http://www.worldservicesgroup.com/publications.asp?

action=article&artid=2995
A recent Court of Appeal case has cast doubt on the value of such 'non-waiver' clauses.
When a party to a contract waives a breach of that contract by the other party, it voluntarily abandons its legal rights to enforce the
contract, or to claim any remedy, in relation to that breach.

A waiver must be clear, but may be oral or written.

Importantly, a waiver need not be express, but can be inferred from a course of conduct. This can lead to situations where one
party to a contract inadvertently waives its legal rights against the other by virtue of its conduct, which could have far-reaching
implications for the innocent party.

To address this risk, many contracts include 'non-waiver' clauses, but are they worth it?
What is a non-waiver clause?
A non-waiver clause aims to preserve a party's rights and remedies if that party fails, whether intentionally or by oversight, to take
action in respect of a breach of contract.
Generally such clauses will provide that:

a failure or delay in enforcing an obligation, or exercising a right or remedy, does not amount to a waiver of that obligation,

right or remedy
a waiver of a breach of a term does not amount to a waiver of a breach of any other term in the agreement
a waiver of a particular obligation in one circumstance will not prevent a party from subsequently requiring compliance with
the obligation on other occasions
Affirmation of repudiatory breaches
Once a repudiatory breach entitling the innocent party to terminate the contract has arisen, that innocent party must elect to treat
the contract as terminated and sue for damages, or to affirm the contract and continue performance of it.
To take effect, such an election must be communicated to the party in breach in clear and unequivocal terms, whether by writing or
by conduct.

Affirmation will often be implied if the innocent party is fully aware of the facts surrounding the alleged breach and acts in a manner
consistent with treating the contract as continuing. For example, an innocent party that does nothing for too long after becoming
aware of the breach may be deemed to have affirmed the contract.
what does this mean?
The relationship between non-waiver clauses and affirmation of repudiatory breaches has always been unclear, and there has been
limited authority on the effectiveness of non-waiver clauses, in particular those clauses preserving rights to terminate for breach.

The Court of Appeal's recent ruling in Tele2 International Card Company SA and others v Post Office Limitedhas raised concerns
regarding the effectiveness of non-waiver clauses. Here it was found that the non-waiver clause in the agreement did not prevent
the breaching party from relying on the doctrine of affirmation by election.

In that case, Tele2 committed a material breach and the Post Office sought to terminate the contract. However, the Post Office only
served its termination notice one year after the breach occurred, despite being fully aware of the breach from the start.

The Post Office argued that its delay had not resulted in an affirmation of the contract (and a loss of the right to terminate) because
the non-waiver clause stated that no delays by a party in enforcing the agreement would be deemed to be a waiver, or prejudice
that party's rights.

The Court of Appeal held that, not withstanding the non-waiver clause in the contract, the Post Office had elected to affirm the
agreement by conduct, and had abandoned its right to terminate for the material breach.

The Court considered that the election was a question of fact and this could not be overridden by the non-waiver clause. As the
Post Office had lost its right to terminate, the Court decided that their purported termination was a repudiatory breach of contract
and in principle, entitled Tele2 to claim damages.

The Court observed that the doctrine of affirmation by election was not specifically excluded from applying to the contract, but did
not comment on whether the clause could have been relied on if it had been drafted to specifically exclude the doctrine.

what should you do?

In practice, a prudent innocent party should always consider sending a letter after the breach, expressly reserving its

rights to later terminate, and should ensure that its subsequent conduct is consistent with that reservation. However, there is no
guarantee that these actions will be effective in overriding the doctrine, and there is always a real risk that the innocent party's
conduct will be construed as affirmation of the contract.
In addition parties generally may want to amend their standard non-waiver clauses to specifically exclude the doctrine of

affirmation of contract by election; however we have yet to see if this will successfully exclude the doctrine, and reliance on nonwaiver clauses should be viewed as a last resort.
Ideally, a decision on termination should be made soon after becoming aware of a repudiatory breach, so that later
arguments about affirmation or waiver can be avoided.

http://www.out-law.com/en/topics/projects--construction/construction-contracts/variations-tocontracts-and-changes-in-the-law/

Variations to contracts
It is common in commercial contracts to include a provision that any changes made to a contract are
ineffective unless made in writing and signed by or on behalf of both parties. This is known as a variation
clause, and is intended to prevent informal or inadvertent oral variations. However, common law allows for
a written contract to be changed by subsequent mutual agreement from both parties, whether oral or
written. This can make the position complicated.
Similarly, changes in the relevant law can affect the way work is performed under a contract. Contractors
will generally be obliged to complete the work in accordance with local building regulations and other laws.
If the law changes during the term of a construction project, this can have cost implications for the
contractors.
Variations - the common law position
As long as the law or the contract itself does not say otherwise, parties to a contract can change it by oral or
written agreement.
But for this variation to be effective there must be:

a valid agreement between the parties mere notification by one party to the other is not effective;

some form of consideration supporting this agreement.

This consideration could take many forms, for example:

mutual abandonment of existing rights;

new benefits being granted by each party to the other party;

the parties assuming additional obligations if the contract is breached.

A concession granted by one party to the other for that party's convenience, and at its request, will not
therefore constitute a variation. In the absence of such a consideration, a variation can be effected by deed.
A contract can, however, be varied by an oral agreement or by its parties conduct, even where the contract
itself contains a no oral variation clause. This position has been recently clarified and confirmed by the
Court of Appeal in Globe Motors V TRW Lucas Varity Electric Steering Ltd [2016] EWCA GV 396.

Waiver is where one party voluntarily agrees to a request by the other not to insist on the precise
performance method outlined in the contract. In these circumstances, it may be said that that party has
waived its right to insist on performance in that particular way. A waiver can be oral or written, or can even
be inferred by conduct - so a party can waive (or be taken to have waived) its right to rely on a written
variation where the way it has acted after the contract has been varied by oral agreement.
It is worth noting that where the terms of the contract include a provision which is solely for the benefit of
one party, that party may waive compliance with that provision and enforce the contract as if it had been
omitted. It cannot do so where the provision is intended to be for the benefit of both parties.
An exception to this general rule is that a contract which is required by law to be made or evidenced in
writing - for example, consumer credit or consumer hire agreements can only be varied in writing.
How construction companies deal with variations
We have looked at how companies in general deal with changes to the work outlined in a contract. In
construction, though, a distinction is made between:

amendments to the contractual provisions; and

variations of the actual work instructed by an employer.
Amendments to a construction contract will generally be made by written agreement between the parties
and will be amendments to the contractual provisions not including the scope of work to be undertaken.
Variations on the performance of that work will, on the other hand, usually be made according to a
variation procedure drafted into the contract terms. This is because construction projects will usually be so
large and take such a long time to perform that it is administratively less of a burden to the parties to agree
a variation procedure in advance, so that an amendment to the contract doesn't have to be made every time
the scope of the work changes.
Providing the variation is made in accordance with the correct procedure, there is no need to change the
actual terms of the contract. Accordingly, there is no need to prove that consideration has been provided for
that amendment to be effective.

http://www.darlingtons.com/blog/waiver-an-important-legal-principle-explained

If you need a formal contractual waiver drafted, we can assist with this and can also
advise if you are confused or concerned about whether action or inaction might lead
to a court finding that there has been a waiver of a breach of contract. This is a
common situation where the implications of getting things wrong can be
considerable and problems can be headed off if you get good advice and/or a letter
written at the right time protecting your interests.
What does waiver mean?
Waiver can be defined as a voluntary relinquishment of legal rights that a person or organisation
would normally have if the waiver did not exists. Although waiver is commonly referred to in
contract law and particularly is a concept often related to breach of contract, it is a broad term
which is applicable in other areas of law too.
What are some examples of waiver?
There are many. In the context of contract law, typical examples of waiver might include losing the
right to insist on goods that are exactly as described; losing the right to see a particular set of
terms enforced in a contract; receiving payment in a form that was different to the form originally
intended i.e. cheque instead of credit card.
How does a waiver come into existence?

For a waiver to come into existence, the person who forfeits legal rights must do so in an informed
way, without duress and through words (verbal and written) or through conduct implying a
waiver has come into existence.
What is waiver by election?
Waiver by election occurs where a person or organisation makes a choice between several rights
(for example, choice of remedies) and communicates that choice through their conduct or words.
The conduct and words must be of such a nature that it is unequivocal that the party has chosen to
exercise one right and abandon another.
What are waiver clauses?
Whether an action or inaction constitutes a waiver often creates uncertainty, especially where the
waiver comes into existence by spoken word or even conduct. To overcome this drawback, waiver
clauses can be inserted into contracts to govern the way in which waiver works. In fixed-term
employment contracts, for example, some employers may try to insert waiver clauses to prevent
employees claiming unfair dismissal if their contract is not renewed. However, such clauses may
only be valid where the contract of employment is for one year or longer.
What is the difference between waiver and variation?
Waiver does not actually vary the terms of a contract whereas variation does. Variation, however,
requires a much more formal approach than waiver all the usual rules of forming a valid contract
need to be followed, that is an offer to vary terms, acceptance of the offer, consideration (a legal
term, but will usually be in the form of money) and intention of both parties for the variation to be
legally binding.
What is the difference between waiver and estoppel?
In estoppel, one party represents to the other that it will not exercise certain legal rights. The party
that is represented to relies on this being the case. The key differences are in the concepts of
reliance and detriment. In waiver, one party does not have to rely on a waiver by the other and
suffer if the other party does not do as they said.

In estoppel, one party relies on the

representation and the party making the representation is estopped (prevented) from going back
on their word because this would cause detriment to the other party.

http://www.darlingtons.com/litigation/breach-of-contract

Breach of an implied term terms implied by conduct

In the event of a dispute, the English courts can imply terms which differ from the
written terms where either or both parties conduct is inconsistent with the written
agreement. For example, if A sells B goods, and the contract says that B must pay
within 14 days of delivery, if B has bought goods over a period of time via numerous
different orders and has sometimes paid within 14 days but at other times has paid only
after 20 or 30 days, the courts may well imply that time was not of the essence.
Using that same example, in the unlikely event that the contract did not include time for
payment, in the event of a dispute, it may well be implied, based on the conduct of the
parties, a length of time based on how the parties have acted thus far.
Another way in which terms may be implied is, where a contract is silent or unclear on
certain issues, whether there are clear standards relating to that issue found in similar
contracts within the industry, sector or type of business dealing in question. An example
might be construction contracts where there are clearly defined industry standards for
certain contractual issues.
A common defence to a breach of contract claim written contract varied
A very common mistake is to assume that, having a contract in writing is the whole
story and that, if the other party does not stick to the written contract, you will almost
certainly succeed with a breach of contract claim.

Contracts get varied in any number of ways such as where the parties do not stick to
the terms, by subsequent conversations or communications by email, or by a course of
dealings inconsistent with the original terms or waiver of a breach.
It is common for a defendant to a breach of contract claim to raise an allegation that the
contract was varied and all too easy to say there was a verbal conversation to change
the terms. At the very least, this can cause delay and mean it will be very difficult, for
example to get a summary judgment from the court, since evidence of an alleged verbal
variation would have to be tested by cross examination at trial.

http://www.mondaq.com/x/402826/Contract+Law/Slovakian+Law+On+Ethical+Hotlines

UK: Contract By Conduct: A Reminder From The Commercial Court

Acceptance by Conduct
It is an established principle of English contract law that the signature of the parties to an agreement is not
a prerequisite to the existence of contractual relations. Typically, where the contract prescribes acceptance
to be communicated in a specific fashion, this will be binding; however, following the decision of the
Commercial Court, the conduct of the parties can indicate acceptance and a clear intention to be bound.
In the present case, the judge found that the requirement for the parties to sign the contract was expressed
to be for the benefit of the claimant only. Consequently, the court held, the claimant alone could waive the
requirement.
The judge found that the claimant had indeed waived the requirement. The claimant had integrated the
defendant's products into television episodes as required and had given the defendant the right to use of
the intellectual property rights. Moreover, the defendant had acknowledged that it would be liable to pay for
the integrations into the television episodes and had marketed its own products using the intellectual
property rights licensed by the claimant.
The acts carried out by both parties were significant enough to go beyond any reasonable steps taken in
anticipation of an agreement being reached and were clear evidence of the claimant's acceptance and
communication of this to the defendant. The judge held that the work anticipated by the deal memorandum
had been carried out and that this demonstrated the acknowledgement by both parties that they were
contractually bound.

http://www.twobirds.com/en/news/articles/2010/affirmation-of-contract-0110
In November 2009, the High Court ruled on a sponsorship contract dispute between Formula 1 team, Force
India Formula One Team Limited (Force India), and sponsors Etihad Airways P.J.S.C. and Aldar Properties
P.J.S.C (Etihad). The court decided that inaction and continued performance on the part of Etihad, despite
multiple breaches of contract by Force India, amounted to affirmation by Etihad so that it was deemed to have
abandoned its right to terminate the contract. The decision was consistent with recent authorities on affirmation,
but serves as a timely reminder that sports sponsors, just like other contacting parties, cannot hang around and
hope to preserve their contractual right to terminate indefinitely in the face of breaches by their
counterparts. The court also decided that when looking at damages in relation to loss of chance, the events that
have actually occurred between the breach and the trial can be taken into account.
Background
In early 2007 Force India, which was at this time owned and operated by a different company, Spyker, lacked a
title sponsor for the upcoming Formula 1 season. It entered into negotiations with Etihad and signed a heads of
agreement shortly before the first race of the season, the Australian Grand Prix.
In late August 2007, Spyker sold Force India to Orange India Holdings SARL (Orange) and the team changed
its name from Spyker to Force India. One of the ultimate owners of Orange had an interest in the Kingfisher
brand, which included Kingfisher Airlines as well as the famous Kingfisher brewery. Etihad witnesses said they
did not feel in the loop regarding the change of ownership and that they were concerned that Kingfisher Airlines
was a competitor and that the team was now associated with alcohol.
During the winter practice sessions of 2007 Force India added new livery and the Kingfisher logo to its
cars. Around the same period Etihad was looking into the possibility of becoming the sponsor of another
Formula 1 team and had begun a legal assessment of Force Indias change in ownership to understand their
potential leverage. But it was not until late January 2008 that Etihad wrote to Force India informing the team
that it was terminating the agreement due to a material breach by the team. Force India countered by claiming

that Etihad had committed a wrongful repudiation (because it had affirmed the contract and lost the right to
terminate) and that Etihad owed the team substantial sums in outstanding sponsorship fees and damages for
future loss.
Affirmation of contract
Force India relied on the decision in Tele2[2] in which the principles of affirmation by election were summarised
as follows:

1.

If a contract gives a party a right to terminate upon the occurrence of defined actions or inactions of the
other party and those actions or inactions occur, the innocent party is entitled to exercise that termination
right. The innocent party has to decide whether or not to do so. Its decision is, in law, an election.

2.

3.

It is a prerequisite to the exercise of the election that the party concerned is aware of the facts giving rise
to its right and the right itself.

The innocent party has to make a decision, because if it does not do so then the time may come when
the law takes the decision out of [its] hands, either by holding [it] to have elected not to exercise the right which
has become available to [it] or sometimes by holding [it] to have elected to exercise it.

4.

Where, with knowledge of the relevant facts, the party that has the right to terminate the contract acts in
a manner that is consistent only with it having chosen one or other of two alternative and inconsistent courses of
action open to it (i.e. to terminate or affirm the contract), then it would be held to have made its election
accordingly.

5.

An election can be communicated to the other party by words or conduct. However, in cases where it is
alleged that a party has elected not to exercise a right, such as the right to terminate a contract on the
happening of defined events, it will only be held to have elected not to exercise that right if the party has so
communicated [its] election to the other party in clear and unequivocal terms.

Etihad had sought to terminate the agreement on the basis that it had been breached by Force India and that the
breaches were material. The purported breaches were:

The use of the Kingfisher logo at the winter practice sessions.

The change of name from Spyker to Force India.

The new livery during the winter testing.

The acquisition of Spyker by a company associated with Kingfisher Airlines, a rival to Etihad.

The court said that the first three alleged breaches had been capable of remedy and that Etihad had not notified
Force India and requested that such breach be remedied (as the agreement required). This simple omission
meant that Etihad could not terminate as a result of these purported breaches.
Importantly the court also ruled that in relation to three of the supposed breaches (including the association with
a rival airline), Etihads knowledge of the breaches and resulting inaction meant that it had affirmed the contract
and waived its right to terminate. Etihads reasons for its inaction (including aviation politics) were essentially
irrelevant. The court said that Etihad had been engaged in a policy of watch and wait and see in order to
understand what advantage they might be able to extract from the situation. It did not act, and in doing so
affirmed the agreement.
Loss of a chance
The court then considered Force Indias claim that because of Etihads wrongful repudiation, Force India had lost
the chance of being paid a contractual bonus in the second and third years of the agreement (which would have
been payable based on the number of World Championship points gained in those years). Etihad argued that
an assessment of the points that would have been gained by Force India in the 2008 and 2009 seasons was
speculative because Formula 1 is wholly unpredictable and that the claim had to fail.
Force India argued that the court was free to take account of the facts that had actually taken place between the
termination of the agreement and the trial, which would entirely eliminate the need for speculation. Force India
had in fact gained 13 World Championship points in the 2008 and 2009 seasons, which would have earned them
an additional $1.3m under the agreement. The court followed the House of Lords decision in Golden Strait[3]
(which said that it was open for a defendant to reduce his liability by reference to events that occurred between
the breach and the trial) and applied it by analogy to the assessment of a loss of chance, awarding Force India
$1.3m under that head of its claim.
Comment

This decision confirms the law on affirmation and is a reminder to all that when the party with which you have a
contract breaches that contract (in such a way that gives rise to a right to terminate), the law requires you to
make a decision: terminate or not. This might not always be easy in a sponsorship context particularly if the
relationship is a long one and there is a history of goodwill that you dont want to disturb. But if you dont make a
decision, the courts will infer one. And, what is more, if a subsequent wrongful repudiation leads to a loss of
chance, it is now clear that post-termination events will be considered. All the more reason to make sure that if
you are going to terminate, you still have the right to do so.

http://www.businessdictionary.com/definition/affirmation-of-contract.html

affirmation of contract
1.Action (or a failure to take action) performed with full knowledge of the facts, that establishes a contract as valid. For example,
a buyer of goods affirms a purchase price by proceeding to resell them, or the seller of goods affirms a price by not taking any action
when the buyer pays a certain sum in settlement of the invoice.
2.Continuation of a voidable contract by a contracting party instead of rescinding it (because of the other party's misrepresentation or
other reason) or considering it discharged (because of the other party's breach of contract or other reason), with full knowledge of the
facts. Such affirmation may be effected through an express declaration by a party to proceed with the contract, or it may be inferred from
that party's conduct.

What is AFFIRMATION OF CONTRACT?

When an act is done with full exposure to facts as it relates to a contract. Or continuing a contract
despite breach or misrepresentation with full knowledge. It can be a declaration or by the parties
actions.

http://www.companybug.com/breach-of-contract-and-affirmation/

Breaches of contract and affirmation a legal guide

April 22, 2015

Commercial solicitor Leigh Ellis explains what happens when a breach of contract occurs in business. Typically
the injured party can either terminate or affirm (continue) with the terms. But, what happens if delays occur?

Breaches of contract
Breaches of contract occur all the time in business. Mostly they are of such a minor nature, have such little
impact or are so easily cured that they are largely ignored.
In other cases breaches of contract continue for a prolonged period because they take time to reveal themselves
or because the party that has suffered financial loss from the breach is unsure about how to best deal with it.
When a sufficiently serious breach of contract occurs the innocent party is left with the option to either
terminate the contract or to affirm it (continuing with the contract). The option chosen must be
communicated to the party in breach either directly by simply stating the option chosen or indirectly through
conduct. The former method is always preferable.

Explicit termination or continuation of a contract usually leaves little doubt as to the intentions of the injured
party. Inferring the choice made from the innocent partys conduct can sometimes be straightforward and usually
leaves doubt as to whether or not they wish the contract.
The problem lies with the approach of the Courts that mere delay of its own does not affirm a contract, however
the longer the delay the more likely it is an affirmation. In the intervening period, there is likely to be conduct of
the innocent party which can be argued to be conduct amounting to an affirmation of the contract.

When will delay affirm a contract after a breach of contract?

The starting point is usually the time when the breach occurred. Generally, a small delay in acting or making a
decision by the person whom the breach was committed against will not be considered to automatically infer that
it wished to affirm the contract. It is perfectly normal for the innocent party to take some time to decide what
they wish to do usually days or weeks, not months. In addition, in some circumstances the innocent party may
only discover that a breach has actually occurred some after time after the event.
There must come a point where inaction on the part of the innocent party must be inferred to mean that they have
chosen to affirm the contract. However, when exactly this point is, is not entirely clear and always depends on all
the circumstances and facts of the case.
In the 2010 case of Force India Formula One Team Ltd v Ethiad Airways PJSC, the Court of Appeal explained
some instances where a delay is more likely to be seen as an affirmation of the contract by the innocent party:
1.

Where time is an important factor because there is a sense of urgency in the

decision to affirm or terminate the contract;
2.
When the innocent partys silence or delay may be misleading. For example, when
the innocent party is aware of the breach but the breaching party is not;
3.
When the delay is in relation to a minor or easily remedied breach.

Following a breach of contract

Despite the clarifications made by the Court of Appeal in the above case, uncertainty will always exist to some
extent because the tests set out by the Court of Appeal take in account the facts of the case to assess delay
between breach of contract and an alleged affirmation.
Businesses which have suffered from a breach of contract should seek legal advice sooner rather than later to
assess their options while they still exist and avoid the risk of accidentally affirming a contract that they may in
fact wish to terminate.
Leigh Ellis is a business solicitor in London at Drukker Solicitors. Breaches of contract are within his areas of
expertise along with technology related contracts and disputes.

http://uk.practicallaw.com/4-385-1118

Affirmation of contract
Where a repudiatory breach of contract occurs, the innocent party must elect either to treat the contract as
terminated(acceptance of the repudiation), or to treat it as continuing (affirmation of the contract).
Affirmation can only take place if the innocent party knows of the breach and of his right to choose between
terminating and affirming the contract. Affirmation will often be implied if the innocent party knows of the breach
and of his right to choose and acts in a manner consistent with treating the contract as continuing.
Although the innocent party does have time to elect whether to affirm or terminate, doing nothing for too long
may be seen as an affirmation. Once an innocent party has affirmed a contract, the affirmation is irrevocable.

Importantly, a waiver need not be express, but can be inferred from a course of conduct.

Waiver is where one party voluntarily agrees to a request by the other not to insist on the
precise performance method outlined in the contract. In these circumstances, it may be said
that that party has waived its right to insist on performance in that particular way. A waiver

can be oral or written, or can even be inferred by conduct - so a party can waive (or be taken
to have waived) its right to rely on a written variation where the way it has acted after the
contract has been varied by oral agreement.

In the event of a dispute, the English courts can imply terms which differ from the written
terms where either or both parties conduct is inconsistent with the written agreement
A very common mistake is to assume that, having a contract in writing is the whole story and
that, if the other party does not stick to the written contract, you will almost certainly succeed
with a breach of contract claim.
A common defence to a breach of contract claim written contract varied.
Contracts get varied in any number of ways such as where the parties do not stick to the
terms, by subsequent conversations or communications by email, or by a course of dealings
inconsistent with the original terms or waiver of a breach.
It is an established principle of English contract law that the signature of the parties to an
agreement is not a prerequisite to the existence of contractual relations.
The court decided that inaction and continued performance on the part of First Party,
despite multiple breaches of contract by Second Party, amounted to affirmation by First
Party so that it was deemed to have abandoned its right to terms of the contract
The court said that the first three alleged breaches had been capable of remedy and that First
party had not notified Second Party and requested that such breach be remedied

Importantly the court also ruled that in relation to three of the supposed breaches (including
the association with a rival airline), First Party knowledge of the breaches and resulting
inaction meant that it had affirmed the contract and waived its right to deemed
approval. First Partys reasons for its inaction were essentially irrelevant. It did not act, and
in doing so affirmed the agreement.

Affirmation is when an act is done with full exposure to facts as it relates to a contract.