When a party fails to strictly comply with a particular provision of a contract, the aggrieved party often delays its attempts to enforce such provision. Whether believing that the breaching party will comply with the terms of the contract or deciding to deal with the default at a more convenient time, the non-breaching party runs the risk of losing its right to enforce the provision at issue. A court may deem such failure to demand strict compliance with the terms of the contract to be a waiver of the applicable provision. If so, the waiving party loses the right to enforce that provision and seek damages due to the default.
Parties often attempt to avoid such a scenario by incorporating a non-waiver clause into the contract. A non-waiver clause generally states that the failure of one party to enforce any provision expressed in the contract will not be deemed a waiver or consent to a subsequent default or breach of that provision, unless the waiver is in writing. In Illinois, non-waiver clauses are enforceable and may be strictly construed even if full compliance with the contract has not been required for a lengthy period of time. In one instance, a non-waiver clause was enforced where the breach was allowed to continue for over twenty years.
However, a non-waiver clause may be waived by the words and deeds of the parties upon a showing of clear and convincing evidence of the waiver, even if the clause requires that any waiver be in writing. An example of such a waiver occurred in the recent case of Chicago College of Osteopathic Medicine v. George A. Fuller Co. In that case, George A. Fuller Co. (“Fuller”) was hired as general contractor to build an outpatient clinic. Fuller hired Ed Hoffman Excavating, Inc. (“Hoffman”) as its subcontractor to perform excavation work. The subcontract between Fuller and Hoffman contained a clause which expressly waived Hoffman’s right to collect damages caused by project delays (“Delay Clause”). Additionally, the contract contained a non-waiver clause which provided that the contract provisions could not be waived except by an express waiver in writing (“Non-Waiver Clause”).
For various unexpected and extraordinary reasons the project was delayed at great expense to Hoffman. During the delay period, Hoffman asked Fuller to either release it from the contract or pay the additional charges incurred due to the delay. On multiple occasions Fuller assured Hoffman that it would not enforce the Delay Clause due to the extraordinary nature of the delays. Hoffman, therefore, continued to perform excavation work on the project Fuller reneged on his promise. At trial, Fuller argued that the Delay Clause barred Hoffman’s recovery for such expenses because the Non-Waiver Clause prohibited any waiver not recorded in writing. The court ruled that Fuller’s repeated oral promises to Hoffman were clear and convincing evidence of Fuller’s intent to waive enforcement of both the Non-Waiver Clause and the Delay Clause.
Strict enforcement of contract terms, therefore, is necessary to preserve the ability to enforce contract rights. If a contract contains a Non-Waiver Clause, the parties must also comply with its provisions or risk losing the ability to enforce it as well as the substantive provisions it was drafted to protect. If you have any questions concerning your right to enforce a contract provision, or if you are uncertain if you have waived your right to enforce, please contact a member of the firm.