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legal alert: Questioning the waiver of non-waiver provisions

31 Jan 2018

In ZVI Construction Co LLC v The University of Notre Dame (USA) in England [2016] EWHC 1924 (TCC), the Court confirms that a party can by its words and/or conduct waive the agreed terms of a contract and specifically a non-waiver clause.

Facts

A US based company agreed to sell a London property to the University of Notre Dame.  They agreed that certain works were completed by ZVI, and all three were a party to the development agreement. It contained a non-waiver clause stating the agreement could only be amended by a written document, which specified the clause to be amended and was signed by all the parties.

Subsequently, a dispute arose between the parties regarding the obligations ZVI owed to the University. The dispute was referred to expert determination, where it was decided ZVI/the seller were liable for numerous defects in the building works. Following this, the University obtained a judgement in the US which ZVI sought to resist contending that the non-waiver clause applied. ZVI then issued proceedings in London for declaratory relief.   

Decision

The central issue for the Court was whether ZVI had waived any right to object to the expert’s jurisdiction by its actions, words or conduct, and whether there had been a variation of the contract between the seller and the University.

The Court acknowledged that questioning the validity of a non-waiver provision is controversial and each case is fact-sensitive.  However, the Court decided that notwithstanding the non-waiver clause, the parties had varied the agreement by conduct.  ZVI’s conduct also amounted to implied acceptance of the expert’s jurisdiction, so it waived the right to object to the expert’s jurisdiction. 

Implications

A party seeking to rely on a non-waiver clause should ensure it does not by its actions override the non-waiver clause such that its actions amount to a variation of the contract. It must be careful to expressly reserve its position from the start.  On the other hand, a party seeking to claim the contract has been varied must demonstrate, on the balance of probabilities, the other party intended to waive the terms of the contract by actions, words or conduct.

 
 
 

Contacts


Bal Manak | Associate

Email:
bal.manak@watsonburton.com
Tel:
0345 901 0929