A waiver of contract occurs when a party to a contract waives or gives up one or more rights or benefits it has under the terms of the contract. A party generally does not waive its rights unless the waiver is made voluntarily and with knowledge of the rights being waived—known as a “knowing and voluntary relinquishment of rights.”
Contracts often include a non-waiver paragraph or provision stating that a party’s (or the parties’) failure to pursue or exercise certain rights under the contract does not constitute a waiver of those or other rights under the contract. Such non-waiver provisions are common in insurance contracts and other commercial contracts.
In Texas, a waiver of contract rights occurs when a party intentionally relinquishes a known right or conducts itself in a manner that is inconsistent with the right's enforcement. Texas courts require that a waiver be made voluntarily and with the full knowledge of the rights being waived, aligning with the principle of 'knowing and voluntary relinquishment of rights.' This means that for a waiver to be effective, the party waiving the rights must be aware of their ability to enforce the right and choose not to do so. Additionally, Texas contract law often upholds non-waiver clauses, which are provisions in contracts that specify that the failure to enforce or exercise certain rights does not amount to a waiver of those rights or any other rights under the contract. These clauses help to protect parties from inadvertently waiving their rights through inaction or forbearance. Non-waiver provisions are particularly prevalent in insurance and commercial contracts to ensure that parties maintain their contractual protections unless a clear and explicit waiver is made.
