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Estoppel


Waiver
Last updated: 21-Jun-2015

Per Lord Wilberforce in Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia (The Laconia), [1977] 1 All ER 545 at p. 551:

Although the word ‘waiver’, like ‘estoppel’, covers a variety of situations different in their legal nature, and tends to be indiscrimi-nately used by the courts as a means of relieving parties from bargains or the consequences of bargains which are thought to be harsh or deserving of relief, in the present context what is relied on is clear enough. The charterers had failed to make a punctual payment but it was open to the owners to accept a late payment as if it were punctual, with the consequence that they could not thereafter rely on the default as entitling them to withdraw. All that is needed to establish waiver, in this sense, of the committed breach of contract, is evidence, clear and unequivocal, that such acceptance has taken place or, after the late payment has been tendered, such a delay in refusing it as might reasonably cause the charterers to believe that it has been accepted.

Flacker Shipping Ltd v Glencore Grain Ltd (The Happy Day), [2002] EWCA Civ 1068, [2002] 2 All ER (Comm) 896, [2002] 2 Lloyd’s Rep 487 per Potter LJ at paras 64-68:

64. Broadly speaking, there are two types of waiver strictly so-called: unilateral waiver and waiver by election.

Unilateral waiver arises where X alone has the benefit of a particular clause in a contract and decides unilaterally not to exercise the right or to forego the benefit conferred by that particular clause. It has been described as:

The abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted. See Banning v Wright [1972] 1 W.L.R. 972 per Lord Hailsham, L.C. at p. 97C-D

In such a case, X may expressly or by his conduct suggest that Y need not perform an obligation under the contract, no question of an election by X between two remedies or courses of action being involved.

Waiver by election on the other hand is concerned with the reaction of X when faced with conduct by Y, or a particular factual situation which has arisen, which entitles X to exercise or refrain from exercising a particular right to the prejudice of Y. Both types of waiver may be distinguished from estoppel. The former looks principally to the position and conduct of the person who is said to have waived his rights. The latter looks chiefly at the position of the person relying on the estoppel. In waiver by election, unlike estoppel, it is not necessary to demonstrate that Y has acted in reliance upon X’s representation: see per Lord Goff of Chieveley in The Kanchenjunga, [1990] 1 Lloyd’s Rep 391 at p. 399, col. 2.

65. So far as waiver by election is concerned, the basic proposition is that where two possible remedies or courses of action are to his knowledge open to X and he has communicated his intention to follow one course or remedy in such a manner as to lead Y to believe that his choice has been made, he will not later be permitted to resile from that position: see Scarf v Jardine, (1882) 7 App. Cas. 345 per Lord Blackburn at pp. 360-361 and Kammins Ballroom Co. v Zenith Investments [1971] A.C. 850.

66. Thus, it is clear that whether or not the party entitled to notice has waived a defect upon which he subsequently seeks to rely, will depend upon the effect of the communications or conduct of the parties, the intention of the party alleged to have waived his rights being judged by objective standards. This being so, it seems to me clear that, in an appropriate commercial context, silence in response to the receipt of an invalid notice in the sense of a failure to intimate rejection of it, may, at least in combination with some other step taken or assented to under the contract, amount to a waiver of the invalidity or, put another way, may amount to acceptance of the notice as complying with the contract pursuant to which it is given.

68. In relation to waiver, it is important to note certain features of the doctrine around which the submissions of the parties have revolved:

(1) In order to demonstrate awareness of the right waived, it must generally be shown that X had knowledge of the underlying facts relevant to his choice or indication of intention: see Matthews v Smallwood [1910] 1 Ch. 777 per Mr. Justice Parker approved in the House of Lords in Fuller’s Theatre and Vaudeville Co. v Rofe [1923] A.C. 435 at p. 443 (in the context of waiver of a right of re-entry).

(2) The Court will examine any act or conduct alleged to be unequivocal in its context, in order to ascertain whether or not it is sufficiently clear and unequivocal to give rise to a waiver: see United States Shipping Board v J.J. Masters and Co., (1922) 10 Ll. L. Rep. 573 per Lord Justice Atkin at p. 578, col. 2.

(3) The Courts will also examine with care any agency relationship between X and any person alleged to have made the unequivocal communication on his behalf. If that person lacked the actual or ostensible authority to waive the right or rights concerned there will be no waiver: see Mardorf Peach & Co. v Attica Corporation of Liberia (The Laconia), [1977] 1 Lloyd’s Rep. 315 at p. 320; [1977] A.C. 850 at pp. 871B-872A.


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