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Boilerplate Clauses: Waiver, Variation

and Entire Agreement
Robert Edel*

SUMMARY

Boilerplate clauses are common to almost all commercial contracts and govern
the manner in which the contract itself should operate. Entire agreement clauses are
perhaps the most commonly used boilerplate clause but are often misunderstood.
The role of the entire agreement clause is not simply to make the agreement an
exhaustive statement of the express terms of the contract. Whilst usually construed
narrowly by the courts, these clauses are often used (with varying degrees of
success) to exclude or limit liability. However the scope of an entire agreement
clause remains a question of construction.
Typically a proposed variation clause to a commercial contract will require that
any changes to a contract can be made only in writing and signed by both parties.
Two interesting and practical issues arise in relation to variation clauses. The first
issue is whether, notwithstanding non-compliance with the procedural requirements
of the variation clause, the parties not simply agree to vary or ignore the variation
procedure clause itself? It is suggested that provided the parties have complied with
the usual legal requirements necessary to create a binding agreement the
“unauthorised variation” will be binding.
The second issue involves the situation where a proposed variation to an
agreement is actually not a variation at all, but rather a termination of the original
contract. Aside from considering the role and effect of other relevant provisions
contained in the “new” agreement, it is generally accepted that the question of
whether the “new” contract terminates the original depends on the intention of the
parties (and careful drafting).
Waiver clauses in a commercial contract are often inserted to prevent an
assumption arising that a party which does not act “quickly” to enforce a right under
a contract (for example, the right to terminate or sue for damages for breach), has
implicitly waived those rights under the agreement and thus forfeited them. Despite
the common use of such clauses the case law reveals that the concept of waiver is
*
Partner, DLA Phillips Fox, Perth, Western Australia. The significant assistance of James
Couche, solicitor, DLA Phillips Fox, in the preparation of this paper is gratefully
acknowledged.

196
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 197

complex. Simply including a waiver clause should not be accepted as a foolproof

method for protecting a party’s rights under an agreement, as waiver clauses have
traditionally been narrowly interpreted by the courts. Clear words or conduct can
result in a conclusion that certain rights have been waived and also that compliance
with a waiver clause itself is not necessary (and therefore, that any rights under such
a clause have been foregone). Waiver clauses will provide an indication as to the
parties intentions but are not a substitute for evidence of those intentions.

WHAT ARE BOILERPLATE CLAUSES AND WHERE DID THE

TERM “BOILERPLATE”ORIGINATE?

While most commonly associated with drafting agreements or contracts, the

term “boilerplate” arose from the newspaper business. “Columns and other pieces
that were syndicated were sent out to subscribing newspapers in the form of a mat
(ie matrix). Once received, boiling lead was poured into this mat to create the
plate used to print the piece, hence the name boilerplate. As the article printed on
a boilerplate could not be altered, the term came to be used by attorneys to refer to
the portions of the contract which did not change through repeated uses in
different applications.”1
Boilerplate is still a term that solicitors use to describe the more generic provisions
that appear in most commercial agreements. This paper examines three so-called
“boilerplate” clauses, namely Entire Agreement, Waiver and Variation clauses.
Generally speaking boilerplate clauses regulate, control, and in some cases
modify the substantive rights of the parties under the contract, including their
operation and enforcement.2
As the origins of the term “boilerplate” suggest, most boilerplate clauses do not
receive detailed consideration by the parties to a contract or their solicitors during
contract preparation. This is unfortunate for two reasons. Firstly, the clauses can
play an important role in regulating the parties’ substantive rights under their
agreement. Secondly, as this paper suggests, the clauses may not necessarily be
effective to achieve the result that the parties intended for them.

ENTIRE AGREEMENT

An “entire agreement” clause is perhaps the most regularly used boilerplate

provision. Most agreements contain a clause providing that the contract
represents the entire agreement between the parties. The intention behind such a

1
Melanie Crawley, and Mike Crawley, “Take Our Word For it webzine”, Issue 9,
www.takeourworld.com/Issue009.html.
2
Richard Christou, Boilerplate: Practical Clauses (4th ed, Sweet & Maxwell, 2005), p 1.
198 AMPLA YEARBOOK 2007

clause is simply to make the document in which it is contained an exhaustive

statement of the express terms of the contract.3
The following is an example of an entire agreement clause:
“This Agreement contains everything the parties have agreed in relation to the
subject matter it deals with. No party can rely on an earlier written
document or anything said or done by another party, or by a director, officer,
agent or employee of that party, before this Agreement was executed, save as
permitted by law.”
This type of boilerplate clause, and others in similar terms, are examples of
provisions which expressly state that the document embodies the entire agreement
or understanding between the parties or that the document sets out all the express
terms and conditions of the final negotiated position.4

Why Include an Entire Agreement Clause?

Written contracts that do not contain an entire agreement clause are vulnerable to
parties alleging that the document does not represent the complete bargain between
the parties and that oral terms also apply. For example, in J Evans & Son
(Portsmouth) Ltd v Andrea Merzario Ltd 5 the plaintiffs employed the defendants as
their forwarding agents to arrange transport for certain machinery. The plaintiff
insisted that the machinery be shipped below deck so that it did not rust. The
defendant assured the plaintiff that the machinery would be carried below deck.
However, when the machinery was shipped it was shipped on deck at the shipper’s
risk (ie at the plaintiff’s risk). The machinery was lost when the containers in which
it was being transported fell overboard. The English Court of Appeal upheld the
plaintiff’s claim and said that the court was entitled to look at all of the evidence from
start to finish in order to see what the bargain was that was struck between the parties.
The parol evidence rule generally provides that evidence may not be given of
terms outside a written contract. However, the rule contains many exceptions and
may not be able to be relied upon in many cases to exclude evidence of antecedent
or oral agreements reached between the parties that were intended to continue in
force along with the express written agreement. Many court decisions suggest that
the rule simply gives rise to a presumption that a written contract contains all of
the terms of the bargain between the parties but does not preclude a party proving
the existence of oral terms.
For this reason drafters often include an entire agreement clause as a way of
stating that the parol evidence rule applies to the document. By the inclusion of
such a clause, the parties agree that the agreement embodies all of the terms of
their bargain and that the parties have “integrated” all of those terms in the
contractual document.
3
Elizabeth Peden, & J W Carter, “Entire Agreement – and Similar- Clauses” (2006) 22
Journal of Contract Law 1.
4
Ibid.
5
(1976) 2 All ER 930.
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 199

The purpose of entire agreement clauses, as expressed by Lightman J in

Inntrepreneur Pub Co (GL) v East Crown Ltd,6 is to stop a party “thrashing through
the undergrowth and finding in the course of negotiations some (chance) remark or
statement (often long forgotten or difficult to recall or explain) on which to found a
claim”.
It is also arguable that any attempt to prove oral terms could also be prevented
by the doctrine of estoppel. In Johnson Matthey Ltd v AC Rochester Overseas
Corp7 it was held that an exclusion clause which was said to “embody the entire
agreement between the parties with respect to the subject matter hereof [and]
cancels and supersedes all previous agreements, negotiations, comments and
writings in respect thereof, that there are no prior representations, warranties or
agreements relating thereto then that prevails over any inconsistent terms and
conditions contained or referred to in any purchase order or other instrument that
may at any time arise between or be given by either party in respect of the subject
matter …”. This clause was held to found an estoppel by convention preventing
the plaintiff from proving a further alleged antecedent estoppel by convention.
Notwithstanding that the various rules referred to above may on some
occasions prevent parties arguing for the inclusion of additional terms outside of a
written agreement, the cases demonstrate that there are a number of circumstances
in which entire agreement clauses will not be effective to prevent the inclusion of
additional terms outside the written agreement. These issues are examined below.

Implied Terms

One issue that arises in relation to entire agreement clauses is whether they can
be utilised to exclude or prevent a party from establishing the existence of implied
terms in the contract.
Some exclusion clauses are drafted broadly and expressly purport to exclude
implied terms or conditions from the contract. An early example of such a clause
is found in L’Estrange v F Graucob Ltd.8 In that case a written contract for the
supply of an automatic cigarette vending machine contained a provision which
provided:
“This Agreement contains all the terms and conditions under which I agree to
purchase the machine specified above and any express or implied condition,
statement, or warranty, statutory or otherwise not stated herein is hereby
excluded.”
The plaintiff did not actually read the clause but signed the contract containing
it. It was held that the clause prevented the plaintiff proving an implied term that
the machine would be fit for the purpose for which it was purchased.

6
[2000] 2 Lloyd’s Rep 611 at 614.
7
(1990) 23 NSWLR 190.
8
[1934] 2 KB 394.
200 AMPLA YEARBOOK 2007

This case raises an important issue, namely the dual function played by some
entire agreement clauses. Where entire agreement clauses are expressed to
exclude implied terms (or even pre-contractual warranties or statements) they also
purport to operate as exclusion clauses.
The exclusion of implied terms (whilst possible in the 1930s when L’Estrange
v Graucob was decided) is now risky and a topic that needs to be approached with
great care. This is largely due to the rise of consumer protection legislation. For
example, s 68 of the Trade Practices Act renders void any term of a contract that
purports to exclude, restrict or modify the application of various provisions of the
Trade Practices Act contained in Div 2 Pt V that import certain conditions and
warranties into consumer transactions and equivalent provisions in State
consumer protection legislation and Sale of Goods legislation.
Where an entire agreement clause does not refer expressly to implied terms and
simply contains the stated intention of the parties that the document is the entire
agreement and is intended to embody all of the terms of the contract, the clause
will be interpreted as referring only to the express terms of the contract. In other
words, an entire agreement clause will not prevent the implication of a term unless
it expressly purports to do so. In Hart v Macdonald 9 a written contract for the
erection of a building provided that ‘it is to be understood that there is no
agreement or understanding between [the parties] not embodied’ in the contract
document. The High Court held that this did not preclude the implication of a
promise by the defendant to commence the business of dairying upon completion
of the dairy plant and to carry on that business so that he would be able to pay for
the plant. A more recent example to similar effect is the case of Etna v Arif.10
In summary, an entire agreement clause that does not expressly refer to implied
terms will not be effective to prevent the implication of a term if that implication is
otherwise justified at law. It appears that the implication of a term will not be
permitted where an entire agreement clause does expressly refer to implied terms.
This might seem strange because a term can only be implied at law if it meets
the five requirements set out in BP Refinery (Westernport) Pty Ltd v Hastings
Shire Council.11 One of those requirements is that the implication of the term must
be necessary in order to give business efficacy to the contract “so that no term will
be implied if the contract is effective without it”. It might be argued that if it is
necessary to imply a term in order to give the contract business efficacy then this
should be done regardless of whether a contract contains an entire agreement
clause that expressly refers to implied terms because without the implication of
such a term the contract will not be fully effective.
Nonetheless, on the current state of authorities it appears as though expressly
including reference to implied terms in an entire agreement clause may be
effective to prevent the implication of additional terms.

9
(1910) 10 CLR 417.
10
[1999] 2 VR 353.
11
(1977) 180 CLR 266 at 283.
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 201

Pre-contractual Representations

Some entire agreement clauses also purport to cover statements or representations

made by one party prior to the contract to induce the other to enter into the agreement.
For example, in Hope v RCA Photophone of Australia Pty Ltd12 a contract for the hire
of certain electrical sound reproduction equipment included the following clause:
“This Agreement and Lease as herein set forth contains the entire
understanding of the respective parties with reference to the subject matter
hereof and there is no other understanding agreement warranty or
representation express or implied in any way binding extending defining or
otherwise relating to the equipment or the provisions hereof on any of the
matters to which these presents relate.”
The plaintiff wished to amend his statement of claim to allege that it had been
agreed prior to the execution of the contract that the equipment to be hired would
be new equipment. The court refused to allow the plaintiff to plead this because of
the operation of the clause set out above.
Another variation on this theme is the “merger” clause which states that the
parties’ pre-contractual negotiations are merged in the executed contract
document. The real question here is whether the clause is drafted with the
intention (or is sufficiently broad) to prevent any pre-contractual representations
giving rise to a right to rescind the contract or prevent the recovery of damages for
misrepresentation or even negligent misstatement.
It should be noted that if the clause does purport to have this effect it is
exclusionary in nature and care will need to be taken in drafting it to ensure that it
does not breach provisions such as that of s 68 of the Trade Practices Act (and the
equivalent in the Fair Trading legislation found in State legislation). This is dealt
with in more detail below.

How Can Entire Agreement Clauses be Challenged?

Misrepresentation
A contract containing a simple entire agreement clause which does not purport
to exclude liability for pre-contractual representations, misrepresentation, etc, can
be terminated if misrepresentation or another vitiating factor is found to exist.
In Arnot v Hill-Douglas13 a contract for the sale of land contained an entire
agreement clause which provided as follows:
“To the extent permitted by law, in relation to the subject matter of this
contract, this contract:
(a) embodies the entire understanding of the parties; and constitutes the
entire terms agreed on between the parties; and
(b) supersedes any prior written or other agreement between the parties.”
12
(1937) 59 CLR 348.
13
[2006] NSWSC 429; BC200603244.
202 AMPLA YEARBOOK 2007

The New South Wales Supreme Court held that such a clause was not effective
to operate to oust claims or defences based on misrepresentation or an estoppel by
representation and quoted Lightman J in Inntrepreneur Pub Co (GL) v East Crown
Ltd,14 where Lightman J said:
“An entire agreement provision does not preclude a claim in misrepresentation,
for the denial of contractual force to a statement cannot affect the status of this
statement as a misrepresentation. The same clause in an agreement may
contain both an entire agreement provision and a further provision designed to
exclude liability, eg the misrepresentation or breach of duty.”
It is for this reason that entire agreement clauses are often accompanied by various
exclusionary clauses excluding liability for pre-contractual misrepresentation or
providing that no reliance has been placed on any pre-contractual representations.

Breach of statute
Another ground on which entire agreement clauses may be held to be invalid is
that they breach provisions such as s 68 of the Trade Practices Act, discussed
above. This will only be the case where the entire agreement clause purports to
exclude implied terms, including those implied by operation of statute. For this
reason, clauses are often expressed to be limited in their operation by the inclusion
of a phrase such as “to the extent permitted by law”. A clause which expressly or
impliedly represents that terms have been excluded by agreement which, as a
matter of law cannot be excluded, may itself be a breach of the Trade Practices
Act/Fair Trading legislation (see s 53(g)).

Breach of public policy

A related topic is the question of whether entire agreement clauses might be
void for breach of public policy. This will typically arise where the clause is
contrary to the policy behind a particular statute or provision of a statute. A good
example is s 52 of the Trade Practices Act. Although there was no express
prohibition on contracting out of liability for breach of s 52, the courts have long
held that it is not open to contracting parties to exclude or qualify the remedies for
breach of s 52 in their contract. See, for example, Accounting Systems 2000
(Developments) Pty Ltd v CCH Australia Ltd.15
An entire agreement clause which purports to forbid reliance on any misleading
or deceptive conduct under s 52 of the Trade Practices Act runs the risk of being
held to be void for breach of public policy. Generally, a simple entire agreement
clause will not have this effect. However, a clause along the lines found in
Johnson Matthey Ltd v AC Rochester Overseas Corp (quoted above) runs the risk
of being seen as an attempt to exclude liability for breach of s 52 of the Trade
Practices Act. It is the reference to “representations” in such clauses which gives

14
[2000] 2 Lloyd’s Rep 611 at 614.
15
(1993) 42 FCR 470 at 506.
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 203

rise to the risk. If the clause is construed as an attempt to exclude liability for
misleading and deceptive representations, then it is likely to be declared void.
For these reasons s 52 of the Trade Practices Act (and the State equivalents) is
one of the most common means of avoiding the impact of an entire agreement
clause. If misleading and deceptive conduct can be demonstrated (or conduct that
is likely to mislead or deceive) then the court has available to it a broad range of
remedies under s 82 and s 87 of the Trade Practices Act (and State equivalents).

Severance

If an entire agreement clause purports to exclude certain implied terms or

liability under s 52 then the issue of severing the offending parts of the clause
arises. Whether this is possible depends on the way the clause is drafted and the
intention of the parties.
It is strongly recommended that in order to avoid the risk of having all of the
entire agreement clause struck out, the best approach would be to keep the entire
agreement clause simple and remove from it reference to the exclusion of implied
terms, pre-contractual representations and so on.
Instead, the entire agreement clause should be accompanied by distinct clauses
dealing with exclusion of liability, exclusion of reliance on pre-contractual
statements, etc. These provisions should be contained in separate clauses and
should include words such as “to the extent permitted by law”.

VARIATION

Applied in its most common context, a variation clause addresses how changes
can be made to a contract after it has been executed by the parties. The wording of
such clauses generally require that any changes to a contract can be made only in
writing, signed by all parties.
The following is an example of a variation clause: “No variation of this
Agreement will be of any force or effect unless it is in writing and signed by each
party to this Agreement.”
The more formal the documentation required for a variation to the contract,
then the less likely it is that a party can dispute whether they are bound by the
variation. Should the variation clause not require the variation to be in writing and
signed by both parties, then the scope to argue that there is no evidence
(particularly written) to support the claim of a variation greatly increases.
204 AMPLA YEARBOOK 2007

Why have Formal Requirements to Vary the Contract?

The requirements for a variation to be in writing and signed by both parties

perform a number of functions:
1 For evidentiary purposes, ie to prevent a dispute arising as to whether the
variation has in fact been agreed between the parties. Furthermore the written
documentation holds more evidentiary weight compared to competing oral
testimony.
2 A channelling function,16 where the parties use a particular form thereby
having similar agreements varied by similar variation agreements.
3. As a cautionary function17 forcing the parties to consider the proposed
variation carefully before executing the variation agreement.

Can the Parties Agree to Ignore the Requirements of the

Variation Clause?

The standard variation clause will generally require any variation to the
contract to be in writing. It may also provide that a verbal variation is not
enforceable.
As with the previous discussion on the enforceability of entire agreement
clauses, the scope of success for such a clause will depend on the construction of
the contract itself.
In short, an orally agreed variation to a written contract that contains a variation
clause of the type described above can nonetheless be binding, notwithstanding
that there is non-compliance with the variation clause. This can arise in a number
of situations.

Express or Implied Variation of the Contract (including the

Variation Clause)

In Mendelssohn v Normand Ltd18 the written terms of a contract governing an

agreement for car parking provided that the garage owners would not accept
responsibility for any loss or damage sustained by the vehicle, its accessories or
contents howsoever caused. The written contract also contained a clause that
provided: “No variation of these conditions will bind the garage proprietors
unless made in writing signed by their duly authorised manager.”
The plaintiff, upon parking his car, was told by the garage attendant that the
garage rules required that the car be left unlocked. The plaintiff gave the car keys
16
Elizabeth Peden, J W Carter & G J Tolhurst, Contract Law in Australia (5th ed,
Butterworths Lexis Nexis, 2007) at [09-020].
17
Ibid.
18
[1970] 1 QB 177.
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 205

to the attendant who agreed to lock it after it had been parked. In fact, the
attendant left the vehicle unlocked and valuables were subsequently stolen from
the car whilst it was parked at the garage. It was held that the statement by the
garage attendant was made within his ostensible authority and further, that such
statement was binding on the defendant. In particular, the Court of Appeal held
that the statement took priority over any printed condition.
The case is capable of being analysed in a number of different ways. At least one
of the judges in the English Court of Appeal viewed the matter as an example of an
amendment to the contract. The court also relied on the doctrine of contractual
misrepresentation which induced the plaintiff to enter into the contract and
disentitled the defendant to the benefit of the exemption contained in the contract.
The case is also capable of being viewed as an example of a contract being made
partly orally and partly in writing or as a species of promissory estoppel.

Estoppel

In Astilleros Canarios SA v Cape Hatteras Shipping Co Inc19 the court accepted

that estoppel or waiver may, in appropriate circumstances, circumvent a clause in a
contract which requires that variations to it be executed in writing. Although the plea
failed in that particular case, it can easily be seen that where there is a representation
that a variation clause will not be relied upon, and there is reliance on that
representation and resulting detriment to the promisee if the promisor is allowed to
resile from the promise, then an estoppel might arise. Similarly, the promisor may be
seen to have waived his right to require compliance with that portion of the contract.

Oral Arrangement that is Specifically Enforceable

In Musumeci v Winadell Pty Ltd20 the parties entered into a lease of certain
premises. The lease contained a clause which stated: “This lease may be amended
or varied only by instrument in writing executed by the Lessor and the Lessee.”
The rent was set at a particular rate. After entry into the lease the plaintiff
sought and was promised a concession in the rent payable under the lease. Later a
dispute arose as to whether an agreement to reduce the rent had been reached. The
Supreme Court of New South Wales followed the decision of the English Court of
Appeal in Williams v Roffey Bros & Nicholls (Contractors) Ltd.21 The court held
that a promise by person A to person B whereby A promises some additional
payment or gives a concession (such as a reduction in rent) in return for the other’s
promise to perform their existing contractual obligations can be enforced provided
that the promisor (person A) obtains in practice some benefit or obviates a
disbenefit and provided that the performance by person B is capable of being

19
[1982] 1 Lloyd’s Rep 518 at 524.
20
(1994) 34 NSWLR 723 at 750.
21
[1991] 1 QB 1.
206 AMPLA YEARBOOK 2007

viewed by A as worth more to A than any likely remedy against B and further
provided that there is no fraud or any economic duress.
In Musumeci v Winadell the court held that the practical benefit that the lessor
gained from the concession of lower future rent was the enhanced capacity of the
plaintiffs to stay in occupation and be able to carry out their future reduced lease
obligations, which enabled the lessor to maintain a full shopping centre.
The legal basis or proper legal classification of the Williams v Roffey approach
is a little unclear. The court in Musumeci made it clear that it was definitely not a
species of estoppel and nor did the arrangement reached between the parties
strictly comply with the usual requirements for a contract (such as offer and
acceptance). It appears that such an arrangement will be simply regarded as
giving rise to a specifically enforceable agreement. As to the variation clause in
the contract the court had the following to say:
“I should deal briefly with the argument which relies on cl 10(3) of the lease.
This provides that the lease can only be amended by an instrument in
writing. But it does not follow that modification by the correspondence is
ineffective, assuming it satisfies the necessary elements of contract. That is
sufficient to give rise to a specifically enforceable agreement obliging the
lessor to execute the necessary instrument for that purpose.”22

Creation of an Entirely New Contract Replacing Original

Contract

On some occasions the parties may agree to vary the contract to such an extent
that it becomes an entirely new agreement which supersedes the original contract.
In these circumstances, the variation clause in the original contract becomes
irrelevant.
The question arises as to when the original contract will be deemed to have
been terminated. As always, this is a question of construction and depends on the
intentions of the parties and the circumstances.

WAIVER

A waiver clause, or perhaps more accurately, a “no waiver” clause in a

commercial contract, is often inserted to prevent it being asserted that a party
which did not act “quickly” to enforce a right under a contract (for example, the
right to terminate or sue for damages for breach), has elected not to enforce those
rights under the agreement and has thus forfeited them.
A common example of such a clause is set out below:

22
See Chan v Cresdon Pty Ltd (1989) 168 CLR 242.
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 207

“A waiver of any right, power or remedy under this Agreement must be in

writing signed by the party granting it. A waiver is only effective in relation
to the particular obligation or breach in respect of which it is given. It is not
to be taken as an implied waiver of any other obligation or breach or as an
implied waiver of that obligation or breach in relation to any other occasion.”
A number of issues arise in relation to the use of ‘waiver’ clauses which
practitioners ought to be aware of, including the following:
1. Courts have traditionally interpreted waiver clauses very narrowly.
2. The operation of a waiver clause can itself be “waived”.
3. A waiver clause will not prevent an estoppel arising in appropriate
circumstances (that is, where the requisite elements of the particular species
of estoppel are found to exist).
4. The use of the word “waiver” can create difficult construction issues because
it is often used in different senses.
Before these issues can be examined meaningfully it is necessary to look
briefly at the different senses in which the word “waiver” is often used.

Difficulty with the Meaning of Waiver

The law relating to “waiver” has been described as extremely complex, and not
characterised by a high degree of coherence or consistency in relation to the
concept of waiver, particularly in its application.23 Deane J in Australia v
Verwayn24 stated: “It has been doubted that waiver exists as a defence or answer in
any case except where it is used as an alternative designation for some other
defence or answer, for example, election or estoppel or new agreement.”
The term waiver is generally used to mean either:
(a) an election by a party not to enforce a right under some species of
agreement; or
(b) an estoppel arising that would prevent a party exercising a right or insisting
on the performance of a particular clause of an agreement.

Waiver Meaning Estoppel

Assume that party A (the promisee) has a right to terminate a contract with
party B (the promisor), as well a right to sue for damages, for example, by reason
of the late delivery of services by party B to a mine site. Party A elects not to
exercise the right to terminate. Rather, party A requests party B to provide the
requested services at a later time. Party B relies upon this “new” arrangement and
re-schedules the delivery accordingly. If party B then returns to the mine site to
23
Elizabeth Peden, J W Carter & G J Tolhurst, Contract Law in Australia (5th ed,
Butterworths Lexis Nexis, 2007) at [07-180].
24
(1990) 170 CLR 394 at 406.
208 AMPLA YEARBOOK 2007

deliver the services as per the “new” arrangement,25 party A cannot refuse those
services because they are late (in the context of the original arrangement) by
reason of the following.
Party A has represented to party B, by making the new arrangements, that time
was not of the essence in delivering the services and that the right of termination
will not be exercised if the goods are delivered according to the new arrangement.
The representation or promise by party A need not be express, it can simply be
implied from party A’s conduct.26
In these circumstances party A may well be estopped from exercising any right
in relation to the delivery of the relevant services by party B within the original
time frame. This situation is often commonly described as party A having
“waived” compliance with those portions of the contract requiring delivery by a
certain date.
It is important to note that party A has not necessarily “lost” its right to terminate.
A more accurate description would be that the right has been temporarily
suspended.27 Provided it is not unequitable to do so, the right may be reasserted in the
event party A gives party B reasonable notice. The temporary loss of the right to
terminate is a key point of difference from the concept of an election.

Waiver Meaning Election

Another way of categorising party A’s conduct in the example given above is to
say that party A has made an election in the face of a fundamental breach of the
contract by party B not to terminate the contract, but rather to affirm the contract
and to treat it as remaining on foot (albeit in an amended form).
In these circumstances, unless the breach is a continuing one, party A will have
lost the right to terminate the contract for that particular breach by party B. Party
A may still, however, have the right to sue for damages.
Again, it is commonly said of such situations that party A has “waived” its right
to terminate the contract. The better analysis is that party A has in fact elected not
to exercise the right to terminate the contract and decided to continue to perform.
Party A will only be considered to have made an election (by words or conduct)
if it is aware of the factual circumstances giving rise to the right to terminate.28 (It
may also be the case that party A must also be aware that it has a legal right under
the contract to terminate). This is an issue which remains to be determinatively
settled in Australia.

25
Being only the new time for delivery of the services.
26
Legione v Hately (1983) 152 CLR 406 at 438-439.
27
Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga)
[1990] 1 Lloyd’s Rep 391 at 399 per Lord Goff.
28
Elizabeth Peden, J W Carter & G J Tolhurst, Contract Law in Australia (5th ed,
Butterworths Lexis Nexis, 2007) at [37-080].
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 209

It is also important to note that an estoppel or an election can arise through a

party’s words or conduct. The question as to whether an election has been made
will be determined objectively, by reference to the words or conduct of a party.29

“Waiver” Clauses will be Narrowly Construed

Waiver clauses have traditionally been very narrowly construed by the courts.
One of the best examples of this is the decision of the Privy Council in R v Paulson
& Ors.30 In that case the respondent was granted a mining lease of certain land in
Canada by the Crown in 1904. The lessee covenanted to commence mining
operations and to commence mining within two years and thereafter continuously
proceed with mining unless excused by the Minister.
The lease also provided that:
“No waiver on behalf of His Majesty, His Successors or Assigns, of any such
breach shall take effect or be binding upon him or them unless the same be
expressed in writing under the authority of the Minister, and any waiver so
expressed shall extend only to the particular breach so waived and shall not
limit or affect His or their rights with respect to any other future breach.”
The lease also provided that if the lessee failed to perform any covenant
contained in the lease which had not been waived by the Minister then the Minister
could cancel the lease.
The lessee did not commence mining operations at all. However, until July
1909 the lease was renewed annually and the Crown accepted the rent which was
paid annually. In July 1909 the lessee paid a year’s rent and that was accepted
conditionally pending a decision upon an application by the lessee for a further
extension of time. In September 1909 the Minister wrote to the lessee’s solicitors
stating that the lease had been cancelled and that the year’s rent would be returned.
The Privy Council held that the Crown had elected to treat the lease as
subsisting and could not cancel it on the basis of the previous breaches by the
lessee. The Privy Council held that:
“The authorities appear to Their Lordships to establish that the landlord, by
the receipt of rent under such circumstances, shows a definite intention to
treat the lease or contract as subsisting, has made an irrevocable election so
to do, and can no longer avoid the lease or contract on account of the breach
of which he had knowledge. They further think the presence in a lease or a
contract of a provision requiring a waiver to be expressed in writing, such as
exists in the present case, does not render inapplicable the principle
established, and does not enable the landlord at the same time to blow hot
and cold, to approbate and reprobate the same transaction.”

29
Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55 per Kitto J.
30
[1921] 1 AC 271.
210 AMPLA YEARBOOK 2007

Operation of a Waiver Clause can itself be “Waived”

As discussed above in the section dealing with entire agreement clauses, it is

possible for the parties to agree to amend their contract in such a way as to delete
certain provisions or agree that they do not apply in certain circumstances. The
parties may, by their words or conduct, evince a clear intention to vary the
agreement. An example of this is to be found in Mendelssohn v Normand Ltd,31
which is discussed above.

Estoppel

Waiver clauses will not be effective to prevent an estoppel arising preventing a

party from insisting on performance of a particular clause where the elements of a
particular species of estoppel can be made out.
A good example is found in the decision of the High Court of Australia in
Craine v Colonial Mutual Fire Insurance Co Ltd.32 In that case the plaintiff made
a claim on an insurance policy for damage to various motor cars caused by fire.
The policy (by clause 11) required a claim to be made by 12.00 noon on 26
October 1917. The claim was not delivered until 3.00pm on 26 October 1917.
Notwithstanding this, the defendant (the insurance company) proceeded to
investigate the claim and proceed generally as though it were bound by the
contract of insurance. On receipt of the claim the company acknowledged receipt
but expressly stated that such receipt was “without prejudice and without setting
up any waiver of any of the provisions or requirements of the policy conditions”.
However, the company went on to require the plaintiff to answer questions and
requisitions (pursuant to the contract of insurance), took possession of the
plaintiff’s premises and all property in the building that was the subject of the fire,
made arrangements to sell or dispose of salvaged stock and took other steps
pursuant to rights that it had under the contract of insurance.
Clause 19 of the policy of insurance provided that:
“Nor shall the company be deemed to have waived any provision or condition
of this policy, or any forfeiture thereunder, by any requirement, act or
proceeding on its part relating to the appraisement of any alleged loss, unless
such provision, condition, or forfeiture be expressly stated in writing to be
waived by the company.”
The court pointed out that the clause was headed “Waiver” and did not make
any mention of estoppel.
The court went on to describe waiver as an intentional act with knowledge and
as “a doctrine of some arbitrariness introduced by the law to prevent a man in
certain circumstances from taking up two inconsistent positions … it looks …
chiefly to the conduct and position of the person who is said to have waived, in

31
[1970] 1 QB 177 at 183.
32
(1920) 28 CLR 305.
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 211

order to see whether he has ‘approbated’ so as to prevent him from ‘reprobating’ –

in English terms, whether he has elected to get some advantage to which he would
not otherwise have been entitled, so as to deny him a later election to the contrary”.
The court pointed out that the concept of waiver by election was completely
different to the concept of estoppel by conduct and went on to hold that in the
present case an estoppel by conduct was established. Since the waiver clause in
question dealt only with “waiver” and not with estoppel, it would not be effective
to prevent an estoppel arising.
Although the court seems to suggest that the waiver clause in question did not
apply to estoppel, it is suggested that even if on its terms it did apply to estoppel, it
would not be effective to prevent an estoppel arising if the constituent elements of
a species of estoppel can be demonstrated.

Construction of a Waiver Clause – Does it Cover Election or

Estoppel?

Most waiver clauses found in commercial contracts use the term “waiver” as
opposed to election or estoppel. As the cases cited above suggest, this can give
rise to issues of construction. It is not always clear what is meant by the term
“waiver”. It may be preferable to seek to draft ‘waiver’ clauses by reference to an
election by a party whether or not to insist upon performance of a clause or clauses
of the agreement in order to avoid any doubt. As suggested above, it is unlikely
that a waiver clause can prevent an estoppel arising even if it does expressly refer
to estoppel.

Why Bother with a Waiver Clause?

The ability of a waiver clause to prevent the loss of a right to elect to insist upon
compliance with a clause of a contract or to prevent an estoppel arising is limited.
However, the clause may be useful in the following respects:
1. In assisting to establish a mechanism or code for the recording of variations to
a contract, particularly those that involve the giving up of rights. Obviously,
the clause is only useful to the extent that it is complied with.
2. The fact that a contract contains a waiver clause of some description can assist in
an argument that the party seeking to establish the existence of an election or an
estoppel did not really rely upon the conduct of the other party because it was
aware that any such election or “waiver” was required to be in writing. For
example, in Owendale Pty Ltd v Anthony33 the Commonwealth Government
entered into a lease which contained a provision that the acceptance of rent by the
Commonwealth should not prevent or impede the exercise by the
Commonwealth of the powers conferred upon it to determine the lease in

33
(1967) 117 CLR 539 at 609.
212 AMPLA YEARBOOK 2007

appropriate circumstances. Owen J said that “I can see no good reason why the
parties to a lease should not validly incorporate such a clause in their agreement
and if they do so, that seems to me to be a very relevant fact to be borne in mind
when it is claimed by a lessee who has committed a breach of covenant that by
accepting rent his lessor has made an election to keep the lease on foot”. He went
on to hold that there was no waiver by the Commonwealth of its right to
terminate for breach in that case.

CONCLUSION

Entire Agreement Clauses

The purpose behind the inclusion of an entire agreement clause in a contract is to

attempt to collate or “integrate” all of the terms of a bargain into a single document
and possibly also to avoid arguments that pre-contractual representations, oral
discussions or implied terms are part of the agreement.
It is important to draft such clauses to include pre-contractual representations
and implied terms. Failure to do so will not prevent a party seeking to establish
pre-contractual representations that form additional terms of the contract or
implied terms.
Entire agreement clauses must be drafted carefully so as to avoid infringing
statutory provisions such as s 68 of the Trade Practices Act which forbid the
contracting out of liability of certain consumer protection warranties.
Care must also be taken to avoid the risk of the entire agreement clause being
declared void for breach of public policy, for example where the clause is
construed as an attempt to forbid reliance on any misleading or deceptive conduct
under s 52 of the Trade Practices Act (or State equivalents).

Variation Clauses

Variation clauses provide a useful purpose in seeking to ensure that there is

clear evidence of any variations of contractual arrangements between parties.
However, such clauses are unlikely to stand in the way of an argument that the
contract has been varied (and that the variation clause itself has been varied or
waived) and will not prevent an estoppel arising in appropriate circumstances.
Further, entire agreement clauses will be bypassed by the application of the
doctrine in Williams v Roffey Bros.34

34
[1991] 1 QB 1.
 BOILERPLATE CLAUSES: WAIVER, VARIATION AND ENTIRE AGREEMENT 213

Waiver Clauses

Waiver clauses:
• will be narrowly construed;
• can themselves be “waived”;
• will not prevent an estoppel arising in appropriate circumstances; and
• can give rise to difficult construction issues due to the different possible
meanings of the term “waiver”’.

General Considerations

Each of the three types of clauses can provide a useful function in the context of
contract management. It is clearly useful to have all of the terms of a contract
collated in a single document. Variation and waiver clauses perform a similar
function and provide a mechanism or code by which variations to the contract or
adjustments to the parties’ rights under the contract are clearly recorded. This will
make management of contracts easier and less prone to dispute. However, such
clauses are only effective to the extent that they are complied with by the parties
and are subject to the significant limitations described above.

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