I generally agree with Robert's comments, but I think his analysis in

relation to waiver in contract is deficient because I disagree with his

core assumption about "wrongs" in contract.  Unlike tort or property

law, contract law is based on the mutual obligations of the contracting

parties.  Unlike tort or property remedies, contractual remedies are

designed to shift the profit or loss inherent in a commercial

transaction when one of the parties fails to perform his obligation as

agreed.  Some rules operate to prevent a person from asking a court to

shift the profit or loss when the other person fails to perform (the

duty to mitigate operates in this way).  When dealing with these rules,

it is, therefore, crucially important to understand precisely what type

of profit or loss shift is being prevented and why.  Simply saying that

a person was or was not "in the wrong" does not help the courts figure

out what type of profit or loss shift is appropriate in the

circumstances.

Waiver is most often used in connection with conditions for the benefit

of one party alone, such as a "time of the essence" clause.  The person

in whose favour this condition operates will ordinarily be allowed to

treat the contract as having been discharged if the other person fails

to fulfil this condition.  In this circumstance the innocent party is

allowed to shift onto the other party a loss that is potentially

disproportionate to the economic consequences of the failure.  For

example a person who is required to purchase property can walk from the

deal if the vendor is late with the title documents this allows a

purchaser of real estate to shift all the losses of a falling prices

onto the vendor for a potentially trivial breach of timing when

otherwise the risk of these losses would be borne by the purchaser.  If

the purchaser in that case waives the condition then he is required to

close within a reasonable time.  His decision to waive or not to waive

might be dependent entirely on whether real estate prices are rising (he

will waive) or falling (he will not waive).  Even when the condition is

waived, however, the innocent person may still have an action for losses

caused by the other person's failure to perform.  This depends on what

exactly the innocent party has waived--the right to treat the contract

has having been discharged or the right to complain about losses he

suffered as a result of the lateness).

Robert's example of the grain doesn't address the question of what the

innocent person has waived.  It is true that by agreeing that the grain

may delivered late the purchaser cannot refuse to pay for the grain on

the grounds that it has been delivered late (i.e. he has waived the

right to refuse delivery);  but is it true that the purchaser cannot sue

for damages for late delivery?  Perhaps accepting late delivery was an

act of mitigation?  In which case he can sue for his losses.  On the

other hand, maybe by accepting late delivery the parties made a rational

commercial decision for both their advantages that the stipulated

delivery date was unworkable.  In that case it is likely that the

innocent party waived his right to ask for any shifting of losses to

occur.  Therefore, merely describing the innocent party's act as a

waiver of a wrong versus something else (estoppel; variation) doesn't

really help us in getting to the root of the problem that the

nomenclature is supposedly trying to help the courts solve.  

D

-----Original Message-----

From: Robert H Stevens [mailto:robert.stevens@ucl.ac.uk]

Sent: Friday, December 12, 2008 6:14 AM

To: Neil Foster

Cc: obligations@uwo.ca

Subject: Re: HCA on waiver, election, etc in contract, and a new word

I am sorry to say that I find the decision of the High Court quite

difficult on first reading.

There is, without any doubt at all, a doctrine of waiver in the common

law. It is not estoppel, variation, election, or renunciation.

At common law, all of our rights can be waived. If you kiss me without

permission you commit a tort. If I give you prior permission, I have

'waived' my right, so that you have a privilege to kiss. I can withdraw

my

consent, and if you kiss me after such withdrawal you commit a wrong. I

cannot retrospectively withdraw my consent, so as to make wrongful what

was not. You commit no wrong because the right was waived. This is,

obviously, nothing to do with estoppel. Even if you would have kissed me

anyway, regardless of my consent, you are not a wrongdoer.

Same with rights to land. If you enter my land without permission you

are

a wrongdoer. If I say "it is ok, you can come on", I have waived my

right

with respect to you, and you commit no wrong. We sometimes put this in

Latin: volenti non fit injuria. Again, I can withdraw my consent, my

(property) right has not been lost. Again, clearly this is nothing to do

with contractual variation, estoppel, electing between different rights

or

remedies, or renouncing my rights.

It is the same in contract. So, if you contract to deliver grain to me

on

1 April, and I subsequently say it is fine if you deliver on 2nd, if you

then deliver on 2nd I cannot claim damages. You commit no wrong because

I

consented to the late delivery, I waived my right to delivery on 1st.

In contract the effect is not just that no wrong is committed, but it

also

means that the seller can claim the price even if punctual deliver on

1st

was a condition precedent to the price being earned under the contract's

terms.

This is nothing to do with estoppel, promissory or otherwise. It is

irrelevant whether the seller could or would have delivered on 1st, just

as it is irrelevant in the case of the kiss that the snog would have

been

applied anyway. It is not variation, there is no consideration. The

right

has not been 'renounced', if before delivery is to take place the buyer

withdraws his consent and insists that he does require delivery on 1st

he

can do so, just as before the kiss occurs consent can be withdrawn.

So why, in this case, were the statements that it didn't matter whether

the payments were punctual or not, not a waiver in this sense? I think

the

answer is at [78]

"The dispensation which the Borrower said he sought, and to which the

Lender or Indemnifier was alleged to have acceded, was dispensation from

the consequences of the Borrower's past performance under the loan

agreements, not dispensation from a future mode of performance."

In that situation waiver (in the sense above) does not assist. If I

agree

with you that you'll deliver goods to me on 1st April, if you deliver

late

you commit a breach. You will be in default even if I subsequently say

that I don't mind.

Robert Stevens

> Dear Colleagues;

> The High Court of Australia seems to reserve the time just before

> Christmas for extensive discussion of contract doctrine (in fact now

that

> I check it was almost precisely a year ago that Koompahtoowas released

> discussing the doctrine of "essential conditions" etc.) Now in

> Agricultural and Rural Finance Pty Limited v Gardiner[2008] HCA 57 (11

> December

2008)http://www.austlii.edu.au/au/cases/cth/HCA/2008/57.htmlwe

> have a detailed discussion of the doctrine of "waiver" (or whether

there

> is a unified doctrine by that name) in contract law. Briefly, a

borrower

> had failed to pay some instalments of a loan on time. The contract

imposed

> penalties for failure to pay "punctually"; it also made a third party

> company liable to "indemnify" against default but again only if

payments

> were made "punctually". Some oral representations were allegedly made

by

> officers of the lender that late payment would be accepted, but later

the

> defaults were sued upon. The question was whether there had been a

> "waiver" of rights that entitled the borrower to some relief. All 5

> members of the HC said not; but Kirby J was much more prepared to

allow a

> generalised doctrine of waiver which led to "unfairness", whereas the

> majority judgement of Gummow, Hayne and Kiefel JJ rejected an

overarching

> category of this sort, analysing in detail other categories such as

> election, forbearance and abandonment.

> I will leave it to others who know more about such things to comment

on

> the merits of the decision. I do note, however, that it has

interesting

> connections with the Williams v Roffey Bros debate that has raged

> recently- see paras [95]-[96] where one of the overall reasons for

denying

> a doctrine of "waiver" is that it would undermine the doctrine of

> consideration.

>  Two incidental things caught my attention. One is that this may well

be

> one of Kirby J's last judgements on the court- he has previously

> informally indicated he might stand down at the end of this year

rather

> than in (I think) March next year as he is constitutionally required

to,

> and I have noticed he has not been participating in a number of cases

> recently (in particular he did not sit on the hearing of the appeal in

> Stuart & Anor v Kirkland-Veenstra & Anor [2008] HCATrans 397 (3

December

> 2008) which I would otherwise have expected him to be interested in-

that

> case will probably resolve a number of issues to do with liability of

> police for "negligent investigation" etc.) A similar debate could no

> doubt be held as to the overall merits of his Honour's service on the

HC

> as was recently held here in relation to Lord Denning, and I suspect

the

> proponents would on the whole be on similar sides. But we may need a

> decade or so to get a feel for the real impact of his Honour's many

> dissents. I simply say that in my view he is no doubt one of

Australia's

> (and the common law world's) great judges and I will miss not being

able

> to refer students to one of his recent judgements in whatever area as

a

> well-written and clear exposition of the law.

> The second thing I note is that Kirby J has done us all a favour by

using

> a word with which I was completely unfamiliar in para [137], where he

> says:

> "Some may not be curious as to the shared foundations of "waiver" by

> "election", "forbearance" or "renunciation". Mumpsimus is never a

stranger

> to lawyers."

> As for me, I freely confess I had no idea what this meant!! But the

online

> OED gives a fascinating overview of the word, the primary meaning of

which

> seems to be "A person who obstinately adheres to old ways in spite of

> clear evidence that they are wrong; an ignorant and bigoted opponent

of

> reform". Now, who can that be aimed at....? Clearly the editors of OED

> need to include this use of the word here in their next edition,

though I

> notice that the meaning here may be moving slightly from referring to

the

> actual "grumpy old conservative" to "the state of refusing to move

with

> the times" or something of the sort.

> Merry Christmas to all!

> Neil F

>

>

>

>

>

>

> Neil Foster

> Senior Lecturer, LLB Program Convenor

> Newcastle Law School

> Faculty of Business & Law

> MC158, McMullin Building

> University of Newcastle

> Callaghan NSW 2308

> AUSTRALIA

> ph 02 4921 7430

> fax 02 4921 6931

>

--

Robert Stevens

Professor of Commercial Law

University College London