By Bruce Jervis
Construction contracts are rife with waivers. Parties are asked to waive certain types of claims, damages or remedies. This leads to questions. Are these waivers effective? What does it take to make a waiver enforceable?
Waivers, which are similar to disclaimers, are viewed with skepticism and strictly construed against the party attempting to impose the waiver. If clear and unambiguous, however, they are frequently enforceable. It depends in part on how fundamental the waived right and how intentional the waiver. This was illustrated in a recent case in Montana.
A subcontract stated that the subcontractor -- and the sub alone -- waived the right to a jury trial in any claims or disputes arising under the subcontract. This unilateral waiver was troublesome, as the right to trial by jury in civil disputes is guaranteed under the U.S. Constitution. But that right can be waived if the waiver is knowing and voluntary.
A court ruled that this waiver had not been knowing and voluntary. It was buried in boilerplate language presented by the contractor to the subcontractor as non-negotiable, required of every sub that wanted to do business with the contractor. The waiver was not conspicuous or prominent and had not been discussed. The subcontractor was entitled to have its claim tried to a jury despite the waiver language.
Can it not be argued, however, that the subcontractor bore responsibility for carefully reviewing the terms and conditions and discovering the waiver? If one signs a contract in ignorance of its contents, should that party be relieved of the results? Does your organization have procedures in place to thoroughly review “standard” terms and conditions? Or, when seeking to impose a waiver, do you call the waiver to the attention of the other party? I welcome your comments.