Waiver of condition

Buyers enjoyed a common law right to waive performance of a condition existing for their exclusive benefit.  However, their notice of waiver was served too late.

In Irwin v Wilson and Others, the Wilsons contracted to purchase a residential flat. Title to the flat was defective as the wrong lease plan had been used on the grant of the lease: the plans for this and the neighbouring flat had been accidently swapped, with the wrong plans having been registered at the Land Registry. The sale contract was accordingly conditional upon the title defects being corrected. The Completion date was, pursuant to Clause 25.1, set for 14 days after the seller's solicitor had served upon the buyer's solicitor documentation showing that the plans had been corrected at the Land Registry. By Clause 25.2, if the seller, having used all reasonable endeavours, was unable to provide all of this documentation by 1 February 2010, either party could terminate the contract on the service of 5 working days' notice.

The seller, having used all reasonable endeavours, was unable to provide the documentation by the stipulated date and, on 1 February, served notice to terminate. As the notice was sent by fax, after 4.00pm, it was deemed served under the standard conditions of sale (4th edition) on the next working day, and its expiry date was therefore Tuesday 9 February. On 8 February, the buyer's solicitor wrote to the seller's solicitor, by fax, again timed after 4.00pm, and therefore deemed delivered on the next working day but served before the expiry of the seller's termination notice purporting to waive the benefit of Clause 25.1 (waiving, in particular, the requirement from the seller's solicitor to produce the various correcting documents), and to require completion without its performance. The questions for the court were:

1. Was Clause 25.1 a condition existing exclusively for the benefit of the buyers, and therefore capable of waiver by them?
2. If so, could the waiver parts of Clause 25.1 safely be severed from the rest of the clause, which dealt with the timing of the completion?
3. Did the presence of a right for either party, especially for the seller, to terminate the agreement in the event of non-performance under Clause 25.1 prevent waiver?
4. Could a notice of waiver be given after the seller had served notice to terminate?  

What did the court decide?

The High Court sided with the buyers on issues (1), (2) and (3) but found against them on issue (4) which resulted in their losing the case. The clause requiring the production of the correcting documents was a condition existing exclusively for the benefit of the buyers. Once waived, completion would simply take place within 14 days of waiver. The right for the seller to terminate upon non-performance did not prevent the buyer's waiver of performance. However, once the seller had served notice to terminate, as in the case of Akzo Noble UK Limited v Arista Tubes Limited [2010] EWCA 28, the notice brought about an unconditional and irreversible termination of the agreement. Thereafter, waiver was not possible.

Practical points

Even if a contract does not contain an express right of waiver, a party may nevertheless waive performance of a condition; however, only if the condition in question is for his exclusive benefit. In this case, the aspects of Clause 25.1 in respect of which the buyers wished to exercise a waiver related to issues of title, so the Judge felt that there could be no doubt that the condition existed for their exclusive benefit. Although the agreement included a right for the seller to terminate if Clause 25.1 had not been performed, that did not prevent the buyers from waiving performance in the first place. However, their notice of waiver was simply served too late.

Naomi Cunningham is a solicitor in the Michelmores Property Litigation Team. For further information on the issues raised in this article, please contact Naomi at naomi.cunningham@michelmores.com