Written agreements typically include the famous "Shifren" clause or non-variation clause whereby no variation or amendment is effective unless reduced to writing and signed by all parties. But does the clause or agreement also cater for how waivers should be dealt with?
In the case of Phoenix Salt Industries (Pty) Ltd v The Lubavitch Foundation of Southern Africa (330/2023) [2024] ZASCA 107 (03 July 2024), the SCA found that a non-variation clause in a loan agreement did not prevent an oral waiver from being effective. The case concerned a dispute regarding the effectiveness of an unwritten waiver of the repayment of a loan. The non-variation clause, no representation clause and indulgences clause in the loan agreement, did not provide that waivers must be in writing to be effective.
The SCA confirmed that a waiver and variation are two distinct doctrines in the law of contract to fulfil different purposes. A waiver is an abandonment or relinquishment of a right or privilege in a contract which is expressed through an explicit statement or conduct. A variation involves making changes to the terms of a contract, either through mutual agreement between the parties or through unilateral action by one party with the consent of the other party.
It is thus essential to ensure that the manner in which waivers can be effective, is provided for explicitly in agreements.
This content is provided for general information only and does not constitute legal or other professional advice. While we have taken reasonable steps to ensure it is accurate as of the date of publication, the legal position may be subject to change. Webber Wentzel accepts no liability or responsibility, to the extent allowed by law, if any information is, for any reason, incorrect or corrupted; or for any loss or damage that may arise from reliance on information in this document.
The application of legal principles depends on the specific facts and circumstances of each matter. For advice on your specific situation, please contact your usual Webber Wentzel contact.
