Thursday, July 26, 2018
It's the time of year when I start thinking about the fact that I should be thinking about my fall classes, and right on cue, here's a case out of the Seventh Circuit, Knopick v. Jayco, Inc., No. 17-2285, that's thoughtful about how waiver works and the policy underlying it. (You can listen to the oral argument here.)
The waiver portion of the case (there was also a jurisdictional issue) involved a warranty that stated it did not apply to RVs purchased by LLCs. The RV in question was purchased by an LLC. Therefore, under the unambiguous language of the warranty, the RV was not covered. However, Knopick argued that Jayco waived this exclusionary language of the warranty when it voluntarily performed some repairs to the RV as if the warranty applied. The warranty, though, had an additional clause stating that such "good will" repairs would not alter the exclusionary language of the warranty.
Even without that language, the court was skeptical that waiver could be used to achieve what Knopick wanted here. The court noted that waiver is ordinarily used as a "shield" to excuse non-performance. It's used so that a party cannot be "lulled" into a belief that its compliance is sufficient to fulfill a contractual obligation only to be surprised by a lawsuit for inadequate compliance later. Knopick, the court said, was trying to use waiver as a "sword." Rather than protecting himself, he wished to use it to compel performance by Jayco. The court, wary of expanding waiver because of how greatly it would damage the predictability of contracts, stated that it was unwilling to use the doctrine of waiver to compel Jayco, as such an action would have the effect of discouraging parties from "good faith" actions such as that undertaken by Jayco for fear of opening themselves up to expanded liability.
h/t to Timothy Murray of Murray, Hogue & Lannis for passing this one along!