This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If one of the parties to a contract has refused to perform under any circumstances, or if he has refused to perform and he has alleged a specific ground as the reason for such refusal, the question is occasionally presented whether such refusal operates as a waiver of a breach on the part of the adversary party which is not assigned as the reason for such refusal. This depends in part, in some jurisdictions at least, on the question whether by such refusal, whether absolute or qualified, the adversary party was induced to refrain from performing or tendering performance.
It is generally held that if one party refuses to perform, either absolutely or qualifiedly, such refusal prevents him from taking advantage of any breach by the adversary party which is committed in reliance upon such refusal and in the belief that further performance will be useless or unnecessary.1 A provision in an insurance policy which requires proof of loss to be submitted in a certain time is waived by the company's denial of liability under the policy,2 as on the ground of suicide.3 A policy on property in Porto Rico excepted loss during invasion or rebellion unless satisfactory proof was made that it was due to some cause other than such invasion or rebellion. The duty of producing such proof which rests upon the insured is waived by a notice given by the insurer, without demanding proof, that it will not pay the loss because due to one of the excepted causes.4 If one party to the contract refuses to accept performance of any kind under any circumstances, and thereby leads the adversary party to refrain from tendering performance, such refusal is said to waive such failure to perform.5 A variance between a lease contracted for, and the one offered, is waived by the lessee's refusal to accept any lease at all.6 If one of the parties refuses to perform and assigns as the ground therefor some alleged breach by the adversary party, or some other defense, it has been held that such refusal operates as a waiver of any subsequent breach by the adversary party which he has committed because he has believed that further performance would be useless in view of such refusal.7 If a purchaser of realty refuses to perform, and alleges some specific breach on the part of the vendor as the ground for such refusal, such refusal is held to waive all other objections which the vendor could have remedied.8 Under a contract of indemnity insurance, the refusal of the insurer to pay the claim or to defend the suit, on the ground that the liability is not within the terms of the contract, operates as a waiver of a clause which forbids the insured to compromise without the consent of the insurer.9 If a carrier refuses to deliver certain goods on the ground that they are not in his possession, such refusal operates as a waiver of the duty of the consignee to tender the freight.10
5 Panoutsos v. Raymond Hadley Corporation , 2 K. B. 473 [affirming (1917), 1 K. B. 767].
1 Plummer v. Kelly, 7 N. D. 88, 73 N. W. 70.
Method of weighing ore to determine royalty due under a mining lease. American Manganese Co. v. Manganese Co., 91 Va. 272. 21 S. E. 466.
2 Ryalla v. Moody, 102 Ala. 519, 15 Bo. 240.
3 Aultman v. Martin, 49 Neb. 103, 68 N. W. 340.
4 Clark v. Bache, 186 Pa. St. 343, 40 Atl. 484.
5 Millar v. Smith, 28 Tex. Civ. App. 386, 67 S. W. 429.
6 Kuhn v. McKay, 7 Wyom. 42, 49 Pac. 473, 51 Pac. 205.
7 Garvey v. Barkley, 56 Wash. 24, 104 Pac. 1108.
1 England. Bank of China. Japan and the Straits v. American Trading Co. , A C. 266.
United States. Royal Ins. Co v. Martin. 192 U. S. 140, 48 L 'ed 385; St. Louis Dressed Beef Co. v Maryland Casualty Co. 201 U. S 173, 50 L. ed. 712; Phenix Ins. Co. v Luce, 123 Fed 257.
Georgia. Cowdery v. Greenlee, 126 Ga. 786, 8 L R. A. (N S ) 137. 55 8. E. 918
Indiana. Adams Express Co. v. Harris, 120 Ind. 73. 16 Am. St. Rep. 315, 7 L. R A. 214, 21 N. E. 340; Millikan v. Hunter, 180 Ind. 140, 100 N. E. 1041.
Iowa. Condon v. Des Moines Mutual Hail Assn., 120 la. 80, 04 N. W. 477.
Massachusetts. Freeland v. Ritz, 154 Mass. 257, 26 Am. St. Rep. 244, 12 L. R. A. 561, 28 N. E. 226; Smith v. Greene, 107 Mass. 16, 83 N. E. 0; C. W. Hunt Co. v. Boston Elevated Ry. Co., 100 Mass. 220, 85 N..E. 446; Justice v. Soderlund, 225 Mass. 320, 114 N. E. 623.
Michigan Schwartz v. Woodruff, 132 Mich 513, 03 N W 1067
Missouri McDonald v Bankers* Life Association, 154 Mo. GIB, 55 S. \V. 999.
Mew Hampshire. Seely v Manhattan Life In* Co, 72 N. H 49, 55 Atl. 425
Vermont. Davis v. Bowers Granite Co., 75 Vt 286. 54 Atl 1084.
2 Phenix Ins. Co. v. Luce, 123 Fed. 257; Condon v. Hail Association, 120 Ia. 80, 04 N. W. 477; Seely v. Manhattan Life Ins. Co., 72 N. H. 40, 55 Atl 425.
3 McDonald v. Bankers' Life Association, 154 Mo. 618, 55 S. W. 999.
4 Royal Ins. Co v. Martin, 102 U. S. 149. 48 L. ed. 385.
5 Bank of China, Japan and the Straits v. American Trading Co. , A. C. 266; St. Louis Dressed Beef Co. v. Maryland Casualty Co., 201 U. S. 173, 50 L. ed. 712; Cowdery v. Greenlee, 126 Ga. 786, 8 L. R. A. (N.S.) 137, 55 S. E. 918; Davie v. Bowers Granite Co., 75 Vt. 286, 54 Atl. 1084.