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.
In a number of jurisdictions, the courts have held that if the party who is not in default has intended to renounce his right of action for damages, and if he has made such intention clear, either by his words or by his conduct, full effect will be given to such intention although there may be neither consideration, as the term is ordinarily understood, nor estoppel in the ordinary sense of the term.1 The only consideration that seems to be presented in many of these cases is the performance, by the party who is in default, of a part of the contractual obligation which he has undertaken; and, in most jurisdictions, such performance on his part does not amount to a consideration.2 In many of these cases, the party who is in default has done no further act in reliance upon the renunciation of the right of damages by the party who is not in default; and if effect is not given to such renunciation, the party who is in default will suffer disappointment of his expectations in being compelled to pay damages which have been caused by his breach of contract Nevertheless, as has been indicated, a number of jurisdictions seem to give effect to renunciation in cases of this sort.3 The acceptance of goods,4 or paying for them, either in money or by giving a note and the like,5 has been held to amount to a waiver of a right of action for damages for breach of warranty, if such was the intention of the buyer. The fact that the buyer has paid the greater part of the purchase price and has given a note for the small balance remaining, has been held to waive a right of action for damages.6 Whether a purchaser of machinery under a warranty has waived such warranty so as to render himself personally liable for parts of such machine which he has accepted to replace defective parts, has been held to be a question of fact where the evidence of such waiver consisted in the fact that the buyer had continued to make use of such machine, and where it was claimed that he had done so in reliance on the assurance of the seller that the defects were not serious and could be remedied easily.7 The act of the buyer in accepting goods is held to discharge a right of action which arises on an implied warranty,8 whether such warranty is implied from the description of the goods,9 or whether it is implied from a sale by sample.10 The act of the buyer in paying the purchase price, the seller to offer certain goods which the buyer was free to accept or reject at his election, this result could be justified, since neither party would be bound until the seller's offer, which would consist of tender of the goods, was accepted by the buyer's act in accepting them. The contract, in these cases, however, is of a very different nature. The buyer is bound to deliver goods of certain quality or make, and the seller is bound to accept goods of this sort if thus delivered. To say that the quality is a condition of performance, and not a covenant on the part of the seller, is a misuse of language; and this appears from the fact that the buyer who has rejected goods because of a breach of implied warranty, is finally free to recover the actual damages which he has suffered by reason of the failure of the seller to deliver goods in accordance with the terms of the contract. By a somewhat similar reasoning, it is sought to justify this result on the theory that the buyer, by accepting the goods, is "deemed to have assented that they correspond with the description, and is concluded from subsequently questioning it."13 This reasoning seems to assume that there is no valid obligation before the goods are tendered; and that the acceptance of the goods is rather the acceptance of an offer than the acceptance of performance of a prior valid contract. Even if the offer of goods must be regarded as implying a demand that the seller renounce his right of action for damages, and even if the seller assents to such an offer by accepting the goods, no consideration for such modification of his rights under the prior contract is suggested. It has been suggested, however, that a waiver of damages by the act of the buyer in retaining goods after he has discovered that they did not comply with the warranty, may in turn be waived by the act of the seller in failing to demand the return of the goods; and that in such case, the buyer may set off damages against the breach, although if the seller had demanded the goods, the buyer would have had to elect between returning the goods and renouncing his claim for damages.14 If the contract contains an express provision to the effect that the buyer must reject the goods or waive all claim for damages, full effect will be given to such provision.15 Taking possession of a building with intent to accept it, has been Raid to be a waiver of a claim for damages.16 While it is difficult to justify a result of this sort in the ordinary building contract, it can be justified where the acceptance of the building or other construction operates as a mutual waiver of rights arising out of the contract.17 If a power company has agreed with a railway company to build a wall and to make a fill behind the wall, as a part of an improvement which it contemplates, and subsequently the power company sublets to the railway company the contract for making the fill, the act of the railway company in accepting the entire work as full performance of its contract, prevents the power company from recovering from the railway company for its omission to fill in the quantity of earth.18 A waiver as to the time of performing a construction contract has been held to be a waiver of damages which have accrued down to the time of such waiver and during a reasonable time thereafter,19 leaving the contractor liable for failure to complete the contract within a reasonable time after such waiver.20 A contract of employment is held to be waived by accepting a smaller compensation than that provided for in the original contract.21 An employe who has a contract with a railroad company for employment for life, if able and willing to work at specified wages, and who has accepted employment for fifteen years at less wages, waives his right to recover the amount specified in the contract.22 If a water company has agreed to furnish "a wholesome, clear, potable water," and the water which it furnishes during one season is not in accordance with the terms of such contract, it is held that if the city has made use of such water it is bound to pay the full contract price therefor.23 If a railway has transported mail, knowing that the post office department intends to pay less than the amount fixed by statute, it can not recover the difference between the amount which the post office department has declared that it will pay, and the amount which the post office department is required by statute to pay,24