The Seventh Circuit provides a useful discussion of the limits of the waiver doctrine: As noted in another post, the buyer of an allegedly-defective recreational vehicle was unable to assert a warranty claim because he had arranged to take title in the name of an LLC that he controlled — and the contract’s limited warranty expressly excluded coverage in that situation. The buyer tried arguing that the manufacturer, by making efforts to fix the problems, had supposedly waived the coverage exclusion, but the Seventh Circuit was having none of it:
This supposed right of Jayco’s [to assert the warranty exclusion]—if it is a right at all—is not the kind readily subject to waiver; it gives Jayco no power to compel Knopick’s performance of a duty of any kind. The warranty exclusion instead clarifies that Knopick and his LLC have no right to compel Jayco’s performance of duties that could otherwise be enforced against it under the manufacturer’s warranty.
The exclusion clause serves as a defense, shielding Jayco from liability under the express warranty, based on Knopick’s (and perhaps the dealer’s) choice about how to handle the purchase and title of the RV. Knopick’s waiver argument would turn the warranty and the rule of waiver on its head by transforming waiver’s limited role as a shield (excusing non-performance) into a sword capable of compelling performance and creating new duties.
The effects of such a new rule would not be benign. Merchants and other contracting parties could not act as good business partners, going beyond their strict contractual duties, without fear of obliging themselves to perform new and broader duties, beyond the express terms of the contract.
The facts of this case illustrate the reasons for the rule. A seller that wants to do a good turn for a customer by undertaking $500 in repairs should be able to do so without putting itself on the hook for more than $50,000 in repairs. In business generally and in consumer markets, a contracting party’s willingness to go beyond her strictly enforceable legal obligations is a key commercial lubricant. It facilitates trust, long-term relationships, repeat customers, and referrals.
Attaching legal liability an order of magnitude or two beyond the cost of the “good-will” repairs, as Knopick would have us do, would discourage low-cost and amicable resolutions to minor commercial disputes.
Knopick v. Jayco, Inc., No. 17-2285, part II-B, slip op. at 8-9 (7th Cir. July 11, 2018 (emphasis and extra paragraphing added; footnote omitted). In the omitted footnote, the court pointed out that the disgruntled customer had not alleged estoppel as a basis for its suit:
This case does not involve the doctrine of equitable estoppel. Knopick has not argued, and nothing in the record suggests, that Jayco performed the good-will repairs to lull him into sleeping on his legal rights under a “lemon law” or other consumer protection law and then stopped repairing the vehicle after those rights expired.
Id., slip op. at 9 n.1.
I imagine I’ll be adding this case to my contract-drafting course materials.