(a) A claim or right arising out of a breach of contract may be discharged in whole or in part without consideration by a waiver contained in a record to which the party agrees, by manifesting assent or otherwise.

(bc) A party that accepts a performance knowing or with reason to know that the performance constitutes a breach of contract waives all remedies for the breach if the party fails within a reasonable time after acceptance to notify the other party of object to the breach.

(c) Except for in a failure to meet a contractual requirement that performance be to the satisfaction of a party, a party that refuses a performance and fails to state in connection with its refusal a particular defect that is ascertainable by reasonable inspection waives the right to rely on the unstated defect to justify refusal if:

(1) the other party could have cured the defect if stated seasonably; or

(2) between merchants, the other party after refusal made a request in a record for a full and final statement in a record of all defects on which the refusing party proposes to rely.

(d) Waiver of breach of contract in one performance does not waive the same or similar breach in future performances unless the party making the waiver expressly so states.

(e) A waiver may not be retracted as to the performance to which the waiver applies. However, except for a waiver in accordance with subsection (a) or a waiver supported by consideration, a waiver affecting an executory portion of a contract may be retracted by seasonable notice received by the other party that strict performance will be is required in the future of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver by the other party.

Committee Action: Considered several times without substantive changes.

1. General Rule. A "waiver" is "the voluntary relinquishment" of a right. Conduct and words may constitute a waiver by either the licensor or the licensee. This section brings together rules from various portions of Article 2 dealing with waiver issues and recasts those rules to fit the broader number and variety of types of performance that are involved in Article 2B transactions. The section also applies principles from the Restatement.

2. Waivers in a Record. Subsection (a) stems from 2A-107. Waivers contained in a record are contractual modifications which, under current law and this Article, are enforceable without consideration. The Restatement is consistent with this view. See Restatement (Second) 277 ("a written renunciation signed and delivered by the obligee discharges without consideration a duty arising out of a breach of contract."). Subsection (a) does not preclude other ways of making an effective waiver, but merely confirms that waivers that meet its provisions are effective. For example, an oral waiver, if effective under common law of a state, remains effective.

This subsection does not require delivery of the record. The requirement of delivery seems unimportant and is not required for modifications of a contract.

3. Waiver by Accepting a Performance. Subsection (b) and (c) deal with waivers by performance in the form of accepting the performance of the other party without objecting to known or ascertainable defects.

Subsection (b) applies to cases where the non-conformity was known and imposes a waiver rule where the known defect was accepted without objection and the other party is not notified of the breach within a reasonable time. This generalizes the rule in Section 2-607(3)(a). The waiver here is implied from the combination of knowledge of the problem and silence beyond a reasonable time after accepting the performance. The rule does not apply where the party merely knows that performance under the license is not consistent with the contract. The performance must have been tendered to and accepted by it. Compare Section 2B-612 -- (acceptance based on expectation that the defect will be cured). The following illustrates the rule:

Illustration: Licensee has an obligation to pay royalties to the Licensor based on 2% of the sale price of products licensed for its manufacture and distribution. The royalty payments must be received on the first of each month. A 5% late fee is imposed for delays of more than five days and the license provides that delay of more than five days is a material breach. In one month, the licensee does not tender payment until the 25^th day of the month and its tender does not include the late charge. Licensor may refuse the tender and cancel the contract. If it accepts the tender it knows of the breach and cannot thereafter cancel the contract for that breach. If it fails to object in a reasonable time to the late tender and the nonpayment of the late fee, it is also barred from recovering that amount.

4. Waiver by Failure to Particularize. Subsection (c) is a narrower rule than Subsection (b). In implies a waiver from a failure to particularize the basis for a refusal of a performance, but only in a limited number of circumstances. A failure to particularize is a waiver if the other party could have cured the problem had it known of the basis for refusal. Additionally, in the case of a contract between merchants, waiver occurs when the breaching party asks for a specification in writing of the reasons for refusal and a basis for that refusal is not listed among the given reasons. This generalizes the language of Section 2-605.

5. Executory and Waived Performances. Subsection (d) states a presumption consistent with common law that, unless the intent is express or the circumstances clearly indicate to the contrary, a waiver applies only to the specific performance defect waived. This principle does not, of course, alter estoppel concepts; a waiver by performance may create justifiable reliance as to future conduct in an appropriate case. Such common law principles continue to apply.

Subsection (e) comes from current UCC Article 2 setting out when waiver as to executory obligations can be retracted. On the treatment of waivers supported by consideration, see Restatement (Second) of Contracts 84, comment f.