Question

Sheila contracted her friend Susan to paint her house for $3,000. Sheila did this as a favor to Susan as Susan was unemployed. Before she could finish the job, however, Susan got a job at a marketing company, which meant that she could not complete her contract. As Susan is her friend, Sheila decided not to enforce the contract, and she let Susan keep the $1,000. This scenario is an example of a(n) ______.

Answer 1

Answer:

Sheila letting Susan keep $1,000 without holding her liable for not completing the job is an example of a WAIVER.

Explanation:

A waiver is a legal intention or demonstration of a party in a contract to voluntarily relinquish their rights or claims in a contract. This is done without holding the other party (especially when they default in meeting the terms of the contract) liable for damages.

The party that voluntarily relinquishes their rights will usually not pursue any legal action against the defaulting party.

Therefore the scenario above is an example of a waiver, since Sheila has decided not to enforce the contract and has also allowed Susan keep part of the money.