Waiver
What it is:
A waiver is a party's voluntary renunciation of rights in a contractual arrangement.
How it works/Example:
When two parties enter into a contract, they often agree to forfeit some of their respective rights or claims. Either party may use a waiver -- expressed either in writing or through the performance of a specific deed -- to officially give up a privilege, right, or claim.
For example, one party might sign a waiver stating that he or she will not take legal action against the other party if there is some unintentional wrongdoing.
Why it matters:
It is important to remember that a party who signs a waiver is surrendering his or her right to pursue a course of action (file a lawsuit, receive compensation, etc). In most cases, a party will sign a waiver only if he or she receives a benefit in exchange for doing so.