Legal Definitions - waiver of claims and defenses

Waiver of claims and defenses refers to the intentional giving up of the right to assert any claims or defenses against an assignee by the maker, drawer, or other obligor under a contract. This is usually done in a contractual clause.

1. A borrower takes out a loan from a bank and signs a contract that includes a waiver of claims and defenses clause. The borrower later defaults on the loan and the bank assigns the debt to a collection agency. The borrower cannot assert any claims or defenses against the collection agency because of the waiver clause.

2. A company sells its accounts receivable to a factoring company and includes a waiver of claims and defenses clause in the contract. If any of the customers whose accounts were sold dispute the payment, they cannot assert any claims or defenses against the factoring company because of the waiver clause.

These examples illustrate how a waiver of claims and defenses clause can protect the assignee from any claims or defenses that the obligor may have against the assignor. It is important to read and understand the terms of a contract before signing it, especially if it includes a waiver clause.