Title: QUALITY PRODUCTS & CONCEPTS COMPANY V NAGEL PRECISION INC

State: michigan

Issuer: Michigan Supreme Court

Document:

_____________________________________________________________________________________________ 
____________________________________________________________________________________________________________________________ 
___________________________________ 
Michigan Supreme Court
Lansing, Michigan 48909 
Chief Justice 
Justices 
Maura D. Corrigan 
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED JULY 31, 2003  
QUALITY PRODUCTS AND 
CONCEPTS COMPANY,  
Plaintiff-Appellee,  
v 
No. 119219  
NAGEL PRECISION, INC,  
Defendant-Appellant.  
BEFORE THE ENTIRE BENCH  
YOUNG, J.  
This case implicates fundamental principles of contract  
law. The primary issue presented concerns the circumstances  
under which a contract can be waived or modified, particularly  
where the contract protects itself against certain methods of  
waiver or modification. At the heart of this inquiry is how  
to 
resolve 
the 
tension 
between 
the 
freedom 
to  
contract—specifically, in this case, the freedom to enter into  
a contract concerning the same subject as the original  
contract—and the provisions of the original contract that  
restrict the manner in which the contract’s terms may be  
waived or modified.  
We hold that parties to a contract are free to mutually  
waive or modify their contract notwithstanding a written  
modification or anti-waiver clause because of the freedom to  
contract.  However, with or without restrictive amendment  
clauses, the principle of freedom to contract does not permit  
a party unilaterally to alter the original contract.  
Accordingly, mutuality is the centerpiece to waiving or  
modifying a contract, just as mutuality is the centerpiece to  
forming any contract.  
This 
mutuality 
requirement is satisfied where a waiver or  
modification is established through clear and convincing  
evidence of a written agreement, oral agreement, or  
affirmative 
conduct 
establishing 
mutual 
agreement 
to 
modify 
or  
waive the particular original contract. In cases where a  
party relies on a course of conduct to establish waiver or  
modification, the law of waiver directs our inquiry and the  
significance 
of 
written 
modification 
and 
anti-waiver  
provisions regarding the parties’ intent is increased.  
Plaintiff’s evidence establishes only that defendant  
remained silent despite being aware of plaintiff’s conduct  
inconsistent with the terms of their contract. Mere knowing  
silence generally cannot constitute waiver. 
Therefore,  
2  
 
plaintiff 
has 
not 
submitted clear and convincing evidence that  
the parties mutually agreed to modify or waive their contract.  
Accordingly, we reverse the judgment of the Court of Appeals  
and reinstate the original judgment of the circuit court  
granting summary disposition to defendant.  
I. Background  
Plaintiff and defendant entered into a contract under  
which plaintiff was to serve as a sales representative for  
defendant.  Pursuant to the agreement, plaintiff would earn  
commissions on sales made to customers in plaintiff’s  
contractually designated sales territory.  The contract  
negotiated by the parties not only expressly defined  
plaintiff’s sales territory, but specifically excluded sales  
to “machine tool suppliers.”  The contract also included  
written modification and anti-waiver clauses.  
Despite these provisions, plaintiff solicited sales from  
Giddings & Lewis and Ex-Cell-O.  It is undisputed that  
Giddings & Lewis and Ex-Cell-O are machine tool suppliers and  
are therefore customers excluded from plaintiff’s sales  
territory under the contract.  
Consistent with the unambiguous terms of the contract,  
plaintiff was denied commissions on these sales.  Plaintiff  
sought to negotiate an amendment of the contract to include  
payment of commissions for sales to machine tool suppliers.  
However, plaintiff and defendant could not reach an agreement  
3  
 
to 
reconfigure 
plaintiff’s 
sales 
territory 
and 
grant 
plaintiff  
the right to sell products to machine tool suppliers.  As a  
result, the parties’ contractual relationship ended.  
Plaintiff filed suit seeking payment of commissions for  
its sales to Giddings & Lewis and Ex-Cell-O, alleging breach  
of “oral contract, implied/express contract/modification,  
quantum meruit, unjust enrichment.”  Defendant moved for  
summary disposition on the basis of the provisions of the  
written contract.  
The circuit court granted summary disposition to  
defendant, stating in pertinent part:  
For purposes of this motion the court must 
look at the facts in a light most favorable to 
plaintiff.  Therefore, the court will accept as 
true that defendant knew about plaintiff’s efforts 
to procure sales with the machine tool suppliers 
and that defendant never objected to plaintiff’s 
efforts.  
Plaintiff 
seeks 
quantum 
meruit 
relief, 
alleging that defendant impliedly consented to 
modify the written agreement and/or waived the 
requirement that modifications be in writing by 
failing to object to plaintiff’s actions or notify 
plaintiff that there would be no commission.  
Plaintiff relies on the case of Klas v Pearce  
Hardware & Furniture Co, 202 Mich 334, 339-340 
(1918), where the court held that defendant  
impliedly 
waived 
the 
requirement 
that 
a  
modification be in writing when he was benefitted 
by plaintiff’s services and was aware of and 
authorized changes or deviations to the written 
contract.  
The 
facts 
of 
the 
case 
at 
bar 
are  
distinguishable from the facts in Klas. When asked  
to put the request for extra work in writing as 
required by the written contract, the defendant in  
4  
 
 
 
Klas replied that “there was no necessity of going 
back to the contract on that point, that they were 
not children, they were willing to pay for any work 
they would order.” Id. at 336.  
In the case at bar, there is no evidence that 
defendant did anything to encourage or authorize 
plaintiff to seek sales outside of the express 
territory found in the written contract.  Plaintiff  
unilaterally attempted to modify the written sales 
agreement by soliciting sales from suppliers 
outside of the territory expressly defined in the 
agreement.
 Plaintiff alleges that defendant  
encouraged them to continue seeking the Giddings & 
Lewis and Ex-Cell-O sales, however, plaintiff has 
presented no evidence to support this allegation. 
While 
there 
is 
evidence 
that 
defendant 
had  
knowledge of plaintiff’s efforts, there is no 
evidence that defendant encouraged plaintiff or 
mutually consented to extend the sales agreement to 
machine tool suppliers. 
The mere fact that  
defendant knew of plaintiff’s activities and did 
not object to them is not enough to constitute a 
waiver of the written modification requirement. 
The court finds no question of fact for the jury to 
decide.  
The 
Court 
of 
Appeals reversed and remanded, holding that,  
although there was no evidence in the record that the parties  
expressly modified the written agreement, there were genuine  
issues of material fact regarding the issues of waiver and  
implied contract.1  The Court of Appeals relied on Klas v  
Pearce Hardware & Furniture Co, 202 Mich 334; 168 NW 425  
(1918), for the proposition that waiver of a written  
modification 
requirement may be implied where conduct, such as  
silence in the face of knowledge, misleads a party into  
1Unpublished opinion per curiam, issued March 21, 2000 
(Docket No. 207538).  
5  
reasonably believing that a contractual provision has been  
waived.  
In lieu of granting leave to appeal, this Court issued  
the following order:  
[T]hat part of the Court of Appeals March 21, 
2000, decision which held that a genuine fact issue 
exists regarding whether a contract may be implied 
in law is vacated.  MCR 7.302(F)(1). 
Such a  
contract cannot be recognized where, as here, the 
express contract covers the subject sales by 
providing that no commission would be paid for 
them.  The case is remanded to the Court of Appeals 
for reconsideration of the issue whether there  
exists a genuine fact dispute regarding whether 
defendant’s 
alleged 
silence 
in 
the 
face 
of  
plaintiff’s activity relative to the excluded  
machine tool suppliers constituted a waiver in 
light of the anti-waiver provision in the contract 
which purports to prevent modification of the 
written agreement. [463 Mich 935 (2000).]  
The Court of Appeals again reversed2 the circuit court’s  
grant of summary disposition and remanded to the circuit  
court, centering its analysis on the written modification  
clause.  The Court failed to take into consideration the anti­
waiver clause, contrary to the directions in our order.3  
We granted leave to appeal and directed the parties to  
include among the issues to be briefed  
2Unpublished opinion per curiam, issued April 24, 2001 
(Docket No. 207538).  
3Despite our explicit reference to the anti-waiver clause 
and our direction to the Court of Appeals to construe it, the 
panel failed to do so.  Instead, the panel acknowledged the 
reference to the anti-waiver clause in our remand order, but, 
nevertheless, and for reasons unspecified, assumed that this 
Court was referring to the written modification clause.  
6  
 
whether there exists a genuine dispute of fact  
about whether defendant’s alleged silence in the 
face of plaintiff’s activity relative to the  
excluded machine tool suppliers constituted a  
waiver in light of the anti-waiver provision in the 
contract, paragraph 11, which purports to prevent 
silent modification of the written agreement. . . . 
[467 Mich 895-896 (2002).]  
II. Standard of Review  
We review de novo lower court decisions on a motion for  
summary disposition. First Pub Corp v Parfet, 468 Mich 101,  
104; 658 NW2d 477 (2003).  In reviewing the motion, the  
pleadings, affidavits, depositions, admissions, and any other  
admissible evidence are viewed in the light most favorable to  
the nonmoving party. Radtke v Everett, 442 Mich 368, 374; 501  
NW2d 155 (1993).  The legal effect of a contractual clause is  
a question of law that is reviewed de novo. 
Bandit  
Industries, Inc v Hobbs Int’l, Inc (After Remand), 463 Mich  
504, 511; 620 NW2d 531 (2001).  
III. Discussion  
We granted leave to appeal to consider whether the Court  
of Appeals erred in concluding that a genuine issue of  
material fact exists concerning plaintiff’s allegation that  
defendant silently waived or modified contractual provisions.  
Plaintiff argues that defendant waived provisions of the  
contract by failing to object to plaintiff’s sales activity in  
the face of defendant’s knowledge of that activity.  
7  
 
 
 
A. Analytic Framework  
In order to decide this case, we must consider what  
circumstances 
may 
support 
amendment 
of 
a 
contract,  
particularly where the contract protects itself against  
certain methods of waiver or modification.  
At the heart of this inquiry is the freedom to contract.  
As this Court recently observed in Wilkie v Auto-Owners Ins  
Co, 469 Mich ___, ___; ___ NW2d ___ (2003):  
This approach, where judges . . . rewrite the 
contract . . . is contrary to the bedrock principle 
of American contract law that parties are free to 
contract as they see fit, and the courts are to 
enforce the agreement as written absent some highly 
unusual 
circumstance 
such 
as 
a 
contract 
in  
violation of law or public policy. This Court has  
recently discussed, and reinforced, its fidelity to 
this understanding of contract law in Terrien v  
Zwit, 467 Mich 56, 71; 648 NW2d 602 (2002).  The  
notion, that free men and women may reach  
agreements 
regarding 
their 
affairs 
without  
government interference and that courts will  
enforce 
those 
agreements, 
is 
ancient 
and  
irrefutable.
 It draws strength from common-law 
roots and can be seen in our fundamental charter, 
the United States Constitution, where government is 
forbidden from impairing the contracts of citizens, 
art I, § 10, cl 1.  Our own state constitutions  
over the years of statehood have similarly echoed 
this limitation on government power.  It is, in 
short, an unmistakable and ineradicable part of the 
legal fabric of our society.  Few have expressed 
the force of this venerable axiom better than the  
late Professor Arthur Corbin, of Yale Law School, 
who wrote on this topic in his definitive study of 
contract law, Corbin on Contracts, as follows:  
“One does not have ‘liberty of contract’ 
unless 
organized 
society 
both 
forbears 
and  
enforces, forbears to penalize him for making his  
8  
 
 
bargain and enforces it for him after it is made.” 
[15 Corbin, Contracts (Interim ed), ch 79, § 1376, 
p 17.]  
While the freedom to contract principle is served by  
requiring 
courts 
to 
enforce 
unambiguous 
contracts 
according 
to  
their terms, the freedom to contract also permits parties to  
enter into new contracts or modify their existing agreements.  
Thus, as in the present case, we are required to resolve the  
tension between the freedom to enter into a contract  
concerning the same subject matter as a previous contract and  
provisions in the previous contract restricting the manner in  
which original contractual terms may be modified or waived.  
Justice CAMPBELL wrote on this issue over a century ago  
when he stated:  
[T]he case seems to settle down to the simple 
question whether a person who has agreed that he 
will only contract by writing in a certain way, 
precludes himself from making a parol bargain to 
change it. The answer is manifest. A written  
bargain is of no higher legal degree than a parol 
one. Either may vary or discharge the other, and 
there can be no more force in an agreement in 
writing not to agree by parol, than in a parol 
agreement not to agree in writing. Every such  
agreement is ended by the new one which contradicts 
it. [Westchester Fire Ins Co v Earl, 33 Mich 143, 
153 (1876).]  
Echoing Justice CAMPBELL was this Court’s similar  
conclusion in Reid v Bradstreet Co, 256 Mich 282, 286; 239 NW  
509 (1931):  
It is well established that a written contract  
may be varied by a subsequent parol agreement 
unless forbidden by the statute of frauds; and that  
9  
this rule obtains though the parties to the  
original contract stipulate therein that it is not 
to be changed except by agreement in writing.  
In discussing the subject of varying written 
instruments by parol, Prof. Williston says:  
"Nor does it make any difference that the 
original written contract provided that it should 
not subsequently be varied except by writing.  This  
stipulation itself may be rescinded by parol and 
any oral variation of the writing which may be 
agreed upon and which is supported by sufficient 
consideration 
is 
by 
necessary 
implication 
a  
rescission to that extent." Williston, Contracts, § 
1828.  
The theory of the rule is that:  
“Whenever two men contract, no limitation 
self-imposed can destroy their power to contract 
again.” [Citation omitted.]  
Moreover, the next year, in Banwell v Risdon, 258 Mich  
274, 278-279; 241 NW 796 (1932), we held that contracting  
parties are at liberty to design their own guidelines for  
modification or waiver of the rights and duties established by  
the 
contract, 
but 
even despite such provisions, a modification  
or waiver can be established by clear and convincing evidence  
that the parties mutually agreed to a modification or waiver  
of the contract.  
Accordingly, it is well established in our law that  
contracts 
with 
written 
modification 
or 
anti-waiver 
clauses 
can  
be modified or waived notwithstanding their restrictive  
amendment clauses. This is because the parties possess, and  
never cease to possess, the freedom to contract even after the  
10  
  
 
  
original contract has been executed.  
However, the freedom to contract does not authorize a  
party to unilaterally alter an existing bilateral agreement.  
Rather, 
a 
party 
alleging waiver or modification must establish  
a mutual intention of the parties to waive or modify the  
original contract.  Banwell, supra. This principle follows  
from the contract formation requirement that is elementary to  
the exercise of one’s freedom to contract: mutual assent.  
Where mutual assent does not exist, a contract does not  
exist.  Accordingly, where there is no mutual agreement to  
enter into a new contract modifying a previous contract, there  
is no new contract and, thus, no modification.  Simply put,  
one cannot unilaterally modify a contract because by  
definition, a unilateral modification lacks mutuality.4  
The 
mutuality 
requirement 
is 
satisfied 
where 
a  
modification is established through clear and convincing  
evidence of a written agreement, oral agreement, or  
affirmative 
conduct 
establishing 
mutual 
agreement 
to 
waive 
the  
terms of the original contract.  In meeting this clear and  
convincing burden, a party advancing amendment must establish  
4We note that the understanding that an express bilateral 
agreement is not susceptible to unilateral modification is 
consistent with our remand order in this very case, where we 
held that an implied-in-law contract cannot contradict an 
express contract on the same subject. See also, e.g., Scholz  
v Montgomery Ward & Co, Inc, 437 Mich 83, 93; 468 NW2d 845 
(1991); In re De Haan’s Estate, 169 Mich 146, 149; 134 NW 983 
(1912).  
11  
  
 
that the parties mutually intended to modify the particular  
original 
contract, 
including 
its 
restrictive 
amendment 
clauses  
such as written modification or anti-waiver clauses.  
Upon proof of an express oral or written agreement, the  
mutuality requirement is clearly satisfied. This is because  
where the parties expressly modify their previous contract,  
rescission of the terms of the prior agreement is a necessary  
implication. 
Reid, supra.  By the clear expression of the  
parties, contradictory provisions in the prior agreement are  
waived.  
However, in situations where a party relies on a course  
of conduct to establish modification, mutual assent is less  
clear and thus the rescission, or waiver, of the original  
contract’s terms is not so evident.5
 As a result, where  
course of conduct is the alleged basis for modification, a  
waiver analysis is necessary.  
As we have stated in other contexts, a waiver is a  
voluntary and intentional abandonment of a known right.  
Roberts v Mecosta Co Hosp, 466 Mich 57, 64 n 4; 642 NW2d 663  
(2002);  People v Carines, 460 Mich 750, 762 n 7; 597 NW2d 130  
(1999). This waiver principle is analytically relevant to a  
case in which a course of conduct is asserted as a basis for  
5This potential ambiguity is, in part, why parties to a 
contract often include written modification and anti-waiver  
provisions; that is, to protect against unintended and 
unilateral modification or waiver.  
12  
amendment of an existing contract because it supports the  
mutuality requirement.  Stated otherwise, when a course of  
conduct establishes by clear and convincing evidence that a  
contracting party, relying on the terms of the prior contract,  
knowingly waived enforcement of those terms, the requirement  
of mutual agreement has been satisfied.  
Further, 
whereas 
an 
original 
contract’s 
written  
modification or anti-waiver clauses do not serve as barriers  
to subsequent modification by express mutual agreement, the  
significance of such clauses regarding the parties’ intent to  
amend is heightened where a party relies on a course of  
conduct to establish modification.  This is because such  
restrictive amendment clauses are an express mutual statement  
regarding the parties’ expectations regarding amendments.  
Accordingly, 
in 
assessing the intent of the parties where  
the intent to modify is not express, such restrictive  
amendment provisions are not necessarily dispositive, but are  
highly relevant in assessing a claim of amendment by course of  
conduct.  Any clear and convincing evidence of conduct must  
overcome not only the substantive portions of the previous  
contract allegedly amended, but also the parties’ express  
statements regarding their own ground rules for modification  
or waiver as reflected in any restrictive amendment clauses.  
B. Application  
With this analytical framework in hand, we now turn to  
13  
 
the present case.  
We begin by determining whether the parties’ written  
contract contemplates the factual circumstances alleged by  
plaintiff. In interpreting a contract, our obligation is to  
determine the intent of the contracting parties.  Sobczak v  
Kotwicki, 347 Mich 242, 249; 79 NW2d 471 (1956).  If the  
language of the contract is unambiguous, we construe and  
enforce the contract as written.  Farm Bureau Mut Ins Co of  
Michigan v Nikkel, 460 Mich 558, 570; 596 NW2d 915 (1999).  
Thus, an unambiguous contractual provision is reflective of  
the parties’ intent as a matter of law. Once discerned, the  
intent of the parties will be enforced unless it is contrary  
to public policy. Id.  
First, it is unambiguous in the contract at issue that  
plaintiff could not receive commissions for the disputed  
sales.  Plaintiff’s sales territory under the contract  
excludes “all House Accounts and: All [t]ransmission plants  
and other machine tool suppliers (turn key operations),” and  
plaintiff has conceded that Giddings & Lewis and Ex-Cell-O are  
excluded machine tool suppliers as contemplated by the  
contract.  
Second, the contract includes a written modification  
clause, located at ¶ 13(b), which provides:  
This Agreement may not be modified in any way 
without the written consent of the parties.  
14  
 
Plaintiff 
has 
not submitted any evidence that the parties  
agreed in writing to modify or waive any provisions of the  
contract.  The facts alleged clearly fall within the ambit of  
the written modification clause.  
Finally, included as ¶ 11 of the contract is the  
following anti-waiver provision:  
No delay, omission or failure of [defendant] 
to exercise any right or power under this Agreement 
or 
to 
insist 
upon 
strict 
compliance 
by 
Representative of any obligation hereunder, and no  
custom or practice of the parties at variance with 
the terms and provisions hereof shall constitute a  
waiver of [defendant’s] rights to demand exact 
compliance with the terms hereof; nor shall the 
same affect or impair the rights of [defendant] 
with respect to any subsequent default of the 
Representative of the same or different nature. 
[Emphasis added.]  
Viewing the facts most favorably to plaintiff, we must  
assume that defendant (1) knew that plaintiff was actively  
soliciting the business of Giddings & Lewis and Ex-Cell-O on  
behalf of defendant, (2) knew that plaintiff expected  
commissions on any resulting sales, and (3) failed to object  
to plaintiff’s solicitation of the excluded customers until  
after sales were completed. Accordingly, plaintiff’s proofs  
establish, at best, knowledge and silence on defendant’s part  
of plaintiff’s effort to enlarge plaintiff’s rights under the  
contract.  However, defendant’s knowing silence clearly falls  
within the excluded activity covered by the “delay, omission  
or failure” language of ¶ 11.  
15  
 
For these reasons, the parties’ written contract  
contemplates the circumstances alleged by plaintiff.  
Nevertheless, although the parties negotiated and  
consented to contractual terms that fully and precisely  
contemplate 
the 
factual 
circumstances 
alleged 
by 
plaintiff 
and  
explicitly provide the legal effect of those alleged  
circumstances, plaintiff asks this Court not to enforce those  
terms.  Viewing the alleged facts in a light most favorable to  
plaintiff, we decline to accommodate plaintiff’s request to  
not enforce the contract.  
Following the analytical framework set forth above,  
plaintiff must present clear and convincing evidence of  
conduct that overcomes not only the substantive portions of  
the 
previous 
contract allegedly amended, but also the parties’  
express statements regarding their own ground rules for  
modification or waiver as reflected in restrictive amendment  
clauses.  Accordingly, plaintiff must establish clear and  
convincing evidence of a mutual agreement to waive the sales­
territory and sales-commissions limitations as well as the  
written modification and anti-waiver clauses.  
Plaintiff’s proofs rest on the mere fact that defendant  
knew 
about 
plaintiff’s 
activity 
inconsistent 
with 
the 
contract  
and remained silent. Plaintiff has submitted no evidence of  
representations or affirmative conduct by defendant that it  
was intentionally and voluntarily relinquishing its right to  
16  
 
confine the parties’ relationship to the terms of the contract  
and thus demand strict adherence to the sales-commissions and  
sales-territory provisions in the contract.  Plaintiff has  
forwarded no evidence that defendant affirmatively accepted  
plaintiff’s sales activity that was inconsistent with the  
contract as a modification of the contract.  
Defendant’s mere silence, regardless whether defendant  
possessed knowledge of plaintiff’s sales activity outside the  
contract, 
does 
not 
here 
amount 
to 
an 
intentional  
relinquishment of the sales-territory and sales-commissions  
limitations in the contract or the contract’s restrictive  
amendment clauses, ¶ 13(b) and ¶ 11. Accordingly, plaintiff  
has failed to establish waiver of the original contract by any  
evidence, much less clear and convincing evidence.  
Plaintiff advances Klas as supportive of its position  
that knowing silence is sufficient to establish a waiver of a  
contractual provision.  The Court of Appeals agreed with this  
suggestion.  
However, as the circuit court concluded, Klas is clearly  
distinguishable. It was the defendant’s agent’s affirmative  
expressions of assent, not a course of mere knowing silence,  
that amounted to a waiver in Klas. When the Klas plaintiff  
informed the defendant that permission to do extra work was  
required to be in writing, the defendant’s agent orally  
responded that “there was no necessity of going back to the  
17  
 
 
 
  
 
contract on that point, that they were not children, they were  
willing to pay for any work they would order . . . .”  Id. at  
336.
 This is an affirmative representation that the  
contractual provisions were being waived. 
6  Thus, in Klas, the  
defendant’s 
affirmative 
expression 
was 
sufficient 
to 
establish  
a waiver.  
Nevertheless, the Klas Court proceeded to expound on  
“implied waivers.” 
Because the Klas defendant orally  
expressed its consent to waive the requirement for written  
approval of extra work, no discussion of implied waivers was  
necessary to the resolution of the case.  Accordingly, the  
Klas Court’s exposition on implied waivers not only mislabels  
the 
defendant’s 
express 
representations 
as 
implied 
conduct, 
it  
is obiter dictum.  
This is not to say that waiver requires an oral or  
written expression of amendment.  It is well settled that a  
course of affirmative conduct, particularly coupled with oral  
or written representations, can amount to waiver. Minkus v  
Sarge, 348 Mich 415, 421-422; 83 NW2d 310 (1957) (holding that  
an oral request and statement that the request was an “extra”  
6Further, Mr. Ransom Pearce, the individual who had 
actual 
authority 
to 
contract for defendant in Klas, testified, 
“I ordered Mr. Klas to do the extra work.”  Klas, supra at  
338. Defendant’s agent, Mr. Chester Pearce, also testified, 
“Whenever a change was made either at the suggestion of [the 
plaintiff] or at my suggestion, I talked it over with [Mr. 
Ransom Pearce] and we agreed to make the change, or not make 
it as the case may be.” Id. at 339.  
18  
  
to the contract, coupled with the fact that the disputed  
matters were “matters of frequent conversation” between the  
plaintiff and the defendant, was inconsistent with a claim  
that there was no waiver). However, we note that waiver and  
forfeiture are related, but distinct concepts.  Roberts,  
supra. 
While waiver requires an intentional and voluntary  
relinquishment of a known right, a forfeiture is the failure  
to assert a right in a timely fashion.  Id. at 69.  In the  
present case, plaintiff’s alleged facts amount only to  
forfeiture, which is insufficient to establish clear and  
convincing evidence of a mutual assent to modify or waive an  
express contract as a matter of law.  
Conclusion  
Simply put, the parties agreed to the terms of their  
written contract.  Nevertheless, plaintiff seeks to be  
rewarded for proceeding in direct contradiction to the  
contract and in the face of the contract’s written  
modification 
and 
anti-waiver provisions on no basis other than  
that defendant was aware of plaintiff’s activities.  There is  
no evidence that defendant affirmatively accepted plaintiff’s  
activities as a modification of the original contract.  
In order to find for plaintiff on the facts presented,  
this Court must refuse to give effect to the express agreement  
of the parties without clear and convincing evidence of  
subsequent bilateral consent to alter the existing bilateral  
19  
agreement.  In other words, this Court would have to allow  
plaintiff 
to 
unilaterally modify a bilateral agreement and, in  
addition, do so in the face of contractual terms that  
precisely prohibit unilateral modification on the basis of no  
more than the defendant’s knowing silence.  Our obligation to  
respect and enforce the parties’ unambiguous contract absent  
mutual assent to modify that contract precludes us from doing  
so.  
Accordingly, we hold that the circuit court correctly  
granted 
summary 
disposition 
for 
defendant 
because 
the 
parties’  
contract was not modified by waiver as a result of defendant’s  
silence in the face of knowledge of plaintiff’s solicitation  
activities.  The judgment of the Court of Appeals is reversed.  
Robert P. Young, Jr. 
Maura D. Corrigan 
Clifford W. Taylor 
Stephen J. Markman  
20  
___________________________________ 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
QUALITY PRODUCTS AND 
CONCEPTS COMPANY,  
Plaintiff-Appellee,  
No. 119219  
NAGEL PRECISION, INC,  
Defendant-Appellant.  
KELLY, J. (concurring in part and dissenting in part).  
We granted leave to appeal to consider whether a  course  
of conduct, if proven, could constitute a waiver of the  
written modification and antiwaiver clauses contained in the  
parties' contract.  I concur with the majority's holding that  
contractual 
terms 
may 
be 
waived, 
including 
written  
modification and antiwaiver clauses. I concur also with the  
majority's holding that contractual waiver may be shown by a  
course of conduct that constitutes clear and convincing  
evidence.  
I write in dissent because I believe that a contracting  
  
party should be permitted to show waiver of written  
modification and antiwaiver clauses through a course of  
conduct constituting estoppel.  The proofs would have to  
demonstrate that one party misled the other into the  
reasonable belief that he had waived certain conditions of  
their contract.  In addition it would have to be shown that  
the other party reasonably relied on the misleading behavior.  
As applied to this case, I would find that a question of fact  
exists whether defendant led plaintiff to believe that it had  
waived the portions of the parties' contract that (1)  
prevented plaintiff from recovering commissions for certain  
accounts, (2) required a  written modification of contract  
changes, and (3) required any waiver to be in writing.  A  
question of fact exists also concerning whether plaintiff  
relied on the alleged behavior. Accordingly, I would affirm  
the decision of the Court of Appeals that set aside the  
summary disposition for defendant.  
I. DEMONSTRATING WAIVER  
Both our case law and modern legal treatises recognize  
that parties may waive contract clauses by a course of conduct  
constituting estoppel.  Both contemplate that a course of  
conduct may consist of silence plus knowledge by one party and  
detrimental reliance by the other over time.  
Our Court first considered the proofs necessary to  
2  
 
establish a contractual waiver in Klas v Pearce Hardware &  
Furniture Co, 202 Mich 334; 168 NW 425 (1918).  We formulated  
the plaintiff's burden by quoting the following among several  
sources as authority:  
"Waiver is a matter of fact to be shown by the 
evidence.  It may be shown by express declarations, 
or by acts and declarations manifesting an intent 
and purpose not to claim the supposed advantage; or 
it may be shown by a course of acts and conduct, 
and in some cases will be implied therefrom.  It  
may also be shown by so neglecting and failing to 
act as to induce a belief that there is an  
intention or purpose to waive.  Proof of express 
words is not necessary, but the waiver may be shown  
by circumstances or by a course of acts and conduct  
which amounts to an estoppel." 
40 Cyc. p. 267. 
[Klas, supra at 339 (emphasis added).1]  
Modern legal treatises reflect Klas's view that silence  
with knowledge can form the basis of a contractual waiver by  
estoppel. American Jurisprudence 2d provides:  
1The majority characterizes as obiter dictum the Klas  
Court's inclusion of a course of conduct in the law of  
contractual waiver.  Ante at 20.  I believe this an incorrect  
reading of the opinion.  The plaintiff in Klas alleged waiver 
consisting of (1) certain oral representations by those 
working for the defendant, and (2) the defendant's course of 
conduct.
 The Court held that waiver may be shown either 
expressly or impliedly, without articulating which formed the 
basis of its decision.  Because we do not know on which basis  
the Klas Court made its decision, the statements or the course 
of conduct, we should not discard one holding in favor of the 
other.  The Klas Court apparently chose not to rank one over 
the other, in the belief that, given the facts of the case, a 
jury might find either or both.  Thus, Klas's discussion of  
implied waiver is not dictum.  At any rate, it is not 
essential for my analysis that Klas have precedential value. 
Rather, I cite it for the fact that this Court has recognized 
the validity of the test that I apply in this case.  
3  
 
[C]ontract provisions may be waived expressly 
or the waiver may be implied from the acts of the 
parties. . . . [O]ften [waiver] is sought to be 
proved by various species of acts and conduct 
permitting different inferences and not directly, 
unmistakably, or unequivocally establishing it, in 
which case it is a question for the jury.  An  
implied waiver exists when there is either an 
unexpressed intention to waive, which may be  
clearly inferred from the circumstances, or no such 
intention in fact to waive, but conduct which 
misleads one of the parties into a reasonable  
belief that a provision of the contract has been 
waived. [17A Am Jur 2d, Manner of waiver, in 
general, § 656, 663 (1991).]  
Williston provides:  
[S]ilence or inaction which is coupled with 
knowledge by the party charged with waiver that the 
contract’s terms have [not] been strictly met, and 
detrimental reliance by the other, for such a 
length of time as to manifest an intention to 
relinquish the known right, may result in a waiver 
of rights under the contract. [13 Williston, 
Contracts, Silence, Inaction or Forbearance, § 
39.35, p 653-654 (2000).]  
This Court should retain the waiver burden set forth in  
Klas and in modern legal treatises. The inquiry into whether  
a written contract provision has been waived should be  
directed to the parties' words and behavior that are alleged  
to demonstrate a revised agreement.  Accordingly, I would  
allow a court to find waiver on the basis of knowing silence,  
in accordance with the standard set forth in American  
Jurisprudence 2d:  
An implied waiver exists when there is either 
an unexpressed intention to waive, which may be 
clearly inferred from the circumstances, or no such  
intention in fact to waive, but conduct which  
4  
  
 
misleads one of the parties into a reasonable  
belief that a provision of the contract has been  
waived. [17A Am Jur 2d, Manner of waiver, in 
general, § 656, p 663 (1991) (emphasis added).]  
II. THE MAJORITY'S "HEIGHTENED" EVIDENTIARY REQUIREMENT  
The 
majority 
requires that the party charged with showing  
waiver of a written modification or antiwaiver clause meet a  
"heightened" standard of proof.  Ante at 14-15. This is a new  
notion in the law, concocted out of whole cloth.  Not only is  
it lacking in supporting precedent, it unnecessarily injects  
confusion into established law.  
What compels addition of this heightened standard of  
proof? Logically, if the parties had decided to amend their  
agreement, they intended to waive any provisions preventing  
them from doing so.  There should be no need for an additional  
showing of waiver merely because the contract contains a  
written modification or antiwaiver clause.  Moreover, the  
existing 
standard, 
clear 
and 
convincing 
evidence, 
already 
sets  
a high hurdle for the burdened party.  
It appears that the purpose of the "heightened" standard  
is to enhance the gatekeeping function of the judge,  
diminishing the role of the jury. Its addition renders more  
difficult the burden of a party arguing waiver of a written  
modification 
or 
antiwaiver 
clause 
to 
survive 
summary  
disposition and reach a jury.  The effect is to signal a  
distrust of any jury's willingness or ability to apply the  
5  
  
established standard faithfully.  
III. THE DEMONSTRATION OF WAIVER IN THIS CASE  
In this case, I would find that a question of fact exists  
about whether a waiver occurred.2  Because we are reviewing a  
summary disposition ruling, we judge the evidence in the light  
most favorable to the nonmoving party, plaintiff.  Maiden v  
Rozwood, 461 Mich 109; 597 NW2d 817 (1999).  Plaintiff alleges  
that it repeatedly reported to Rolf Bochsler, defendant's  
vice-president and chief operating officer, that it was  
soliciting business for defendant from companies that were  
excluded from its territory.  Defendant knew of plaintiff's  
efforts, was in a position to benefit financially from them,  
and repeatedly said nothing to deter plaintiff's efforts.  
Moreover, 
defendant 
accepted 
without 
hesitation 
the 
money 
from  
the sales negotiated by plaintiff to businesses excluded from  
its territory.  
While one instance of mere silence fails to evince the  
"course of acts and conduct" envisioned in Klas, this case  
involves more than a single instance of mere silence,  
defendant's 
arguments 
notwithstanding. 
 
Plaintiff 
alleges 
that  
it repeatedly informed defendant that it was pursuing  
2I dispute the majority's derogatory characterization of 
plaintiff as a party that seeks to have the Court "not enforce 
the contract." Ante at 18. Rather, plaintiff requests that 
the Court examine the contract and find that defendant waived  
certain portions of it.  
6  
  
extracontractual 
accounts 
prohibited 
by 
the 
parties' 
contract.  
Not only did defendant know of plaintiff's activities, it knew  
that they would inure to its financial benefit.  Defendant  
said nothing.  Plaintiff relied on defendant's repeated  
instances of silence and concluded the sales in question.  
Defendant took the proceeds, but refused to pay plaintiff its  
commissions.  This course of conduct, if proven, could satisfy  
the standard described in 17A Am Jur 2d, causing the contract  
language that prevented plaintiff from recovering the sales  
commissions to be treated as waived.  Accordingly, I would  
hold 
that 
defendant's alleged behavior created a fact question  
regarding waiver.  
IV. CONSTRUCTION OF THE ANTIWAIVER CLAUSE  
I disagree also with the majority's assumption that the  
antiwaiver clause applies in this case.  Under the parties'  
antiwaiver 
clause, 
defendant 
was 
entitled 
to 
"exact  
compliance" by plaintiff with the terms of the written  
agreement, even if it failed consistently to "insist upon  
strict compliance" by plaintiff.3  Plaintiff asserts that it  
3The antiwaiver clause states:  
No delay, omission or failure of [defendant] 
to exercise any right or power under this Agreement 
or 
to 
insist 
upon 
strict 
compliance 
by 
Representative of any obligation hereunder, and no 
custom or practice of the parties at variance with 
the terms and provisions hereof shall constitute a 
(continued...)  
7  
 
could show that defendant failed to insist on strict  
compliance by plaintiff; it allowed plaintiff to solicit  
accounts not available to it under the contract.  Defendant  
infers 
that, 
even 
if 
plaintiff's allegation is true, defendant  
was entitled to "exact compliance" by plaintiff.  The  
"compliance" would be, apparently, that plaintiff would  
refrain from claiming commissions from sales to these  
accounts.  The majority appears to agree with defendant and  
interprets this reasoning as an obvious application of the  
contract language as written.  
I quite disagree. 
The antiwaiver clause is not  
implicated under the facts of this case.  Therefore, waiver of  
it never becomes an issue.  The following hypothetical example  
illustrates how, I believe, the clause should be interpreted:  
Assume that the same contract exists as in the case before us.  
Plaintiff seeks to makes sales to company A, which is an  
excluded company under the parties' agreement.  Plaintiff  
notifies defendant of its activities and defendant is silent.  
Plaintiff relies on defendant's silence and tries, but is  
unable, to make the sale.  Then, plaintiff seeks to make sales  
3(...continued) 
waiver of [defendant's] rights to demand exact 
compliance with the terms hereof; nor shall the 
same affect or impair the rights of [defendant] 
with respect to any subsequent default of the 
Representative of the same or different nature.  
8  
 
to company B, another company excluded from plaintiff's  
territory. This time defendant objects, reminding plaintiff  
that company B is an excluded account for which plaintiff is  
not entitled to commissions.  Plaintiff makes the sale and  
claims the commission.  
Defendant is entitled to refuse to pay, even though it  
received the proceeds of the sale.  It was entitled to "strict  
compliance" by plaintiff regarding company B, even though it  
had failed to "insist upon strict compliance" by plaintiff  
regarding company A. Its prior “practice . . . at variance  
with the [contract's] terms . . . [did not] constitute a  
waiver of [defendant's] right to demand exact compliance with  
the terms of [of the contract.]" See n 3.  
However, if plaintiff had made the sale to company A,  
defendant 
could 
not 
have successfully relied on the antiwavier  
clause.
 When plaintiff attempted to sell to company A,  
defendant had no "prior practice" of waiving the no-sales-to­
excluded-accounts 
contract 
provision. 
Moreover, 
when  
contracting, plaintiff surely did not agree that defendant  
could waive plaintiff's compliance with one provision, then  
insist on plaintiff's compliance with another if plaintiff,  
thereby, worked without commission. To read the language as  
the majority does would mean that the parties contracted that  
one could cheat the other, something to which they surely did  
9  
not intend to agree.  
Therefore, 
properly 
construed, 
the 
antiwaiver 
clause 
does  
not apply to the facts of this case and whether it was waived  
is irrelevant.  
V. CONCLUSION  
I would hold that written modification and antiwaiver  
clauses in a contract may be waived by a course of conduct.  
This includes conduct that misleads one party into the  
reasonable belief that a waiver has occurred and on which the  
misled party relies, a form of estoppel.  In this case, a  
waiver may have taken place.  Plaintiff alleges that defendant  
exhibited repeated instances of silence when it was notified  
that plaintiff was pursuing sales opportunities forbidden by  
the contract and plaintiff relied on that conduct as a waiver.  
If proven, that could suffice to establish that defendant  
waived the parties’ antiwaiver and written modification  
contract provisions.  
The majority disagrees with this dissent on how  
defendant's course of conduct should be judged.  The heart of  
our disagreement concerns the role of the jury in deciding  
contractual waiver cases.  The effect of the majority decision  
is to authorize and encourage judges to decide close waiver  
questions, such as whether a defendant's alleged repeated  
instances of knowing silence constitute waiver.  I would allow  
10  
 
a jury to make this determination.  I have faith that juries  
can understand and apply the waiver burden correctly, and I  
would give them a chance to do so in this case.  Accordingly,  
I would affirm the decision of the Court of Appeals that set  
aside the summary disposition for defendant and remand the  
case to the trial court.  
Marilyn Kelly  
CAVANAGH, J.  
I concur in the result only.  
Michael F. Cavanagh  
11  
___________________________________ 
v 
S T A T E O F M I C H I G A N  
SUPREME COURT  
QUALITY PRODUCTS AND 
CONCEPTS COMPANY,  
Plaintiff-Appellee,  
No. 119219  
NAGEL PRECISION, INC,  
Defendant-Appellant.  
WEAVER, J. (concurring in part and dissenting in part).  
I concur with the majority and Justice KELLY that  
contractual 
terms 
may 
be 
waived, 
including 
written­
modification and antiwaiver clauses. I also concur that, in  
addition to the fact that contract terms may be waived by the  
parties’ written or oral agreement, waiver may be established  
by clear and convincing evidence of an intent to waive through  
the parties’ course of conduct.  
I disagree with the majority’s imposition of a  
“heightened” burden on a party who relies on a course of  
conduct to modify a contract that includes a written­
modification or antiwaiver clause.  Ante at 14-15.  The  
majority’s heightened standard is not necessary, because the  
existing law already requires that waiver by a course of  
conduct must be established by clear and convincing evidence.  
Moreover, the majority has failed to justify why the parties’  
mutual consent to contractual terms addressing waiver or  
modification methods deserves any greater weight than their  
mutual consent to any other term of the contract.  As noted by  
Justice 
KELLY, 
the 
apparent 
purpose 
of 
this 
heightened 
standard  
is to make it more difficult to establish that a question of  
fact exists regarding the intent to waive contract terms.  
I dissent separately also because I would hold that  
defendant’s course of conduct, as alleged by plaintiff,  
establishes a question of fact regarding whether defendant  
intended to waive the contract requirements, including the  
written-modification 
and 
antiwaiver 
clauses 
of 
the 
contract 
at  
issue.
 In light of defendant’s alleged knowledge of  
plaintiff’s 
contractually 
prohibited 
sales 
efforts,  
defendant’s silence as those efforts proceeded, as well as  
defendant’s acceptance of payment resulting from plaintiff’s  
efforts, I would allow a jury to determine whether defendant  
intended to waive the terms of the contract at issue.   
would, therefore, affirm the decision of the Court of Appeals  
that set aside the summary disposition for defendant.  
Elizabeth A. Weaver  
2  
I