By Jordan Heath, Associate, Jones Walker
September 10, 2025

This article discusses instances where parties’ actions during the life of a contract can influence a court’s future interpretation of the contract’s terms, or, in some cases, even waive a contract term. While this article doesn’t examine every situation where this might occur, it highlights two different situations that general contractors need to be aware of.

First, this article explains the idea of “course of performance.” If litigation arises and a contract provision is subject to multiple interpretations, then the parties’ actions during the life of the contract can be used to interpret the provision. This can lead to unexpected outcomes or different results for one (or both) of the parties to the dispute.

Second, even if a specific contract provision is unambiguous, there are times when a party’s actions can act as a waiver of that provision. This waiver can effectively overturn the contract provision and its application.

This article briefly examines both scenarios and outlines strategies that general contractors can employ to safeguard against unintentionally influencing a court’s interpretation of an ambiguous term or inadvertently waiving a contract term through their actions during a project.

Again, this article does not cover every nuance or conceivable scenario. But understanding that your actions during a project can impact how contract terms are interpreted or enforced is important because, as many general contractors understand, not all projects reach final completion without disputes about the contract terms.

Background Law

As a general contractor, you’ve probably heard: “What’s the contract say?” This is for good reason. The contract language is often the best place to start when executing a project or addressing a specific problem.

Most courts recognize the fundamental notion that where a contract’s terms are clear and unambiguous, “courts should not rewrite, modify, or limit its effect[.]”[1] Therefore, the starting point for most contract disputes is the contract’s terms. Generally speaking, courts will look to the terms of the contract to determine the obligations of the parties and seek to enforce the plain meaning of the contract’s terms.

But that is not always the case. As discussed below, a party’s actions during the life of a contract can sometimes impact how a court will interpret an ambiguous term or even serve to waive an unambiguous term.

Course of Performance

Where the contract’s terms are vague, or subject to multiple interpretations, a court may look to how the parties acted in accordance with that term. This is because courts presume that “parties to an agreement know best what they meant” when negotiating and executing the terms of the contract.[2] But to do so, many states require that a contract’s terms be “reasonably subject to more than one interpretation” for a course of performance argument to be viable.[3]

Further, some states have statutes that specifically define course of performance. While these statutes often arise in the context of the Uniform Commercial Code (a topic for discussion in a separate article), which is not applicable to all construction contracts, they are still informative. The UCC typically applies to contracts for the sale of goods. But there are many exceptions (again, a topic for another day). Some construction contracts may be governed by the UCC. As such, it is important to understand your state’s law on this issue. States also differ in their application of a course of performance argument in a non-UCC governed case. For example, the Court of Appeals of Washington has used a course of performance analysis in interpreting the meaning of a contract’s terms in a non-UCC-governed case.[4] Again, this is an area in which it is important to talk to your attorney about how your state handles these issues, but know that some states have statutes that may impact course of performance issues.

For example, Georgia’s version of the UCC defines course of performance as “a sequence of conduct between the parties to a particular transaction that exists if: (1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.”[5] Essentially, this means that where two parties repeatedly do something throughout the course of a contract and no party objects to that act, their actions can be used to explain the meaning of a certain term.

With that background, it can be said that generally, where a contract’s terms are vague and subject to multiple interpretations, parties’ actions during the course of the contract could potentially be used to interpret the meaning of the term. In other words, in some circumstances, actions can have direct consequences on contract terms.

Course of Performance Example

How does a course of performance issue come up on a project? Imagine a general contractor working on a multi-year project. Work is well underway. The contract calls for “good piping” to be used. Since day one, the general contractor has used brand X for piping. The owner knows this and does not raise any objection. The owner also knows that brand Y is technically a better pipe, but for the moment, everything is going well, and the owner does not take issue with the general contractor using brand X. The general contractor thinks there is no issue because the owner knows the general contractor has been using brand X but does not say anything.

Eventually, disputes arise regarding the general contractor’s work and a lawsuit is filed. The owner argues that the general contractor has allegedly breached the contract since day one by not providing “good piping” in accordance with the contract.

The contract required “good piping.” What if evidence could show that brand Y is better than brand X? In comes the lawyer’s favorite phrase: “It depends.”

Assuming the term “good piping” is not defined in the contract, a court could find that the term “good piping” is ambiguous and subject to multiple interpretations. As such, a court could potentially look to the parties’ actions to interpret what they intended “good piping” to mean. If so, the general contractor here may have a viable argument that the owner accepted brand X pipes through a course of performance. As such, the general contractor did not breach the contract, as determined by the parties’ course of conduct.

Waiver of Unambiguous Terms

Even when the contract’s terms are clear and unambiguous, in some states, a party can waive its right to enforce a term through its actions. In states that recognize this doctrine, the standard to prove a waiver by conduct is typically a high one. For example, under New York law “the defense of waiver requires a clear manifestation of an intent by plaintiff to relinquish her known right.”[6]

Further, “mere silence, oversight, or thoughtlessness in failing to object to a breach of the contract will not support a finding of waiver.”[7] Most states require evidence that “the contracting party was intentionally and voluntarily relinquishing its right” to enforce the term of the contract.[8] Importantly, some courts hold that where a party has waived a specific term of a contract, that in and of itself does not mean that it has waived all of the contract’s terms.[9]

To avoid inadvertently waiving a contractual term, it is important to know what your contract requires, as well as your state’s law. There are situations during a project that could lead to a contractor waiving its right to enforce a contractual term through its actions and performance.

Example of Waiver by Conduct

One example of where a contractor needs to be careful not to inadvertently waive its right to enforce a contract term is payment deadlines. Imagine a general contractor and owner have a payment provision that requires progress payments to be made 30 days after the general contactor submits invoices. But over the course of the contract, the owner has consistently paid the general contractor 50 days after the general contractor submits invoices for payment. If the owner and general contractor have done this for multiple payments and the general contractor has not acknowledged the late payments and raised an issue, the general contractor could risk inadvertently waiving its right to enforce the 30-day payment deadline. Again, the court would look to the parties’ actions during performance (and generally apply the applicable law in analyzing that performance). 

Protecting Yourself

Contractors need to be aware of how their actions in the field, often done with good intentions (and we all know what road is paved with good intentions) to “make the job go smoothly,” can risk waiving or altering some of their rights. Although it may seem like a good idea in the moment, especially in a fast-paced job, parties need to be cognizant that not requiring strict adherence to the terms of the contract may come back to hurt them in the long run.

Some ways to protect yourself from inadvertently altering how a court will interpret the terms of your contract or even potentially waiving a contract term include:

  • Understand your contract
    • It is important to understand what your contract requires. Without knowing specifically what the contract says, you may be acting in a way contrary to the terms without even knowing it. This also means ensuring the requirements of the contract are clear. Remember, in many states a contract must be “reasonably subject to more than one interpretation” for a course of performance argument to come into play. If you were not involved in the negotiation of the contract, as soon as you are involved in a project, get your hands on the contract and review it. This will help guide your actions on the project.
  • Follow the contract
    • Now that you understand the contract, follow the contract. As discussed previously, this can sometimes be easier said than done. We all understand that sometimes there is an incentive to “go with the flow” when a project is going well. But when things are not going well, and a dispute ends up in litigation, close adherence with your contract terms can be helpful. There is a lot of time and thought (hopefully) that goes into drafting a contract’s terms. Do not potentially waste that by inadvertently waiving or altering those terms.
  • Anti-waiver provisions
    • An anti-waiver provision essentially says, “if a party fails to require strict adherence with a contract term, the party does not waive its right to enforce the term as written at a later time.” This can certainly be helpful. But note that some states recognize that even anti-waiver provisions themselves can be waived.[10] These are complicated provisions, and this article does not cover every aspect of this issue. As always, it is important to consult your attorney for guidance.

Conclusion

General contractors should remain mindful about how their actions during a project can influence the interpretation or enforcement of contract terms. This article is not a complete survey of the concepts of course of performance and waiver by conduct, but it does highlight some of the potential issues that can arise in relation to contract terms and your actions on a project. To navigate these challenges effectively, it is important to know the law applicable to your specific contract and to talk with your attorney.

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The views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.

[1] Midwest Med. Solutions, LLC v. Exactech U.S., Inc., 21 F.4th 1002, 1005 (4th Cir. 2021).

[2] Reed & Reed, Inc. v. Weeks Marine, Inc., 431 F.3d 384, 388 (1st. Cir. 2005).

[3] Journey Acquisition-II, L.P. v. EQT Prod. Co., 830 F.3d 444, 457 (6th Cir. 2016).

[4] See Spradlin Rock Prods., Inc. v. Pub. Util. Dist. No. 1 of Grays Harbor County, 266 P.3d 229, 237 (Wash. App. 2011) (explaining that although construction contracts are generally not governed by the Uniform Commercial Code, a party’s “course of performance may be relevant in interpreting the meaning of an agreement.”).

[5] O.C.G.A. § 11-1-303.

[6] Beth Isr. Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573, 585 (2d Cir. 2006).

[7] Id.

[8] United Wholesale Mortg., LLC v. America’s Moneyline, Inc., 2025 U.S. Dist. LEXIS 125087, at *23 (E.D. Mich. 2025).

[9] See Matthews v. Newrez, LLC, 2025 U.S. Dist. LEXIS 110676, at *14 (D. Or. 2025) (explaining that “failing to object to conduct that does not comply with some contract terms does not equate to a waiver or all of the contract’s terms.”).

[10] See AL-IN Partners, LLC v. LifeVantage Corp., 496 P.3d 76, 81 (Utah 2021) (explaining that “even an antiwaiver provision is subject to waiver” when a party establishes a waiver of “both the underlying provision and the antiwaiver provision.”).