CHAPTER 13.07. Waiver of Defenses

• Jurisdiction: United States

13.07. Waiver of Defenses

It is common for a guaranty to provide for the waiver of many, if not all, of the guarantor's defenses through broad waivers, waivers of a list of defenses, or a combination of the two approaches. There does not appear to be any Delaware authority particular to guaranties limiting the ability of a guarantor to waive its defenses by contract.⁹⁶ Further, it should be noted that the Delaware Supreme Court has upheld the entry of judgment against a guarantor pursuant to a warrant to confess judgment contained in a guaranty, which is a type of waiver.⁹⁷

Although there do not appear to be any cases in which a Delaware court has refused to enforce a waiver in a guaranty, there are instances in which Delaware cases recite fairly broad waivers either without negative comment or for narrower propositions, e.g., intent of the parties to enter into an absolute guaranty.⁹⁸ At minimum, there is authority that a guarantor can "waive . . . any defense . . . the principal may have regarding the enforcement of the obligation so long as the waiver is clear and unequivocal."⁹⁹ Moreover, it would seem to follow from the enforceability of confessions of judgment in guaranties that so-called "catch-all" waivers should be enforceable with respect to those defenses that may be waived, as the permissibility of the confession of judgment waiver would seem to vitiate any argument that use of a general waiver violates Delaware's public policy sufficient to set aside Delaware's strong policy in favor of the freedom to contract.¹⁰⁰

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Notes:

^[96] Cf. Pellaton v. Bank of N.Y., 592 A.2d 473, 477 (Del. 1991); Wilmington Trust Co. v. Keith, 2002 WL 1748622, at *4 (Del. Super. June 26, 2002); First Fed. Sav. Bank v. CPM Energy Systems Corp., 1991 WL 35689, at *2 (Del. Super. Mar. 12, 1991). But note that waivers of certain statutory rights are not permitted under Delaware law. For example, Section 9-602 of Article 9 of the Delaware U.C.C. provides that an obligor may not waive or vary the rules in certain sections of Article 9.

^[97] Pellaton, 592 A.2d at 477 (affirming the Delaware Superior Court's entry of judgments against a guarantor pursuant to warrants to confess judgment contained in two contracts of guaranty).

^[98] See, e.g., Addy v. Piedmonte, 2009 WL 707641, at *16 (Del. Ch. Mar. 18, 2009) (The guaranty at issue provided the guarantor's liability "shall not be affected by any circumstance other than . . . payment in full of the [underlying obligation]"...