Can antiwaiver provisions be overcome by conduct in Utah contracts? Mounteer Enterprises v. HOA for the Colony Explained

The Utah Supreme Court’s decision in Mounteer Enterprises v. HOA for the Colony provides crucial guidance for practitioners handling contract disputes involving antiwaiver provisions. This case clarifies the heightened burden parties face when attempting to prove waiver in contracts containing such protective clauses.

Background and Facts

HOA for the Colony contracted with Mounteer Enterprises for snow removal services, requiring Mounteer to maintain $7 million in aggregate liability insurance. The contract included an antiwaiver provision stating that HOA’s failure to notice insurance deficiencies would not constitute waiver of the insurance requirement. For years, Mounteer provided only $5 million coverage while HOA accepted the deficient certificates and made payments. When HOA later terminated the contract for insufficient insurance, Mounteer claimed HOA had waived the insurance requirement through its conduct.

Key Legal Issues

The court addressed whether a party can waive an antiwaiver provision through conduct alone, and if so, what standard applies. The case also resolved a circuit split regarding whether prejudice is an element of waiver in Utah.

Court’s Analysis and Holding

The Utah Supreme Court held that waiver of an antiwaiver provision requires clear intent to waive both the underlying provision and the antiwaiver clause itself. Mere failure to enforce a contract term cannot establish such waiver because this conduct is entirely consistent with the flexibility that antiwaiver provisions are designed to preserve. The court distinguished cases involving affirmative disavowal of contractual rights, noting that passive non-enforcement differs fundamentally from active conduct inconsistent with contractual obligations.

Additionally, the court definitively resolved that prejudice is not an element of waiver, clarifying inconsistent precedent and aligning Utah law with the majority approach.

Practice Implications

This decision strengthens the enforceability of antiwaiver clauses in Utah contracts. Practitioners should understand that proving waiver against such provisions requires evidence of intentional relinquishment beyond mere non-enforcement. When drafting contracts, antiwaiver provisions provide meaningful protection for parties who want flexibility in enforcement without losing their ultimate contractual rights.