Does a contract become null and void if some or most of its terms were not followed by one (or both) of the parties?

Question

If two parties sign an agreement and one party can prove that the other party did not demand that the terms be enforced when it could have, can the other party argue that the entire contract is void and unenforceable because the parties never intended to enforce it in the first place or due to waiver?

For example, an employee was initially hired for a one year term at $50 an hour after which the employee transitioned to an at will employee. The employee continues working for the company for several years. After a few years the company renews the employees contract for 8 more years at $75 an hour but continues to pay the employee $50 an hour and the employee never demands the higher salary. Let's further assume that the second contract contains several other benefits for the employee but the employee continues to act as if the first contract is in force. For example, the first contract did not provide dental insurance, the second one did and the employee never demanded dental insurance.

Suppose the second contract contains certain provisions that the employee wishes to enforce during his 7th or 8th year of employment.

Can the employer argue that the entire contract is null and void since the employee never enforced the other provisions of the contract? Can the employer argue that the employee "waived his right" to the second contract by not enforcing it and acting as if it never existed?

Are there any case precedents that can be applied to prove either way?

Answer 1

Does a contract become null and void if some or most of its terms were not followed by one (or both) of the parties?

No. Parties' temporary or systematic waiver of their contractual rights does not alter the validity or terms of that contract. Parties entitled to resume enforcement of their rights anytime. A party's noncompliance with his obligations gives the counterparty a viable claim of breach of contract, although the proper approach would be to first try to solve the dispute outside the court.

In the employment scenario you describe, the employee is entitled to --at least-- back pay as per the second contract (the difference between $75 and $50) subject to the statute of limitations, which under NJ is six years for contract disputes. See Hagans v. Nickerson, Superior Court of NJ (Oct. 2022), (citing NJSA A:14-1(a)). This precludes the recovery of some of the back pay if "the employee wishes to enforce during his 7th or 8th year of employment". A "retroactive" enforcement of other rights might be available, depending on the nature of those rights and other details. But nothing prevents the employee to henceforth enforce all of his rights pursuant to the current contract.

Can the employer argue that the employee "waived his right" to the second contract by not enforcing it and acting as if it never existed?

As explained above, no. Nor does it make sense for the employer to argue in terms of "a right to the second contract". A contract establishes a set of rights [and obligations], whence "a right to a set of rights" would reflect the employer's poor understanding of the ramifications of the contract he signed.

Answer 2

canada

No, a pattern of non-enforcement does not create a legal barrier to enforcing the contractual right.

See John Burrows Ltd. v. Subsurface Surveys Ltd, [1968] S.C.R. 607. The creditor loaned some money to a debtor and the parties agreed to a repayment schedule. The debtor did not insist on enforcing this: eleven payments had been accepted more than ten days after they were due and the creditor did not invoke the acceleration clause. The question was whether these indulgences gave rise to "the defence of equitable estoppel or estoppel by representation."

The answer was: no.

It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.

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the behaviour of Mr. Burrows is much more consistent with his having granted friendly indulgences to an old associate while retaining his right to insist on the letter of the obligation...