What does the term "waiver" in a legal contract refer to?

In a legal contract, the term "waiver" refers to the voluntary relinquishment of a known right. This means that one party in the contract decides not to enforce a right or a provision that they are entitled to, thus intentionally giving up that right. This can happen in various ways, such as through implied actions or explicit statements waiving a particular provision of the contract.

For instance, if a landlord allows a tenant to pay rent late without consequences, the landlord has waived their right to impose a late fee for that instance. The concept of waiver is important because it reflects the flexibility parties have in a contractual relationship, enabling them to adapt to specific situations without necessarily terminating the entire agreement.

The other options describe different legal concepts but do not capture the essence of waiver. For example, mutual exchange of obligations refers to consideration in a contract, ensuring compliance pertains to adherence to terms, and contesting validity speaks to challenging the legality of a contract, none of which align with the definition of waiver.