Class Action Waiver
Also called: Collective Action Waiver · No Class Action Clause
A class action waiver requires disputes to be brought individually, rather than as part of a collective or class action combining many claimants with similar claims. It's common in consumer-facing terms and some employment contracts, and significantly changes the practical leverage available to an individual claimant.
In more detail
Class actions exist partly to make small individual claims economically viable to pursue — bundling many small claims into one case makes litigation worthwhile even when no single claimant's loss would justify the cost alone. A waiver removes that leverage, requiring each claimant to pursue their claim individually.
For the company including this clause, the practical effect is significant: individual claims for small amounts are often simply not pursued at all, since the cost of individual litigation or arbitration can exceed what's actually at stake for one claimant.
Enforceability of class action waivers — particularly in consumer and employment contexts — is one of the more actively contested areas of contract law in several legal systems, with outcomes varying significantly by jurisdiction and by the specific context (consumer versus commercial, employment versus general contract).
A SaaS platform's terms of service include a class action waiver requiring any dispute to be brought individually through arbitration. If a data-handling issue affects thousands of users similarly, each must arbitrate their claim separately rather than joining a single collective action.
The enforceability of class action waivers varies significantly by jurisdiction and context — some legal systems restrict or prohibit them in consumer and employment contracts specifically, while permitting them more freely in commercial agreements between sophisticated parties.
What our lawyers check
- Whether a class action waiver exists, and its scope
- Enforceability under the specific governing law and context (consumer, employment, commercial)
- Whether it's paired with an arbitration requirement, compounding its practical effect
- Any carve-outs for specific types of claims
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
All glossary terms