Michigan Credit Insurance Producer Practice Exam 2025 - Free Credit Insurance Practice Questions and Study Guide

In a contract context, the term 'waiver' refers to the voluntary relinquishment of a known right. When a party waives a right, they are choosing to forgo their entitlement to that right, often in relation to terms that were agreed upon in the contract. This can occur in various scenarios, such as when a party does not enforce a provision they are entitled to enforce, implying consent to proceed without enforcing that provision.

Understanding waiver is essential because it affects the rights and responsibilities of the parties involved in a contract. By waiving a right, a party can create potential legal implications, such as the loss of that right in future dealings. For example, if a lender consistently accepts late payments without penalty, they may inadvertently waive their right to enforce the late fee provision stipulated in the contract.

The other options do not accurately represent the definition of waiver. Rejection of a contract signifies a refusal to enter into the agreement rather than relinquishing rights. Adding new terms involves modifying the contract, which is distinct from waiving rights. Additionally, requesting more information from an insurer does not relate to the concept of waiver but rather pertains to clarifying contractual obligations or underwriting processes.