Glossary · legal

Class action waiver

Also called class waiver, collective action waiver, no class arbitration clause.

The term giving up your right to bring or join a class or collective action, so any dispute proceeds only on an individual basis — usually drafted inside an arbitration clause.

Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.

What it means

Where the waiver sits inside an arbitration agreement, the Federal Arbitration Act's enforcement policy applies to it, and courts have generally enforced class waivers in arbitration agreements including in commercial contracts. A standalone waiver outside an arbitration clause is treated differently and state law varies more.

What is drafted alongside it

  • A bar on consolidating your claim with any other claimant's
  • A bar on the arbitrator awarding relief beyond the individual parties before them
  • A non-severability or "blowup" provision: if the class waiver is held unenforceable, the whole arbitration agreement falls away and the matter goes to court, which removes the incentive to challenge the waiver in isolation
  • A jury waiver covering anything that does end up in court

Where you meet it

Advance agreements, broker agreements, equipment leases, processing agreements, software and platform terms. It is now close to universal, and its presence tells you nothing in particular about the counterparty.

Where this one catches people

The waiver matters most for exactly the disputes it removes: small, identical, systematic ones. If a funder misapplies a fee to four thousand merchants at 300 each, that is 1.2 million of somebody's money and 300 of yours. No individual arbitration is worth bringing over 300, so in practice the claim is never brought at all. That is the function of the clause, and it is not concealed — it is simply not read.

Three things to check before signing. Whether there is an opt-out: a minority of agreements let you reject the arbitration and class waiver terms by writing to a named address within a short window after signing, and exercising it costs a stamp. Whether small claims court is carved out, as it sometimes is, which preserves a genuinely usable forum for modest disputes. And who pays the arbitration fees, because a clause that leaves you funding a commercial filing fee on a 4,000 claim achieves the same result as a waiver by a different route.

Where you will meet this term

Merchant Cash Advance Working Capital Term Loan Equipment Financing Invoice Financing Credit Card Processing

Read next

Arbitration clauseA contract term sending disputes to a private arbitrator instead of a court, usually alongside a jury waiver … Attorneys' fees clauseThe term making the business pay the funder's legal and collection costs on default, often as a fixed percent… Broker agreement (ISO agreement)The contract between a funder and a broker setting commission, exclusivity, clawback and conduct terms, to wh… Choice of lawThe clause naming which state's law interprets the agreement, distinct from the forum clause that names where… Confession of judgment (COJ)A pre-signed admission of liability that lets a funder obtain a court judgment on default without suing you, … Integration clauseThe provision stating that the signed document is the complete and final expression of the deal and supersede… Jurisdiction clauseThe provision fixing which state's law governs the contract and where any dispute must be brought — the claus… Purchase and sale agreementThe contract documenting an advance as a sale of a specified amount of future receipts rather than a loan, co… Statute of limitations (SOL)The deadline for filing suit on a claim, running from when the claim accrued — after which even an obviously … Waiver of jury trialA clause in which both parties give up the right to a jury in any dispute arising from the agreement, leaving…

Class action waiver — common questions

What does class action waiver mean?

The term giving up your right to bring or join a class or collective action, so any dispute proceeds only on an individual basis — usually drafted inside an arbitration clause.

Where does class action waiver catch people out?

The waiver matters most for exactly the disputes it removes: small, identical, systematic ones. If a funder misapplies a fee to four thousand merchants at 300 each, that is 1.2 million of somebody's money and 300 of yours. No individual arbitration is worth bringing over 300, so in practice the claim is never brought at all. That is the function of the clause, and it is not concealed — it is simply not read.

Is class action waiver the same as an interest rate?

Class action waiver is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.

Which products does class action waiver apply to?

Merchant Cash Advance, Working Capital, Term Loan, Equipment Financing, Invoice Financing, Credit Card Processing.

Is there a worked example of class action waiver?

Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.

What else should I read alongside class action waiver?

Arbitration clause, Attorneys' fees clause, Broker agreement, Choice of law, Confession of judgment.

Has this definition been checked?

Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.

Is this legal advice?

No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.

Can I suggest a term?

Yes — [email protected]. The glossary grows from what people are actually shown in contracts.