Severability Clause: Everything You Need to Know
A severability clause is a provision of a contract that states what happens if part of the contract is deemed by a court to be unenforceable. 3 min read
2. Severability Clause Essentials
3. Further Severability Clause Considerations
Severability Clause Overview
A severability clause is a provision of a contract that states what happens if part of the contract is deemed by a court to be unenforceable. This clause will usually contain saving language designed to maintain the rest of the contract and reformation language describing how unenforceable parts of the contract can be amended so as to be enforceable or else be deleted altogether. If, however, the “essential purpose” of the agreement is affected by the unenforceable part of the contract, then the entire contract will be held to be unenforceable and the contract will be terminated.
Severability Clause Essentials
In many legal jurisdictions in the United States, the concept of severability will apply to most contracts, but the courts may not be able to exercise this unless it is specifically stated in the contract. Thus, adding a severability clause is considered wise, as it will show that both parties desire unenforceable, illegal, or invalid provisions to be deleted while maintaining the terms of the greater contract. A typical severability clause might state the following:
- That invalid or unenforceable provisions will not effect the validity or the enforceability of the contract as a whole.
- That invalid or unenforceable provisions will be severed from the contract.
- That the remaining contract will be enforced as if the unenforceable portion were never a part of the contract.
Further Severability Clause Considerations
Severability clauses can often be treated as what is known “boilerplate clauses,” or clauses that are considered to be so standard that little consideration is given to them, if any. However, neglecting to consider the finer points of the severability clause could lead to some highly undesirable consequences.
For instance, it is standard for a severability clause to state that only the invalid term will cease to be enforced, while every other term will remain in effect as before. The result of this could theoretically be that a provision detailing compensation to a party for services or product received would be thrown out, while the part of the contract maintaining that such services or products should be received would remain, meaning that the services or product would be given for greatly reduced or even no compensation.
In order to avoid such a scenario, the language relating to the enforceability of the rest of the contract in relation to the unenforceable part could be modified to state that the invalidation of the payment would also invalidate the entire contract, as the payment would be essential to the purpose of the contract.
An unfortunate effect of this, however (though not as unfortunate as having payment but not service invalidated, in the eyes of the serving party), is that the entire contract would be invalidated, and either a new contract would have to be drawn up or a new contract partner be found. The parties involved might not find this desirable for a number of reasons, and to avoid this they might adopt language that allows for the modification of the contract in the event of the invalidity of a portion of it.
Nonetheless, even if such language is adopted, there may be some contractual problems that run too deep for any modification to amend, or the contract may be adjudicated in a jurisdiction that only allows for the removal and not rewriting of clauses, commonly known as the “blue pencil doctrine.” If such is the case, the contract will have to be severed anyway, and one or both parties may find they suffer economically as a consequence.
Because of this, both parties might consider adding an economic adjustment clause to compensate a party adversely affected by the deletion of an unenforceable clause, so long as that party had not acted in bad faith to invalidate the portion of the contract, although the inclusion and enaction of such a clause can induce further litigation.
Ultimately, the best way to avoid these problems is to make sure the contract is drawn up correctly in the first place, adhering to all laws that may pertain to it. However, human error or other, unforeseen circumstances still make a severability clause recommended, and if you need further help with the severability clause, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.