Severability Clause
What is a Severability Clause?
Severability clause, sometimes also referred to as a savings clause, is a contractual provision that ensures the survival of the remaining terms and conditions in a contract, even if one or more provisions are found to be unenforceable, invalid, or illegal. This clause plays a crucial role in preserving the primary intention of the parties while entering into a commercial contract.
What is the purpose of a severability clause in a contract?
To maintain the overall enforceability and integrity of a contract. It ensures that the unenforceable provisions do not impact the enforceability of the remaining provisions. This is particularly important in commercial contracts where parties invest time, resources, and money to negotiate and draft terms to protect their interests. A well-crafted severability clause prevents the entire agreement from being deemed void, saving the parties from potential losses and disputes.
How does a severability clause function in case of a dispute?
In the event of a legal dispute, a court may invalidate a particular provision in the contract if it is found to be illegal, against public policy, or unenforceable for any reason. When a severability clause is present, the court can sever or remove the problematic provision without affecting the other provisions. The remaining terms of the contract continue to be enforceable, and the parties are still bound by them.
Example 1:
"If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired."
This basic severability clause is designed to uphold the enforceability of the other provisions even if one or more are found to be invalid, illegal, or unenforceable.
Example 2:
"If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or unenforceable, such provision shall be modified by the court and interpreted so as best to accomplish the objectives of the original provision to the fullest extent permitted by law, and the remaining provisions of this Agreement shall remain in effect."
This type of clause allows the court to modify the problematic provision to preserve the parties' original intent while maintaining the enforceability of the remaining terms.
In conclusion, a severability clause is an essential element in commercial contracts, as it protects the validity and enforceability of the remaining provisions in case one or more terms are deemed unenforceable. This ensures that parties' intentions are preserved, and their investments in time, resources, and money are protected.
How to manage clauses like these effectively?
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