Understanding Contract Terms (post 3): Severability
In just about every contract you’ll come across, you’ll see the term severability somewhere in the last few paragraphs of the contract. It’s one of those ‘boiler plate’ clauses that most people glance right over when they’re reviewing a contract. However, the effects of this clause are worth reviewing and understanding. In today’s post, the third in our series on understanding contract terms, we explore the definition of severability, and how it may affect your business.
Webster’s Dictionary defines severability as “capable of being divided into legally independent rights or obligations.” Finally, we have a Webster’s definition we can work with. At the root of the definition is the idea of dividing something into parts.
In contract terms, this clause refers to situations when parts (or terms) of a contract are held illegal or unenforceable. In these situations, the severability clause states that the remainder of the contract will still be valid and enforceable. Essentially, the clause allows the contract to be divided into parts, the unenforceable terms and the enforceable terms.
Some severability clauses go even further to state that certain terms are so essential to the contract that if they are held to be illegal or unenforceable, then the remainder of the contract will be void. Most jurisdictions apply the rule that a severability clause will not be enforced if it changes the fundamental nature of the contract.
Here’s an example of a severability clause:
“This Agreement will be enforced to the fullest extent permitted by applicable law. If for any reason any term or provision of this Agreement is held to be invalid or unenforceable to any extent, then (a) such term or provision will be interpreted, construed, or reformed to the extent reasonably required to render the same valid, enforceable, and consistent with the original intent underlying such provision; (b) such term or provision will remain in effect to the extent that it is not invalid or unenforceable; and (c) such invalidity or unenforceability will not affect any other term or provision of this Agreement.”
Believe it or not, there are a lot of moving parts in your contract. A solid severability clause will make sure that the contract doesn’t break down because one of those parts is failing.