Governing law severability: Overview, definition, and example
What is governing law severability?
Governing law severability refers to two key provisions in contracts that often appear together: governing law, which specifies the legal jurisdiction that will interpret and enforce the agreement, and severability, which ensures that if any provision of the contract is found to be invalid or unenforceable, the remaining provisions will remain in effect. These clauses work together to provide legal clarity and ensure the enforceability of the contract, even if specific parts are challenged.
Why is governing law severability important?
These provisions are important because they ensure predictability and fairness in the interpretation and enforcement of contracts:
- Governing law: Establishes which jurisdiction's laws will apply, reducing ambiguity if disputes arise.
- Severability: Protects the validity of the overall agreement by allowing the contract to function even if certain provisions are invalidated.
For businesses, including governing law and severability clauses in contracts reduces legal risks, ensures clarity in case of disputes, and preserves the integrity of the agreement.
Understanding governing law severability through an example
Imagine a software licensing agreement between a company in California and a client in New York. The governing law clause specifies that California law will apply to the interpretation and enforcement of the contract. If a court later determines that a specific provision, such as a non-compete clause, is unenforceable under California law, the severability clause ensures that the rest of the agreement remains valid and enforceable.
In another example, a construction contract includes a severability clause stating that if any provision is found invalid under local zoning laws, the remaining provisions of the agreement will not be affected. The governing law clause specifies that disputes will be resolved under Texas law.
An example of a governing law severability clause
Here’s how a governing law severability clause might appear in a contract:
“This Agreement shall be governed by and construed in accordance with the laws of the State of [Insert Jurisdiction], without regard to its conflict of laws principles. If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect and shall be interpreted to achieve the intent of the Parties as closely as possible.”
Conclusion
Governing law and severability clauses are critical for ensuring the enforceability and integrity of contracts. The governing law clause establishes which jurisdiction’s laws apply, providing legal clarity and consistency, while the severability clause ensures that the agreement remains valid even if specific provisions are invalidated. Including these provisions in contracts helps businesses minimize legal risks, resolve disputes efficiently, and maintain the enforceability of their agreements.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.