Separability clause: Overview, definition, and example
What is a separability clause?
A separability clause, also known as a severability clause, is a provision in a contract that ensures the remaining parts of the contract remain valid and enforceable if any part of the contract is found to be illegal, unenforceable, or void. The purpose of a separability clause is to allow the rest of the contract to continue in effect even if one or more provisions are struck down or declared invalid. This clause is crucial in preventing the entire agreement from being rendered null and void due to a single problematic clause.
In essence, the separability clause allows the parties to retain the benefits of the contract even if certain terms are found to be non-compliant with the law or unenforceable for any reason.
Why is a separability clause important?
A separability clause is important because it provides a safety net for the contract as a whole, protecting the parties from losing the entire agreement due to a specific provision that may be found to be unenforceable. It reduces the risk of invalidating an entire agreement when only a small part of it is problematic, which helps to maintain the overall intent of the contract.
For businesses, including a separability clause helps ensure that their contractual arrangements remain intact even if one part of the agreement is challenged. For individuals, it provides reassurance that the entire agreement won't be impacted by a single issue, maintaining the overall balance of rights and obligations under the contract.
Understanding a separability clause through an example
Imagine two companies enter into a contract for the supply of goods, with various terms regarding delivery dates, prices, and penalties for late delivery. One of the clauses in the contract specifies a penalty that is deemed excessively high by a court and is ruled to be unenforceable. However, due to the separability clause in the contract, the rest of the agreement, including the provisions on price and delivery, remains valid and enforceable, even though the penalty clause is invalidated.
In another example, a company signs a partnership agreement with a separate business entity, but one of the clauses that involves an illegal restriction on competition is struck down by a court. Thanks to the separability clause, the partnership continues without the unenforceable non-compete provision, allowing both parties to continue with the rest of the agreement as originally intended.
An example of a separability clause
Here’s how a separability clause might look in a contract:
“If any provision of this Agreement is determined by a court of competent jurisdiction to be illegal, invalid, or unenforceable, the remaining provisions of this Agreement shall remain in full force and effect, and the illegal, invalid, or unenforceable provision shall be deemed amended to reflect the parties’ intention as closely as possible.”
Conclusion
A separability clause is a vital safeguard in contracts, ensuring that if one provision is found to be unenforceable, the rest of the agreement remains valid and effective. This clause protects the integrity of the contract, allowing both parties to continue to operate under the other terms without disruption. Including a separability clause in agreements provides clarity and confidence that the contract’s objectives will be maintained, even if one aspect is legally challenged or invalidated.
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.