Severability of covenants: Overview, definition, and example
What is severability of covenants?
Severability of covenants refers to a contractual provision stating that if one part (or covenant) of the agreement is found to be invalid, illegal, or unenforceable, the rest of the contract remains intact and enforceable. This ensures that an agreement doesn’t become void just because one specific term is unenforceable.
For example, if a non-compete clause in an employment contract is ruled too restrictive by a court, a severability clause ensures that the rest of the employment agreement, including salary and benefits, remains valid.
Why is severability of covenants important?
Severability of covenants is important because it protects the enforceability of a contract by preventing one invalid provision from nullifying the entire agreement. It allows courts to strike out or modify the problematic clause while preserving the rest of the contract’s terms.
For businesses, severability ensures that contracts remain functional even if legal challenges arise over certain provisions. This is especially relevant in agreements containing non-compete clauses, confidentiality provisions, or restrictive covenants, where enforceability varies by jurisdiction.
Understanding severability of covenants through an example
Imagine a franchise agreement that includes a non-compete clause preventing the franchisee from operating a similar business within a 100-mile radius for 10 years. A court finds the restriction excessive and unenforceable. If the agreement includes a severability of covenants clause, the court can modify the restriction (e.g., reducing it to 25 miles for 2 years) while keeping the rest of the contract enforceable.
In another case, a partnership agreement contains multiple clauses, including one that unintentionally violates a new regulation. A severability of covenants clause ensures that only the illegal provision is removed, while the rest of the partnership agreement remains valid.
An example of a severability of covenants clause
Here’s how a severability of covenants clause might appear in a contract:
“If any covenant or provision of this Agreement is found to be invalid, illegal, or unenforceable, such provision shall be modified to the extent necessary to make it enforceable. If modification is not possible, the provision shall be severed, and the remaining provisions shall continue in full force and effect.”
Conclusion
Severability of covenants ensures that contracts remain enforceable even if certain provisions are found to be invalid. This clause helps businesses avoid losing the entire agreement due to legal challenges over specific terms.
By including a severability of covenants clause in contracts, businesses can protect their agreements from becoming void, ensuring that disputes over one provision do not impact the enforceability of the rest of the contract.
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.