Severability: Overview, definition and example
What is severability?
Severability is a legal concept in contracts that ensures if one part of the agreement is found to be invalid or unenforceable, the rest of the contract remains valid and enforceable. It’s like saying, “If one piece of this puzzle doesn’t fit, the rest still works.” Severability helps contracts stay intact even when something goes wrong with a specific clause.
For example, if a court decides that one term of a contract is illegal or unenforceable, severability means the rest of the agreement can still function as intended.
Why is severability important?
Severability is important because it prevents an entire contract from being thrown out due to one problematic clause. Without severability, a single invalid term could jeopardize the entire agreement, leading to unnecessary disputes or delays.
For businesses, including a severability clause in contracts provides certainty and stability. It protects the agreement’s core purpose, ensuring that minor issues don’t derail the whole deal. This is especially useful in complex contracts where legal or regulatory differences might affect certain terms.
Understanding severability through an example
Imagine a contract between a retailer and a supplier that includes a clause imposing penalties higher than what is legally allowed. If a court finds this penalty clause unenforceable, severability ensures that the rest of the contract—such as the terms for product delivery and payment—remains valid. The contract can continue to operate, with only the problematic term removed or replaced.
Another example could involve an employment agreement that includes a non-compete clause that’s too broad. If a court rules the non-compete clause unenforceable, severability allows the rest of the contract, like the salary and benefits provisions, to stay in effect.
An example of a severability clause
Here’s how a severability clause might look in a contract:
“If any provision of this Agreement is found to be invalid, illegal, or unenforceable, the remaining provisions shall remain in full force and effect. The parties agree to replace the invalid provision with a valid one that most closely reflects the original intent and purpose.”
Conclusion
Severability ensures that a contract remains functional even if one part of it is invalid or unenforceable. It’s a safeguard that allows the rest of the agreement to move forward, protecting the interests of both parties.
By including a severability clause, businesses can reduce the risk of losing an entire deal over a single problematic term. It’s a practical way to maintain the integrity and enforceability of contracts, even when challenges arise.
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.