Survivability: Overview, definition, and example
What is survivability?
Survivability refers to the continuation of certain rights, obligations, and provisions of a contract even after the contract's termination or expiration. In contracts, the survivability clause specifies which parts of the agreement will remain in effect after the contract ends. Not all provisions of a contract automatically survive its termination—only those that the parties explicitly agree to continue.
Common provisions that may survive include:
- Confidentiality agreements: Parties may continue to be bound by confidentiality clauses even after the contract ends.
- Indemnity clauses: The obligation to indemnify or compensate for certain liabilities may extend beyond the contract's termination.
- Dispute resolution provisions: Provisions for arbitration or legal action may continue even after the contract has been concluded.
- Non-compete or non-solicitation clauses: These may last beyond the contract term to protect business interests.
Survivability clauses are crucial because they ensure that certain obligations or rights, which are intended to last longer than the contract itself, remain enforceable.
Why is survivability important?
Survivability is important because it clarifies which provisions remain enforceable after the contract ends, helping both parties understand their ongoing obligations. It also ensures that critical protections or business interests, such as confidentiality or indemnity, continue to apply even after the main terms of the contract have been fulfilled or expired.
For businesses, survivability provisions provide security by maintaining essential protections and rights after the contract ends. For example, a company may want a confidentiality clause to continue in effect after the contract is over to prevent the unauthorized disclosure of sensitive information.
Understanding survivability through an example
Imagine a software company enters into a contract with a client to develop a custom software solution. The contract includes a confidentiality clause, which requires both parties to keep proprietary information confidential even after the contract ends. In this case, the survivability clause ensures that the confidentiality obligations remain in force after the contract’s expiration or termination.
In another example, a business enters into an agreement with a supplier that includes an indemnification clause, where the supplier agrees to cover certain legal expenses. The survivability clause ensures that the supplier’s obligation to indemnify the business continues even after the contract is terminated, for any issues arising from the supplier's actions during the contract period.
An example of a survivability clause
Here’s how a survivability clause might look in a contract:
“Notwithstanding the termination or expiration of this Agreement, the provisions regarding confidentiality, indemnity, and dispute resolution shall survive and remain in effect for a period of [X] years from the date of termination.”
Conclusion
Survivability clauses ensure that certain key provisions of a contract remain enforceable even after the contract ends. They protect vital interests, such as confidentiality, indemnity, and dispute resolution, that are intended to last beyond the contract’s life. By explicitly stating which provisions survive, parties can have greater certainty about their ongoing responsibilities and rights, minimizing potential conflicts and protecting their business interests long after the formal agreement has expired.
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.