What is a severability clause?
A severability clause allows the rest of an agreement to remain valid even if one or more provisions are unenforceable or illegal. However, some terms may be declared vital to the purpose of an agreement and can therefore not be covered by the severability clause.
A severability clause is usually made up of two parts. Savings language that describes how the remainder of the agreement will remain intact. And reformatory language that describes how both parties have agreed to handle the invalid provisions: delete them or rewrite them, for example. Usually, these terms are rewritten to comply with the legal framework.
Why a severability clause can be important
Without the inclusion of a severability clause an agreement can become invalid already due to only one provision being unenforceable under local legislation. A severability clause protects the agreement’s overall purpose. If the invalid provision or term is vital to the agreement’s purpose as a whole, however, the severability clause does not have any effect on it.
It also demonstrates the parties’ willingness to amend the agreement in order to keep it intact overall.
Examples of severability clauses
A severability clause in a contract might look like this:
“If a provision of this Agreement is or becomes illegal, unenforceable, or invalid in any jurisdiction, it shall not affect (1) the enforceability or validity in that jurisdiction of any other provision of this Agreement, or (2) the enforceability or validity in other jurisdictions of that or any other provision of this Agreement.”
A severability clause can also be used in legislation. It usually specifies that if one “section, subsection, sentence, clause, phrase, word, provision or application” of the law is deemed unconstitutional or illegal the other sections, subsections etc. are not affected by that.
FAQs
Severability is a drafting concept that allows the remainder of a contract's terms to remain effective, even if one or more of its clauses is found to be unenforceable or illegal. Unenforceable clauses may be severed from other parts of the contract, without rendering the entire contract unenforceable.
What is an example of a severable contract? ›
For example, if Mr. X purchases a computer, a scanner, a printer and a desk from a retailer, and the retailer cannot deliver the printer, the other parts of the contract (the computer, the scanner and the desk) are still valid and must be honored.
What is the severability clause in a lease agreement? ›
A severability clause states that if any portion of your lease is ruled non-applicable by the court, the rest of the lease agreement is going to remain valid. If you don't include a severability clause on your lease, you may be exposed to getting the entire contract invalidated by the court.
What is the 9 severability clause? ›
A severability clause allows the rest of an agreement to remain valid even if one or more provisions are unenforceable or illegal. However, some terms may be declared vital to the purpose of an agreement and can therefore not be covered by the severability clause.
What is the severability clause of indemnification? ›
Severability clause
An indemnity agreement must contain a severability or savings clause to address the contract's enforceability if some of its terms are illegal, unenforceable, or otherwise in conflict with the law.
What happens if there is no severability clause? ›
In most cases, courts forced to review a contract will view the contract only as solid as its weakest point. If the court determines that a single material provision within the contract is unenforceable due to law or is unconscionable, then the entire contract will be invalid without a severability clause.
Do severability clauses work? ›
It essentially works to ensure that even if a particular clause cannot be enforced, the remainder of the contract can still stand. In the context of small businesses and estate planning, this clause becomes particularly crucial.
Why should you have a severability clause? ›
Commercial agreements tend to record valuable deals, so the contract must remain enforceable to the highest degree possible. Severability clauses (or 'severance clauses') aim to ensure that the remaining provisions of a commercial contract remain binding on the parties if a small part of it is erroneous.
What does a severability clause look like? ›
The parties hereto agree that (a) the provisions of this Amendment will be severable in the event that for any reason whatsoever any of the provisions hereof are invalid, void or otherwise unenforceable, (b) any such invalid, void or otherwise unenforceable provisions will be replaced by other provisions which are as ...
What is another word for severability clause? ›
Severability clause, sometimes also referred to as a savings clause, is a contractual provision that ensures the survival of the remaining terms and conditions in a contract, even if one or more provisions are found to be unenforceable, invalid, or illegal.
Although you should include a severability clause in a contract, some courts apply the concept while some may not. Still, if the unenforceable part of the agreement is essential, not even the courts can do anything about it. More than likely, the entire contract is voided.
How do you know if a contract is severable? ›
A severable contract is a contract with two or more agreements that are distinct enough to where the unenforceability or breach of one does not nullify the enforceability of the other. Generally, a party who fails to fully perform a contract cannot recover for part performance.
What is the severability of liability? ›
A severability of interests clause is a policy provision clarifying that, except with respect to the coverage limits, insurance applies to each insured as though a separate policy were issued to each.
Should I agree to an indemnification clause? ›
The indemnification clause is a crucial element in commercial contracts as it helps mitigate the risks and consequences associated with potential breaches of contracts. This clause also ensures that the parties are fairly compensated for their losses and helps maintain a stable and predictable business relationship.
What is a force majeure clause? ›
A "force majeure" clause (French for "superior force") is a contract provision that relieves the parties from performing their contractual obligations when certain circ*mstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible.
What happens if there is no indemnification clause? ›
Without an indemnity clause, a party may bring a claim for damages resulting from the other party's breach of contract, subject to any liability cap agreed between them on a commercial basis.
What are the three examples of contracts? ›
Examples of standard form contracts can include: employment contracts. lease agreements. insurance agreements.
What is the simple example of contract of guarantee? ›
Illustration: If A gives an undertaking stating that if ` 300 are lent to C by B and C does not pay, A will pay back the money, it will be a contract of guarantee. Here, A is the surety, B is the principal debtor and C is the creditor.
