52 Severability

Desired Result

You want to craft and include a severability clause that effectively communicates to a court that, if a particular term of the agreement is determined to be unenforceable, the remaining terms should remain intact and the parties should continue to perform under and be bound by the remaining terms.

Essentials of the law:

The severability clause (also known as a “savings” clause) is intended to void any unenforceable, illegal, or invalid provisions of the contract, while keeping the other contractual terms intact.^[1]. These clauses communicate that the parties intended the provisions of the agreement to be separate, and for the remainder of the agreement to be enforced even if one or more individual terms are severed.

In some circumstances, even if the parties fail to include a severability clause, a court might still sever an unenforceable provision and continue to enforce the remainder of the agreement ^[2]. Generally speaking, a court will apply severability absent such a provision, where a fair construction of the terms suggest the parties intended them to be severable. Nevertheless, including the severability clause clearly and unambiguously indicates to the court that the parties intended the terms to be separable and to continue being bound by the remainder.

However, some contract terms are so essential to the parties’ agreement, or the benefit of the bargain they negotiated, that parties do not wish to continue performing if a court deems that essential provision unenforceable. (If this is the case, make sure your severability clause addresses that the contract’s terms are severable except if any designated essential provisions (which you then list) are the ones found unenforceable.) For the same reason, even absent a severability clause, a court may refuse to enforce the remainder of the agreement if the particular provision deemed unenforceable was clearly essential to the parties’ agreement.

Desired language:

“If any provision or provisions of this Agreement shall be held to be invalid, illegal, unenforceable or in conflict with the law of any jurisdiction, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.”^[3]

Tricks and traps:

As noted above, some terms of a contract can be considered so essential to the purpose of the agreement that parties will want to specifically carve these out of the severability clause, such that if they are found to be invalid then the courts could determine that the entire contract is void. If you have any such essential clauses, you could make such a carve-out using language like the following:

Sample language: “…however, if any fundamental term or provision of this Agreement (including without limitation [LIST APPLICABLE FUNDAMENTAL TERMS]), is invalid, illegal, or unenforceable, the remainder of this Agreement shall be unenforceable].”^[4]

Importance and risk:

Without a severability clause, one invalid provision could render the entire contract void, which at best would require the parties to negotiate a new contract, and at worst could nullify important provisions, such as indemnification or confidentiality. The severability clause ensures that the remaining terms will be upheld and considered separate and distinct from another in the event of litigation. It also allows for the possibility of simply reforming the contract to fix the singular invalid provision.