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How can a severability clause protect your contract?

On Behalf of | Apr 15, 2024 | Business Law

If you own a business, you likely have signed a number of contracts with other companies or entrepreneurs. In the event of court litigation with a signatory to your agreement, your contract could be at stake. A bad outcome could even render the entire document invalid.

Certain language can do a lot to protect a contract even if a court decides that part of the document violates the law. A severability clause is a common provision that can help guard a legal agreement in a lawsuit.

What is a severability clause?

A severability clause is a provision in a contract that draws a distinction between a part of a contract that is legally problematic and the rest of the document. Basically, severability language states that if a court finds part of the contract legally invalid due to law, public policy or unconstitutionality, the rest of the agreement will remain in effect. This clause allows a court to uphold the valid portions of the contract, even if a court determines that one or more sections are invalid.

How can a severability clause be effective?

With a severability clause in place, the court can simply remove the invalid portion and allow the rest of the contract to remain in effect. Still, severability provisions should clearly establish the independence of the contract provisions so there is no confusion over severing the contract from the legally unenforceable portion.

However, if a significant part of the contract becomes invalid, the contract might become completely unenforceable in spite of the severability clause. You may need to renegotiate with the other contracted party to restore the contract to effectiveness. Therefore, your contract might require negotiation or arbitration requirements to facilitate modification to the contract.

Severability clauses might come across as boilerplate language, but they are nothing to ignore. Putting one in your contract could make the difference if you face legal challenges over the document.