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What is a severability clause?

On Behalf of | Dec 19, 2022 | Business Law |

When you draft a contract with another business, you may want to consider a severability clause. A severability clause states that if any other provisions become unenforceable, the agreement will remain intact.

Businesses should consider severability clauses when working with other companies, employees, vendors, independent contractors and any other party. Your severability clause could impact any future litigation.

Why consider a severability clause in your contract

If a court determines that your contract includes an unenforceable provision, it can ruin the rest of the agreement. Your contract may not remain intact. Both companies can lose any benefit they would receive otherwise because they did not include a severability clause. There are various reasons why you may run into this situation. Courts can deem provisions unenforceable because of public policy, legal violations or because they cannot enforce them.

How to avoid problems with the severability clause

When drafting a severability clause, you do not want to be too vague. Some severability clauses can cause more problems because they force businesses to remain in a contract even if the contract lost its intention. Consider drafting a severability clause that requires modification after removing a provision. The change should ensure that the contract returns to its original intention. Your severability clauses can state what happens if you modify the contract. For instance, you can plan to have a judge look over the contract or settle the new terms through arbitration.

You should not consider your contract enforceable if the terms no longer include material provisions.


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