Business Law Legal Topics

How to Draft a Contract with Severability in Mind

Don’t want the baby thrown out with the bathwater? Use a “severability” or a “partial invalidity” clause to prevent a court from declaring an entire contract invalid or unenforceable just because a single provision in the contract is declared invalid or unenforceable.

A contract may be construed as either severable or entire.

  • A severable or divisible contract is one in which two or more separate partial performances on each side are agreed to be exchanged for partial performances on the other side. The failure to perform one part doesn’t bar recovery for performance of another part.
  • An entire contract is one in which all performances are common and interdependent, and any material breach justifies termination by the other party.

Whether a contract is severable or entire depends on the parties’ intention, as revealed in the language of the contract itself and the surrounding circumstances.

A severability provision like this one helps to clarify the parties’ intention:

Severability. If a court or an arbitrator of competent jurisdiction holds any provision of this Agreement to be illegal, unenforceable, or invalid for any reason, the validity and enforceability of the remaining provisions of this Agreement shall not be affected _ _[; provided, however, that this clause shall not be applied so as to defeat the primary intent of the parties, which is _ _[describe the primary purpose of the transaction from the viewpoint of both parties]_ _]_ _.

The optional language may be used when the entire agreement would fail if the provision that’s struck down is so central to the transaction that its purpose can’t be carried out. You may want to specify the provisions that, if struck down, would nullify the agreement.

The severability clause may also designate particular clauses, such as the main elements of consideration, that the parties agree aren’t considered to be severable. See, e.g., Securitas Sec. Servs. USA, Inc. v Superior Court (2015) 234 CA4th 1109, in which the court reviewed an arbitration agreement that provided that a class action waiver was not severable. The court found the provision to be unambiguous and to prevent severance of the waiver.

For more on drafting severability clauses as well as many other general contract provisions, turn to CEB’s Drafting Business Contracts: Principles, Techniques and Forms, chap 17.  For discussion of the relevant statutory and case law governing severability, see CEB’s California Law of Contracts §§5.70-5.71A.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2019. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

Add your comment to the blog post

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s