Severability: What Happens When a Provision Is Invalid?
A severability clause is intended to preserve the rest of a contract if one provision is defective. Its presence does not guarantee that the remainder will continue to be valid. Consider both the commercial basis of the transaction and the governing law.
Does the Transaction Still Work without the Provision?
A limitation of liability or exclusivity commitment may be central to the bargain. Removing it can change the balance of risk between the parties. Consider not only whether the rest of the agreement can survive, but whether the parties would still wish to continue on that basis.
The Legal Approach Varies
Whether problematic wording can be removed or modified, and how much of the agreement survives, depends on the governing law and the type of provision. For restrictions such as non-compete obligations, avoid general assumptions about enforceability in a particular jurisdiction; check the applicable legislation and case law.
Agreeing a Replacement Provision
A contract can provide a process for discussing a replacement if a provision is invalid or unenforceable, taking account of the original commercial objective. A duty to discuss does not guarantee agreement. Where appropriate, address performance during those discussions and what happens if they fail.
Review Boilerplate in Context
Assess how important the potentially problematic provision is, whether it can be separated from the rest and what action would be needed if it were lost. A severability clause does not replace a proper assessment of enforceability. Advice from a specialist in the relevant jurisdiction may be needed for foreign-law questions.
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