Severability
A severability clause states that if any part of the contract is found invalid or unenforceable, the rest of the contract continues in force without it.
What it does
Contracts sometimes contain a term that a court or regulator will not enforce: a liability exclusion that goes too far, a non-compete that is too wide, a penalty that the law treats as unenforceable, or a term that conflicts with mandatory local rules. Without a severability clause, there is a risk that the invalid term brings down the whole contract, or at least creates an argument that it does.
The clause addresses this in two steps. First, the invalid provision is severed and the remainder stays in force. Second, many clauses go further and require the parties to negotiate a replacement, or allow a court to modify the offending term to the minimum extent necessary to make it valid.
How much of this actually works depends on the legal system. Some courts will strike out offending words and leave the rest. Others will not rewrite a clause, whatever the contract says, and will simply remove it. A few will refuse to sever at all where the invalid term goes to the heart of the bargain. The clause improves the odds. It does not guarantee the outcome.
Example wording
If any provision of this Agreement is held by any court or competent authority to be invalid, unlawful, or unenforceable in whole or in part, that provision or part shall be deemed severed to the extent required, and the validity and enforceability of the remaining provisions shall not be affected. The parties shall negotiate in good faith to replace any severed provision with a valid provision that achieves, as far as possible, the same commercial effect.
Risks for SMBs
Overreaching clauses backfire. A supplier that drafts an aggressive liability exclusion, relying on severability to save the enforceable part, may find that a court strikes the whole exclusion rather than trimming it. The safer approach is to draft the exclusion within what the law allows in the first place, with severability as a backstop, not a strategy.
Non-competes and restraints. Restrictive clauses such as non-solicitation and exclusivity are where severability is most often tested. In some jurisdictions a court may cut a three-year restraint to one year. In others it will strike it entirely. Draft the restraint narrowly and, where the jurisdiction allows, use a cascade: three years, or if unenforceable two, or if unenforceable one.
Losing a term that was the point of the deal. If the severed term was essential, such as an exclusivity that justified a price, the remaining contract may be commercially unbalanced. The good faith renegotiation wording helps, but neither party is obliged to reach agreement. Consider a right to terminate if a fundamental term is severed.
Boilerplate that nobody reads. Severability is rarely negotiated, and is often copied from another contract with a different governing law. Check that the wording makes sense under the law that actually governs.
Common variants and negotiation points
- Simple severance. The minimum: the invalid term is removed, the rest survives. Suitable for most SMB contracts.
- Modification wording. Add that the term is to be read down, or modified, to the extent necessary to make it enforceable. This helps in jurisdictions that permit courts to do so.
- Renegotiation duty. A duty to negotiate a replacement in good faith is common and harmless, but it is not a duty to agree.
- Fundamental terms. Where a term is essential to one party, provide that its severance gives that party a right to terminate or to renegotiate the price.
- Cascade drafting. For restraints, set out alternative lesser scopes in the clause itself, so a court can pick the widest one that is enforceable without rewriting anything.
Related clauses
- Entire agreement: its companion boilerplate clause, which fixes what the agreement consists of.
- Liability cap: the clause most likely to be tested against mandatory law.
- Non-solicitation: where severability and cascade drafting matter most.
- Governing law: decides how a court will apply the severability clause.
This page is general information about a common contract clause. It is not legal advice and does not account for your jurisdiction, industry, or the specific contract in front of you. Talk to a qualified lawyer before relying on it.
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