What is a Severability Clause?
Welcome to part three of the ongoing series on common contract terms, with articles previously written here and here about indemnification and integration clauses, respectively. The topic for this post shifts to a discussion of severability clauses. Severability clauses, like integration clauses, often reside within the “boilerplate” provisions found regularly in contracts ranging across multiple industries and subjects. In other words, they are common contract terms. Yet once again, like with integration clauses, parties insert severability clauses into their agreements often without considering their broader impact.
A severability clause provides that the invalidity of one contractual provision does not render the entire contract void. In other words, parties will place a severability clause into their contract in order to prevent the invalidity of the entire contract where one term has been deemed void. Typically, a third party with the power to interpret the contract (often a judge or arbitrator) will have the authority to invalidate a particular term while preserving the contract as a whole if the document contains a severability clause.
For the most part, a severability clause affords parties to a contract with great protection, and ensures that one poorly drafted or considered provision will not render an entire contract invalid. Washington courts will often use severability clauses to excise unconscionable provisions from a contract while preserving the overall agreement, although they may refuse to enforce a severability clause where unconscionable provisions pervade the contract so severely that severing the provisions at issue would entail rewriting the entire agreement.
Without considering it carefully, a severability clause might seem like a desirable provision to include in every contract. It protects parties from having their contracts invalidated for failure of unenforceability of a single term. However, severability clauses can prove to be a double-edged sword because an adjudicator may sever an unenforceable provision regardless of whether it upsets the balance of power between, or otherwise undermines the intentions of, the parties who negotiated the contract.
For example, two parties may enter in an agreement that contains a confidentiality clause and a severability clause. If a judge or arbitrator determines that the confidentiality clause is invalid, the judge or arbitrator may strike down that provision while using the severability clause to leave the rest of the contract undisturbed. On its face, this may seem like a good outcome because all the rest of the terms have been preserved. However, if one party entered into contract having placed great weight on the inclusion of the confidentiality clause, while the other party did not, the severability clause results in an imbalance between them, where one party received something far different than bargained for and the other party remains largely unharmed.
As a result, parties to any agreement must carefully assess whether they want a severability clause in their contract. While careful drafting will often protect against the negative consequences relating to severance of a provision, the parties must also look at their contracts globally to determine whether an all or nothing approach would benefit them over severability.
The attorneys at Beresford Booth have significant experience in contract formation, interpretation, and enforcement across a wide variety of subjects, and have negotiated and litigated numerous contract disputes. If you need assistance with any contractual issues, please do not hesitate to contact us at info@beresfordlaw.com or by phone (425) 776-4100 for assistance.