Severability clauses are a vital part of many UK commercial agreements, yet they’re often overlooked until a dispute arises. These clauses are a form of legal safeguard, ensuring that if part of the contract becomes invalid or unenforceable, the rest of the agreement can still stand, provided this does not fundamentally alter the contract. Below, we explore what severability means in legal terms, how it operates in contracts, and why it's important for businesses.
What is Severability?
Severability refers to the legal principle that allows the valid portions of a contract to remain enforceable even if one or more specific terms are found to be unlawful, void, or otherwise unenforceable.
In practical terms, it ensures that an entire agreement doesn’t fall apart because one clause is problematic. Instead, only the problematic clause is “severed,” while the rest of the contract remains intact. This is only possible so long as the contract can still be performed sensibly and in line with the parties’ original intentions.
Your Key Takeaways:
- Severability protects the integrity of a contract.
- Only the invalid or unenforceable parts are removed, not the entire agreement.
- A well-drafted severability clause strengthens a contract’s enforceability.
- UK courts may interpret and apply severability flexibly and with caution, depending on context. They will not sever a clause if doing so would fundamentally change the contract or contradict public policy.
What is a Commercial Agreement?
A commercial agreement is a legally binding contract between two or more parties for business purposes. These agreements govern various types of business relationships, including the sale of goods, provision of services, distribution, franchising, or joint ventures.
They are typically detailed, formalised in writing, and tailored to outline the roles, responsibilities, and expectations of each party. Severability clauses are commonly included in these contracts as a standard risk management provision.
Understanding The Purpose of Severability
The primary purpose of a severability clause is to maintain the viability of a contract even if a specific provision is deemed unenforceable. Without such a clause, an entire agreement may be rendered void if one term is found to be legally flawed.
What The Best Clauses Aim To Do
Well-drafted severability clauses aim to:
- Limit the legal impact of invalid terms.
- Maintain the commercial intention of the parties.
- Avoid unnecessary renegotiation or litigation.
- Clarify the parties' agreement that the remainder of the contract should remain enforceable.
The Two Key Parts of Severability
Severability is split into two key parts.
- Legislation: In the UK, courts often consider the unfair terms provisions under the Consumer Rights Act 2015 and the Unfair Contract Terms Act 1977. These acts guide whether certain terms can be enforced. If a contract is illegal due to statute or public policy, severance may not be possible, and the entire contract or relevant parts may be void.
- Contract Clauses: The clause itself usually states that if a term is found invalid, it shall be removed without affecting the rest of the contract. In sophisticated agreements, the clause may also include mechanisms for modifying the invalid term to bring it into compliance.
Example Clauses
Here are examples of how severability clauses may be worded:
A Basic Severability Clause
"In the event that any term or condition of this agreement is determined to be invalid or unenforceable, that specific part shall be removed, and all remaining provisions shall continue to be fully effective."
An Enhanced Clause with Modification
"Should any part of this agreement be deemed unlawful, invalid, or unenforceable, the rest of the agreement shall remain operative. The parties further agree to substitute the affected provision with a lawful and enforceable one that reflects as closely as possible the original intent."
These clauses reflect the parties’ intention to preserve the contract and provide the courts with a guideline on how to proceed. However, remember that courts will only sever a clause if the contract can still operate sensibly and without fundamentally altering the agreement.
The Advantages of Severability
There are three key positives for the inclusion of severability clauses.
1. Gives Contract the Best Chance of Success
Including a severability clause increases the likelihood that a contract remains enforceable even if legal challenges arise. This is particularly important in long-term agreements where legislative or regulatory changes may affect certain terms over time.
2. Helps Interparty Relations
Knowing that a contract can withstand the removal of an invalid term provides confidence and reduces tension between parties. It fosters a more cooperative relationship, especially when unforeseen legal complications emerge.
3. Helps Avoid Future Legal Disputes
Severability clauses often pre-empt arguments over entire contract validity by clearly defining what should happen if a clause is struck down. This reduces the scope for costly and time-consuming litigation, allowing the parties to focus on resolving the core issue.
The Limits of Severability in UK Law
UK courts take a cautious, minimalist approach to severance. They will only remove the unenforceable part if:
- The remaining contract continues to make sense and reflects the original intentions of the parties.
- Severance does not require the court to add or substantially rewrite any part of the contract (sometimes referred to as the “blue pencil” test).
- The removal does not fundamentally change the nature or scope of the agreement.
If severing a clause would alter the core commercial bargain or leave the contract unworkable, the courts may refuse to enforce the remainder.
Practical Considerations and Past Cases
UK courts have previously considered severability in a range of cases. For example, in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd (1894), the House of Lords upheld the principle that only the unenforceable part of a restrictive covenant could be struck out, provided the remainder still made commercial sense.
It’s important to note that while courts may sometimes sever terms even without a formal clause, this is rare and unpredictable. Including a clear severability clause is best practice for certainty.
For legal advice tailored to your business contract needs, reach out to our expert team of commercial contract solicitors today. We’re here to help you with swift dispute resolution. Call us on 0300 303 2071 or email us at info@witansolicitor.co.uk.
FAQ
What limits are there on a judge's interpretation of a severability clause?
While courts will generally respect severability clauses, judges will not enforce them if doing so would fundamentally alter the nature of the contract or contradict public policy. The court may decline to sever a clause if the remainder of the agreement cannot operate sensibly without it. Courts also cannot rewrite or add to the contract, they can only remove the problematic part.
Do companies ever challenge the validity of severability clauses in court?
Yes, disputes can arise where a party argues that a severability clause should not apply, typically when removing a clause would distort the contract's purpose. In such cases, the courts assess the clause’s wording, the agreement’s overall structure, and the original intent of the parties.
