Severability - legal surgery

Well, it's Monday again. I hope everyone enjoyed the weekend. As promised, it's back to business.

Today- severability. Let's suppose you have a contract. A real one, a nice one with page numbers and topic headings and actual terms and conditions. You know, a contract you paid your lawyer to draft up for you and the kind that you tell your friends has all sorts of "legal mumbo jumbo" in it. Well, today's topic is some of that legal mumbo jumbo.

If you have a contract like this somewhere in your possession, take a look at it. Somewhere above the signature line - but not too much above it, is likely a heading entitled "severability." Essentially, it provides that if there ends up being a problem with the contract or the law changes in some way that makes some part of the contract or the underlying deal illegal, the rest of the contract is still enforceable.

Does this sound hypertechnical? Well, it's intended to limit litigation. You see, in the common law, there is an old defense to contractual performance based upon illegality. It's sort of common sense, right? If the contract becomes illegal or the stuff sold under it is illegal, then the contract is not enforceable.

The idea with a severability clause is that it helps draw a line between the illegal and the legal. If, for instance, you have a contract to sell 100 widgets to someone who will pay for them in 6 installments at 18% interest and the law changes to reduce the maximum interest rate to 12%, you probably don't want your whole contract voided. With a severability clause, the contract will expressly provide for the illegal interest provision to be disregarded (or severed out) but it would leave the rest of the contract in place. Neat, huh?

So, sure things like severability clauses may be "mumbo jumbo" but it's handy mumbo jumbo.