[Updated 16 September 2020: See this February 2017 post for a new version of this provision.]
[Updated April 23, 2013: See this October 2012 post for a revised version of this language.]
[Updated 2:30 p.m. EST, March 7, 2011: To tweak the language, as discussed in the comments.]
One exciting part of working on Koncision’s confidentiality agreement is that I’ve been forced to give serious thought to some topics I’ve studiously avoided.
One example is severability provisions. I’ve previously found them vaguely annoying, but I’ve never gotten around to figuring out why. And I’ve certainly never gotten around to devising alternative language—until this weekend.
After chewing over my no-hiring and no-soliciting language, Chris Lemens and I traded drafts of the severability provision of our dreams. Chris is a stalwart member of Koncision’s confidentiality agreement editorial board; thanks to his input, the provision is much clearer than it would have been otherwise.
Here’s what we came up with:
Severability. If any provision of this agreement is held to be unenforceable, then that provision is to be construed either by modifying it to the minimum extent necessary to make it enforceable (if permitted by law) or disregarding it (if not). [But if modifying or disregarding the unenforceable provision would result in failure of an essential purpose of this agreement, the entire agreement is to be held unenforceable. The parties acknowledge that enforcement of section Y as written is an essential purpose of this agreement.] If an unenforceable provision is modified or disregarded in accordance with this section X, the rest of the agreement is to remain in effect as written, and the unenforceable provision is to remain as written in any circumstances other than those in which the provision is held to be unenforceable.
And here’s what prompted this language:
- Basic severability provisions usually just says that if any provision is held invalid, the remainder will remain enforceable. It signals to a court the intent of the parties. But the standard provision tells only part of the story, in that it doesn’t address what happens to the unenforceable provision. That’s addressed in the first sentence of the new provision, which works whether you’re in a “blue pencil” jurisdiction (where courts delete the offending provision) or a “rule of reasonableness” jurisdiction (where courts might be willing to “rewrite” it).
- You see versions of the second sentence quite often. But automatically including it in a severability provision seems counterproductive. Instead, you should first consider whether any provision that’s at risk of being held unenforceable is so important that if it’s found unenforceable, you’d want to pull the plug on the entire contract. If you decide that no such provision is that important—for example, it’s hard to imagine anyone feeling that strongly about a no-soliciting provision—it would make sense to omit the second sentence. If you decide that one or more such provisions are that important, it would probably be a good idea to point them out by including the third sentence.
- The first half of the fourth sentence articulates what’s in basic severability provisions, but it makes it clearer what the context is. The second half isn’t essential, but I think it’s helpful, if only to make things clear to the parties.
- I couldn’t be bothered to add language saying that if any provision is held unenforceable the parties must negotiate in good faith to modify that provision. For one thing, an obligation to negotiate in good faith would seem to add little to the implied obligation be behave in good faith. But more practically, if a provision is held to be unenforceable, it’s because the parties have litigated their dispute. By then, it would be a little late for such negotiations.
- Remember, a severability provision makes sense only if one or more provisions are at risk of being held unenforceable. If a contract doesn’t contain any noncompetition, liquidated-damages, or other hot-button provisions, including a severability provision would just clog up the works.
In event event, that’s the prototype of Koncision’s severability provision. It think it’s hot stuff, but I’m ready to improve it.