At one of my recent European seminars I told the participants that I’m not in favor of the approach to document design that says that as soon as you have two distinct thoughts in a contract provision you should enumerate them and tabulate them. (For more about that, see this 2013 post (eighth paragraph) and this 2012 post.)
But, said one of the participants, under English law doesn’t enumeration and tabulation make it easier for a court to declare that only part of a provision is unenforceable, leaving the rest enforceable?
It’s awkward to address such questions on the fly without devoting more time to them than the seminar agenda allows. I’ve had time to consider the matter and on this blog I have the space to address it, so consider the following points:
Narrow Issue
Severability come into play only with respect to hot-button issues that could cause a provision to fall foul of public policy: Noncompetition provisions. No-hire provisions. Liquidated damages. Interest rates. And so on. For purposes of common-or-garden contract provisions, there would be no reason to consider the effect of tabulation on severability.
Enumeration and Tabulation Irrelevant
The seminar participant who raised this issue presumably had in mind the “blue-pencil rule,” which in the U.S. is contrasted with the “rule of reasonableness.” Here’s how Negotiating and Drafting Contract Boilerplate
545 (Tina L. Stark ed. 2003) (footnotes omitted) summarizes these two approaches:
Pursuant to the traditional blue-pencil rule, a court will delete portions of an otherwise unenforceable provision if the deleted portions can be clearly, and “grammatically,” separated from the remainder of the provision (i.e., if the provision will still be grammatically correct after the offending terms have been deleted). For example, an overbroad covenant forbidding future employment “in the State of Connecticut” could not be reduced to cover an enforceable geographic area in a blue-pencil jurisdiction; by contrast, a covenant seeking the same substantive result by instead separately listing each county in the State of Connecticut could be salvaged by a court determining to “delete” specific counties until the list was no longer overbroad. …
The Restatement has rejected the traditional blue-pencil approach in favor of the more flexible “rule of reasonableness,” pursuant to which a court may reform an unenforceable provision to the extent reasonable under the circumstances, and enforce it as so reformed.
English courts recognize the blue-pencil rule. Here’s what Mark Anderson & Victor Warner, A-Z Guide to Boilerplate and Commercial Clauses
508 (3d ed. 2012) (citation omitted) (yo, @IPDraughts!) has to say about it:
[T]here is also the so-called ‘blue pencil test’ developed by the courts. In certain circumstances the offending words (ie those containing the unlawful provision) are struck from the clause and if the remaining words of the clause make sense as a contractual provision, the remaining words will remain (and continue to operate). Otherwise, the entire clause containing the unlawful provision is removed from the contract.
The blue-pencil test is unhelpfully arbitrary, but there’s no way to wish it out of existence. Instead, the question is how it relates to tabulation and enumeration. The answer is, it doesn’t. Consider the following alternative provisions:
Roe shall eat fish and chips every day.
Roe shall eat the following every day:
(1) fish; and
(2) chips.
In the jurisdiction in question public policy forbids eating fish any day except Friday. A court keen on wielding a blue pencil would have no trouble doing so in either version.
The Role of Severability
Besides, looking to facilitate severability in all circumstances doesn’t take into account which side of the issue you’d likely be on. And generally, severing a provision is rather crude. I’d go out of my way to avoid creating the sort of problem that requires a court to consider severability.
Reminder About My Severability Provision
If you want the severability provision of your dreams, consider this 2012 post and this 2011 post.
Roe eating fish? Cannibalistic matricide?
I come across blue pencil issues most in situations where the drafter is trying to achieve an outcome in the face of likely judicial hostility. A well known way of a judge avoiding the “unfair” effect of an employee non-compete clause is to say (1) it goes too far and (2) we are not prepared to rewrite it, so the whole thing fails. This results in ever more elaborate drafting to try to “game” the judge’s reaction, with a cascade of clauses so that even if parts 1-4 are struck down, part 5 will remain and have some teeth.
I don’t like this game, but sometimes duty to the client’s instructions requires something along these lines.
There is a separate issue about generally breaking clauses down into small numbered items, where I know you think English and Australian drafters go too far. I agree, but think this is less of a sin than having paragraphs in contracts that run to more than half a page (or in some cases more than a page), as I see too often in US contracts?
That imagery will haunt my morning!
Regarding document design, you know that I’m not in the business of debating which evil is greater. Instead, I occupy the happy middle ground.