When two parties agree to do business with one another, they may negotiate a multiple-page contract explaining their obligations. There is an expectation that they should both fulfill their obligations in good faith.
While it is beneficial to extend grace to one another for oversights and uncontrollable circumstances, either party can potentially take legal action if the other breaches the agreement. Contract disputes often begin with reminders or complaints, followed by formal communication and then possibly civil litigation.
In some cases, the presence of specific clauses in a contract can affect what occurs when there is a disagreement. Severability clauses are relatively common, and they can lead to unexpected issues during a contract dispute.
What is the purpose of a severability clause?
A severability clause essentially separates each individual obligation in a contract. The impact of a severability clause is that a breach of one aspect of the contract does not invalidate the remainder of the agreement.
For a business dealing with a contract dispute with a vendor, severability clauses might mean that they have to continue making payments despite issues with a recent shipment. Severability clauses create scenarios in which the parties that experience breaches of contract may unintentionally put themselves at risk of litigation by failing to fulfill their own contractual obligations.
When contract disputes go to court, requests to eliminate future contractual obligations are among the remedies that plaintiffs might seek. Severability clauses make such relief necessary in some cases. Reviewing an original contract with a business law attorney can help an executive or business owner address a significant contract issue accordingly.