Severability Clause

What Is a Severability Clause?

A severability clause (sometimes called a “savings clause”) is a short boilerplate provision in a contract that addresses what happens if a court later decides that one specific term of the contract is invalid or unenforceable. The clause instructs the court (and the parties) to treat the offending term as severed and to leave the rest of the contract intact and enforceable.

The standard formulation reads roughly: “If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable, that provision shall be severed from this Agreement and the remaining provisions shall remain in full force and effect. The parties further agree that the invalid provision shall be replaced by an enforceable provision that most closely reflects the parties’ original intent.”

That second sentence (the reformation language) is critical in jurisdictions that allow judicial modification of overbroad clauses, and is harmless in jurisdictions that do not.

What Happens Without a Severability Clause

Without an express severability clause, a court that finds one provision unenforceable must decide whether to invalidate the whole contract or only the offending clause. The default rule under the Restatement (Second) of Contracts is that an unenforceable term does not invalidate the whole contract unless the term is so essential that the contract cannot stand without it. But “essential” is judgment-driven and unpredictable.

The risk is highest where the unenforceable clause is at the core of the bargain. A US company that drafted an overbroad non-compete with a contractor in a state hostile to non-competes might lose not just the non-compete but the entire agreement if the offending clause is held essential. With a severability clause, the non-compete falls and the rest (IP assignment, confidentiality, payment terms) survives.

The cost of including a severability clause is essentially zero. The cost of omitting it can be the loss of a contract that took weeks to negotiate. Every well-drafted commercial contract includes one.

Blue-Pencil vs. Reformation

The interaction between a severability clause and overbroad provisions (especially restrictive covenants like non-competes, non-solicits, and confidentiality clauses with unbounded duration) is where state law gets interesting. Three approaches dominate.

Red-pencil (all-or-nothing). The court refuses to save an overbroad clause. The clause falls in its entirety and the severability clause then preserves the rest of the contract. This is the most contractor-friendly and most drafter-hostile approach. It encourages careful, conservative drafting because overdrafting destroys the clause.

Strict blue-pencil. The court can strike specific unenforceable language with a metaphorical blue pencil but cannot add new words. If the surviving language still makes sense and is enforceable on its own, the modified clause is upheld. If striking the offending words leaves the clause meaningless, the whole clause falls. North Carolina is a prominent strict blue-pencil jurisdiction.

Reformation. The court can rewrite the offending clause to make it reasonable and enforceable. A non-compete with a five-year duration might be reformed to two years. A geographic restriction covering the entire US might be narrowed to the states where the company actually operates. Texas, Illinois, and several other states have reformation regimes for restrictive covenants. Reformation is the most drafter-friendly approach because overbroad clauses are saved rather than struck.

Several states address the “moral hazard” of drafter-friendly reformation by imposing consequences. The drafter who relied on reformation may forfeit attorneys’ fees or other remedies that would otherwise have been available. The policy goal is to discourage routine overdrafting that relies on the court to fix it.

State Variation and Why Governing Law Matters

The severability clause itself is the same everywhere. What changes is what the court can do with it. A clause that is identical on the page produces very different outcomes in a red-pencil state versus a reformation state. This is why the governing law clause and the severability clause are functionally connected: the governing-law choice determines which approach to severability applies.

For US contractor agreements with potentially overbroad restrictive covenants (non-competes, broad non-solicits, lengthy confidentiality with no time limit), the choice of governing law materially changes the risk. A Delaware or New York choice produces a moderate, predictable outcome. A North Carolina choice means strict blue-pencil. A California choice for a non-compete is essentially fatal because California’s Business and Professions Code section 16600 voids most non-competes regardless of how they are drafted, and severability cannot save what state policy invalidates.

Drafting a Severability Clause

A robust modern severability clause does three things.

Severs the unenforceable provision. “If any provision is held invalid, that provision shall be severed.”

Preserves the remainder. “The remaining provisions shall remain in full force and effect.”

Authorises reformation. “Any invalid provision shall be replaced by an enforceable provision that most closely reflects the parties’ original intent, to the maximum extent permitted by applicable law.”

The third element is the request to the court to reform rather than just strike. In a reformation state it gives the court a clear authorisation to rewrite. In a blue-pencil state it is harmless surplusage. In a red-pencil state it cannot save the offending clause but does not cost anything either.

Where Omnivoo Helps

Omnivoo’s Contract Management templates include a robust severability clause as standard boilerplate alongside the governing law selection, with the reformation language calibrated so that whatever US state law a customer chooses for their contractor agreements, the survival of the agreement does not depend on having drafted every restrictive covenant perfectly. Combined with the MSA + SOW structure, the result is contracts that hold up across multiple jurisdictions without manual rebuilding for each new engagement.