Business contracts often include numerous supplemental clauses. Not only do contracts outline the expectations of both parties, but they may also include certain standard clauses intended to strengthen the contract or protect one of the parties.
Instead of using fill-in-the-blank template contracts, business leaders often benefit from creating custom documents based on their unique needs. Each contract may need to include specific provisions, such as restrictive covenants intended to prevent business partners from leaving the company and competing against it unfairly afterward.
One type of clause can be an important inclusion in a number of different types of contracts. Severability clauses can help to strengthen contractual obligations.
What is a severability clause?
The inclusion of many different terms, obligations and standards in a contract can result in breaches occurring. One party may misunderstand their responsibilities or may intentionally refuse to pay the other party or deliver goods as promised.
When a breach of contract occurs, either party that signed the contract may try to rush forward with the assumption that the contract is now invalid. Severability clauses help prevent the invalidation of a business agreement solely because of one issue.
A severability clause essentially declares that the contract remains valid in its entirety even if a breach of certain requirements occurs. Severability clauses ensure that a company can pursue the completion of work or demand payment even if a minor breach of the agreement occurred previously.
Stronger contracts limit conflict
When employees, service providers and other businesses are aware that breach of contract litigation could occur, they are more likely to fulfill their contractual obligations. The inclusion of a severability clause in a contract helps prevent small oversights or errors from complicating a working relationship and causing major disputes.
If both parties recognize that the contract remains in effect despite minor issues, it may be easier to remedy breaches and preserve the working relationship. In cases where continuing to work together may not be the best outcome, either party could take legal action and ask the courts to order contract rescission, thereby eliminating contractual obligations.
Securing appropriate support while drafting contracts can help business leaders strengthen their agreements with outside parties. Custom contracts can go a long way toward the minimization of operational disputes.