Value of Severability Clause

Posted by David Adelstein on June 16, 2018
Trial Perspectives

 

 

 

Severability clauses have become fairly commonplace in contracts.  Cut and paste provisions.  However, these clauses can provide tremendous value.  A sample of a severability clause is as follows:

If any provision of this Agreement, the deletion of which would not adversely affect the receipt of any material benefit by or in favor of any party or substantially increase the burden of any party to this Agreement, shall be held to be invalid or unenforceable to any extent, the same shall not affect in any respect whatsoever the validity or enforceability of the remainder of this Agreement.

There are numerous ways to draft this type of clause with the essence being that if anything in the contract is deemed invalid or unenforceable, the balance of the provision and contract shall remain in full force and effect.  Such a provision, regardless of how it is worded, is known as a severability clause. 

An example of the application of the severability clause can be found in Premier Compounding Pharmacy, Inc. v. Larson, 43 Fla. L. Weekly D1340a (Fla. 4th DCA 2018), dealing with a non-compete agreement between a pharmacy and pharmacist. 

The non-compete agreement in the case contained language that the pharmacy (employer) could obtain injunctive relief without posting an injunction bond.  Requiring a temporary injunction to be posted without a bond is contrary to Florida Statute s. 542.335(j) which states in relevant part, “No temporary injunction shall be entered unless the person seeking enforcement of a restrictive covenant gives a proper bond, and the court shall not enforce any contractual provision waiving the requirement of an injunction bond or limiting the amount of such bond.”

Based on this statute, the language in the non-compete agreement that allowed the employer to move for a temporary injunction without posting a bond was not legal. 

Without going into all of the details of the case, the appellate court maintained that the language in the non-compete agreement that allowed the employer to move for a temporary injunction without posting a bond can be eliminated from the provision, with valid legal obligations remaining in the agreement, i.e., the temporary injunction can be  issued while requiring the employer to post a bond pursuant to Florida law.  

Additionally, the provision also allowed the employer to recover attorney’s fees in obtaining the injunctive relief.  The trial court denied the employer’s request for fees (although the injunction was entered) finding the provision unenforceable because of the preceding invalid sentence that allowed the employer to obtain an injunction without posting a bond.  No different than the appellate court eliminating the “without a bond” from the provision, the court held that, “because the extent of unenforceability of the provision goes solely to the ‘no bond’ requirement of the injunction, the remainder of the provision and the agreement is still enforceable, including the attorney’s fees provision.” Premier Compounding Pharmacy, Inc., supra.

Hence, while the provision at-issue was contrary to Florida law, the severability provision provided value in simply eliminating the invalid language and enforcing the remainder of the provision.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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