Severance of Contracts

What is Severance of Contracts in Contract Law?

Quick Definition

Severance of contract refers to the court’s ability to remove an illegal or unenforceable part of a contract while leaving the remainder valid and enforceable. It applies where the offending clause can be separated without changing the overall meaning of the agreement. The aim is to preserve as much of the contract as possible.

In Context

Severance is commonly considered where a contract contains a clause that is illegal, contrary to public policy, or overly restrictive, such as in restraint of trade agreements. Courts will only sever terms if the remaining contract still reflects the parties’ original intentions and functions independently. In Tillman v Egon Zehnder Ltd, the Supreme Court allowed part of an overly broad non-compete clause to be severed, making the rest enforceable. However, courts will not rewrite contracts or fundamentally alter their meaning under the guise of severance. In exams, the key issue is whether the clause is truly separable or whether removing it would distort the contract as a whole.

See Also

• Legality of Object

• Public Policy

• Restraint of Trade

Learn More

Explore our Contract Law Notes for clearer case breakdowns, exam-ready structures, and practical guidance on handling illegality and enforceability issues with confidence.