Severability and Survival and Successors Oh My!

rubiks cube

What Do These Contract Provisions Mean?

By Stacia Hofmann

Despite modern attorneys’ best efforts to use plain language, you will still find legal jargon in some common contract clauses. In this blogpost, I summarize three of those provisions.

Name of Provision

Sample Language1

What It Means

Severability

In case any one or more of the provisions of this Attachment shall be found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Attachment will not be affected.

Zuver v. Airtouch Commc’n, Inc., 153 Wn.2d 293, 299, 103 P.3d 753 (2004).

Not all contracts are enforceable as written. Sometimes, just a part of the contract, or a certain paragraph, is not supported by the law. A severability provision lets the judge know that if just part of the contract is unenforceable, the parties still want to keep the enforceable parts of the contract.

In Zuver, the court found that provisions about remedies and confidentiality were invalid, but enforced the rest of the contract. The unenforceable clauses could be “severed” from the rest of the contract.

Survival

14. CONTINUING OBLIGATIONS
Notwithstanding the termination of Party A for any reason, the provisions of paragraph 5, 6, 7, 9, and 13 of this Agreement will continue in full force and effect following such termination.

Hvidtfeldt v. Sitrion Sys., Am., Inc., Washington Court of Appeals, Division I, No. 72846-6-I (October 12, 2015 – Unpublished)

You might see language like this, or that a provision “shall survive” the term or termination of a contract. This type of survival is concerned about the “death” of the contract: even if the relationship between the parties ends, some of the contractual obligations continue to live on.

In the Hvidtfeldt case, the court held that the promises in the contract that were not enumerated (i.e., promises in paragraph 2) were no longer in effect after Party A’s termination because that paragraph was not included in the list of paragraphs that survived Party A’s termination.

Successors and Assigns

Party A may not assign this agreement without the prior written consent of Party B (which consent shall not unreasonably be withheld), except that in the event of the merger or consolidation of Party A with or into another corporation or in the event of liquidation of Party A this agreement may, without Party B’s consent, be assigned to the corporation into or with which Party A is merged, consolidated or liquidated or to the party succeeding Party A’s interests as a result of such liquidation, in which case the successor to Party A shall succeed to all of Party A’s rights and be bound by all its obligations hereunder. Subject to the foregoing this agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns.

Robbins v. Hunt Food & Indus., 64 Wn.2d 289, 292, 391 P.2d 713 (1964).

Successors are those people (e.g., after the death of a person) or entities (e.g., after the sale of a business) that naturally succeed, or fall into the footsteps, of the contracting party. If something happens to a party, does the contract continue or end?

Assigns (aka assignees) are a little different. In a contract assignment, a party transfers its contractual rights and obligations to a different person or entity. Some contracts expressly allow for a transfer of interest. Others specifically prohibit assignment.

In the Robbins case, the court found that Party A could assign (transfer) its contract rights and responsibilities, and Party B’s express permission was not required because there was no reasonable basis for Party B to withhold consent.

So, as you’re reviewing your longer contracts, pay close attention to severability paragraphs, survival provisions, and successor clauses. It may be tempting to ignore them – not only are they full of unusual legal terms, but they seem kind of boring. However, you never want to agree to something you don’t understand, and, if a judge ever has to interpret the effect of one of these provisions on the rest of your contract, you don’t want to be unpleasantly surprised.

This blog is for informational purposes only and is not guaranteed to be correct, complete, or current. The statements on this blog are not intended to be legal advice, should not be relied upon as legal advice, and do not create an attorney-client relationship. If you have a legal question, have filed or are considering filing a lawsuit, have been sued, or have been charged with a crime, you should consult an attorney. Furthermore, statements within original blogpost articles constitute Stacia Hofmann’s opinion, and should not be construed as the opinion of any other person. Judges and other attorneys may disagree with her opinion, and laws change frequently. Neither Stacia Hofmann nor Cornerpoint Law is responsible for the content of any comments posted by visitors. Responsibility for the content of comments belongs to the commenter alone.

  1. For ease, I have used Party A and Party B instead of the real parties’ names.
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About Stacia Hofmann

I am a business law and litigation attorney and certified risk manager at Cornerpoint Law. I founded Cornerpoint on the principle that proactive risk management leads to more efficient, economic, socially responsible, and sustainable operations. t: 206-693-2718/e: stacia@cornerpointlaw.com

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