Decoding Legalese: Part 1 SEVERABILITY

Most written agreements end off with a number of “boilerplate” clauses, being the small print that is usually glossed over. These are standardised clauses which deal with general matters and appear in most contracts, regardless of whether the specific agreement concerns a simple sale of apples or the manufacture of jet planes worth billions of rands.

Examples include clauses about severability, the whole agreement, variation, disputes, jurisdiction and so on.
These clauses are often clumsily drafted in high legalese. For the sake of covering all bases, they may go on much longer than is strictly necessary.
This series of updates seeks to decode the legalese in some of the most common boilerplate clauses.
Towards the end of most agreements, one comes across words to the following effect under the heading “SEVERABILITY“:

Except as expressly provided to the contrary herein, each paragraph, clause, term, and provision of this AGREEMENT, and any portion thereof, shall be considered severable. If for any reason, any provision of this AGREEMENT is held to be invalid, contrary to, or in conflict with any applicable present or future law or regulation by any Court in any proceeding between the parties, that ruling shall not impair the operation of, or have any effect upon, such other portions of this AGREEMENT as may remain otherwise intelligible, which shall continue to be given full force and effect and bind the parties hereto.

The effect of this clause is, in a nutshell, that if any part of the agreement is found to be invalid, it will not result in the entire agreement being invalid. Instead, the invalid part will be ignored as if removed from the agreement, and the rest of the agreement will stand.

For example, we might agree:1. I shall purchase ten apples from you every week for a year.

2. I shall pay you R3,00 per apple.

3. If I fail to pay for any single apple, then you may cause the words “bad debtor” to be tattooed in large black capital letters across my forehead.

4. The clauses of this agreement are severable, one from the other.

Clause 3 would be found to be against public policy (that is, morally repugnant and socially undesirable) and thus unenforceable. However as the clauses are expressly severable one from the other, you could still enforce your right to payment against me. The failure of clause 3 would not mean that the agreement fell away in its entirety and you were left out of pocket.


Decoding legalese – part 2: “entire agreement” clauses

This series of updates seeks to decode the legalese in some of the most common “boilerplate” clauses commonly found at the end of contracts.

Another very common clause is the “ENTIRE AGREEMENT” clause, which is generally along the following lines:

This agreement constitutes the entire agreement between the parties, and supercedes all agreements and arrangements between the parties, whether written or oral, express or implied, relating to the subject-matter of this agreement. Each party accepts that it is relying entirely on the terms set out in this agreement and not on any pre-contract statement, representation or misrepresentation made by or on behalf of the other party except to the extent, if at all, specifically set out in this agreement. 

When selling a product or marketing a service, a good many grandiose claims may be made regarding quality and results. These are seldom later incorporated into the contract as terms. With a standard “whole agreement” clause in a contract, the buyer is generally deprived of the right to require that those claims be lived up to. The clause has the result that anything the parties may actually have agreed upon, but which is not written down in the contract, is null and void.

For example, before I buy a lawnmower, the salesperson tells me that “this machine is so fast and effective, it will cut your garden maintenance time in half!” I am thrilled, sign the paperwork (including a “whole agreement” clause) and rush home to try out my new purchase. While I find that the lawnmower does in fact work just fine, it works the same as any other mower and does not, in fact, cut my garden maintenance time in half. Nowhere in the agreement with the salesperson did we record the salesperson’s promise, and so in general it is excluded from the agreement and unenforceable. I must live with my purchase.

There will be some exceptions under the Consumer Protection Act, which forbids misleading statements by suppliers and enables consumers to cancel transactions in some cases where they have been misled, but this Act only applies to certain transactions. Even where the Act applies, proof of the misleading statement will be very difficult if it was not recorded in writing.

In general, therefore, it is essential to ensure that any important promises made, are written into the contract. On a pre-printed standard form, additional clauses written in by hand and initialled by both parties are perfectly valid and binding. If a supplier makes a promise, they ought not to have any difficulty in formalising the promise. If they are reluctant, it is probably worth questioning their sincerity and therefore weighing up the transaction very carefully before committing.