To err is human, says the old adage and, arguably, few other proverbs capture the essence of human nature with equal accuracy and precision. Of course, some errors are more consequential than others. As a contractor in the construction industry, you might have already learned the hard way that an error in a construction agreement may spell terrible consequences for you and your business. That’s why contracts often contain wording that provides a way to amend mistakes made when the contract was drafted. This way out is called a severability clause also known as a saving clause. In this article, you will learn what severability clauses are, what protections they can offer, and whether there are circumstances in which you may want to avoid a standard severability.
Severability Clauses Explained
Negotiating the terms and provisions of a construction contract is a time-consuming yet important step towards successful resolution of a project. Imagine, however, that a contract that has taken many days or even weeks to negotiate and draft is suddenly found to contain one or more provisions that are invalid – but only after you and the project owner have already signed the agreement!
Sometimes the controversial clause may go directly against an established state or federal laws; other times, the proverbial devil may be in the smallest details such as a spelling error, a misplaced punctuation mark, or a grammatical mistake that entirely change the meaning of the clause in question. In any case, a contract containing an invalid provision runs the risk of rendering the entire agreement null and void. This, in turn, may result in a loss of money, time, and resources with serious consequences to both parties that are inconvenient at best and utterly disastrous at worst.
Severability clauses are added to contracts to prevent such a scenario from occurring. Their main purpose is to protect the validity of a contract, so that it may remain in force as a whole even if one or more of its provisions are found to be invalid. A typical severability clause will contain saving language – or in other words, a statement affirming and preserving the validity of the rest of the contract even if one or more clauses are found to be invalid. A severability clause, for example, may state that the invalid part of the contract should be rejected and deleted altogether. However, it may also provide for ways to amend the error. This will allow the previously invalid clause to stay in the contract – but in a different form.
Why You Should Be Cautious of Severability Clauses
Caution is advised and must be exercised when a severability clause is included in a construction contract, as the application of such clauses in their most basic form can bring undesirable results. Let’s consider one example.
A provision of the contract detailing fees and compensation for the contractor’s labor costs is found to be invalid. The contract contains a standard severability clause which states that any unlawful or invalid term of the contract shall be deleted, but the rest of the contract shall be preserved as is. This may potentially lead to a situation where the contractor is still bound by their contractual obligations to perform the work as agreed while no longer being entitled to payment. This is a position no one wants to find themselves in.
While the example mentioned above may seem extreme, it does highlight the need to avoid standard severability clauses that appear in most typical construction contracts. Disadvantageous situations can be avoided by introducing modifications to the wording of the severability clause in order to better adjust the clause to the specific needs of any given project. For example, a severability clause may identify provisions of the contract that are deemed essential to the purpose of the agreement, that their invalidation would automatically invalidate the entire contract as well.
What Can You Do?
In order to avoid negative consequences of badly written severability clauses and take full advantage of their legal potential, you may need to ask a lawyer for professional advice and consultation on a contract you’re about to sign. Our attorneys at National Lien & Bond will be able to review your contract and advise on any potential disadvantageous result or risks its provisions may entail. Contact us today to schedule your free consultation.
This blog is for educational purposes only and not intended for legal advice.
Frequently Asked Questions
What is a severability clause in a construction contract?
A severability clause (also called 'savings clause' or 'separability clause') is a contract provision stating that if any specific clause, term, or provision of the contract is found to be invalid, unenforceable, or void by a court, the remaining provisions of the contract will continue to be valid and enforceable. The clause 'severs' the invalid provision from the rest of the contract rather than allowing one bad clause to invalidate the entire agreement. Severability clauses are standard in most well-drafted construction contracts but are sometimes missing from owner-drafted or boilerplate forms.
Why does a severability clause matter for unpaid contractors?
Severability clauses protect unpaid contractors when one provision of their contract is found unenforceable. Common examples in construction: (1) a prospective lien waiver is invalidated (lien rights cannot be prospectively waived in most states), but the contract's payment terms remain enforceable; (2) an overbroad indemnification clause is struck under anti-indemnity statutes, but the scope of work and payment provisions survive; (3) an unconscionable arbitration clause is voided, but the underlying breach-of-contract right survives. Without severability, invalidation of any single clause could void the entire contract — destroying payment rights along with the bad clause.
Are severability clauses always enforceable?
Generally yes — courts enforce severability clauses unless: (1) the invalid clause is so central to the contract that removing it would frustrate the parties' intent; (2) the invalid clause is part of an illegal scheme that taints the entire contract; (3) the invalid clauses are so numerous that severing them leaves the contract substantially altered; (4) the severability clause itself was procured by fraud or unconscionable conduct. In ordinary construction-payment disputes, severability clauses are routinely enforced — making them low-risk protective devices for unpaid contractors.
What contract clauses are most commonly invalidated in construction disputes?
Common construction contract provisions struck down by courts include: (1) prospective lien waivers (cannot be waived in CA, IL, NY, and most states); (2) overbroad indemnification clauses (struck under state anti-indemnity statutes in most jurisdictions); (3) unconscionable arbitration clauses (especially in subcontractor agreements); (4) 'pay-when-paid' clauses with no time limit (re-interpreted as 'pay-within-reasonable-time' in most states); (5) jury-trial waivers (some states require specific knowing-waiver language); (6) limitations on consequential damages (sometimes void as against public policy in personal injury context). Severability protects the rest of the contract when any of these is struck.
Should I always negotiate for a severability clause?
Yes — severability clauses should be a standard demand in every construction contract review for unpaid contractors. Most owner-drafted contracts include severability favoring the owner; most GC-drafted subcontracts include severability favoring the GC. Subcontractors and suppliers should ensure the severability clause is BILATERAL (protecting both parties) rather than unilateral. The cost of negotiating for severability is minimal; the protective value is substantial. National Lien & Bond reviews construction contracts before signing and identifies missing or one-sided severability provisions.
What is the difference between a severability clause and a savings clause?
The terms are often used interchangeably. A 'severability clause' explicitly states that invalid provisions are severed. A 'savings clause' may be broader — addressing not just severability but also reformation (where invalid provisions are rewritten to be enforceable rather than struck entirely), conflict resolution (where ambiguous provisions are construed in favor of enforcement), or choice-of-law fallbacks. The best contract drafting combines severability with reformation language: 'if any provision is unenforceable, it shall be reformed to be enforceable to the maximum extent permitted by law, and if not reformable, it shall be severed.'
How does National Lien & Bond help with construction contract review?
National Lien & Bond reviews construction contracts BEFORE signing to identify problematic provisions including: (1) missing or one-sided severability clauses; (2) prospective lien waivers; (3) overbroad indemnification; (4) unconscionable arbitration; (5) pay-when-paid clauses without time limits; (6) jury-trial waivers; (7) missing fee-shifting provisions. For Illinois-based engagements, Hal Emalfarb's firm at Emalfarb Swan and Bain handles direct review. For 50-state coverage, NLB's network attorneys verify state-specific enforceability and negotiate revised contract language. Contact NLB for a free initial consultation before signing any construction contract.