Several cases stress the importance of determining which provisions are essential. The inclusion of a severability clause supports the argument that not all provisions of a contract are material and that the unenforceability of a provision should not invalidate the entire agreement. Thus, in Gladys Ferro v. Rose Bologna, 31 N.Y.2d 30 (N.Y. 1972), the Tribunal enforced third party beneficiaries under a separation agreement, despite the illegality of the clauses exempting a husband from assisting his wife. The court concluded that the separation agreement contained a severability clause, arguing that the illegal clauses for other provisions of the agreement were not so essential and interwoven with them that they were logically inextricably linked. The parties may contest whether, having regard to the applicable law, it is desirable to include a provision that maintains an agreement with erroneous non-essential provisions or terminates an agreement with invalid substantive provisions. Nevertheless, the main purpose of the severability clause is to reflect the objectives of the parties in clear terms and to avoid agreements that are not desirable on the part of both parties. The practice of the market in the UK is not to include severability clauses related to derivatives. In general, parties to framework agreements are content to leave the issue of severance pay to the common law and are reluctant to intervene in the standard documentation. The general view is that the inclusion of a severability clause in English law is unlikely to make much difference. However, English severability cases are generally old, and it may be tempting for a court considering the issue in a modern commercial context to try to interpret or develop the law in such a way that it takes into account, for example, the underlying commercial intent.
The parties may be able to protect themselves from the uncertainty of such an approach by including a severability clause For example, in the context of a derivative embedded in a broader structure, the primary concern might be to reduce the risk that the entire framework contract will be poisoned by the nullity of non-essential provisions. In such a case, the inclusion of a severability clause may slightly improve the chances that the valid parts of the agreement will continue to exist. The main criterion for answering this question is the intention expressed, considered in the light of the language of the contract and the circumstances accompanying it. (Rudman v. Cowles Communications, Inc., 30 N.Y.2d 1 (N.Y. 1972)). In determining the intent of the parties, a New York court may consider whether the contract contains a severability clause. The absence of a severability clause was cited as an indication that the parties intended to consider that all the terms of a contract were related to the central purpose of this Agreement (F&K Supply, Inc.c. Willowbrook Development Co., 732 N.Y.S.2d 734 (N.Y. App. Div.
2001)). In such a case, a court could declare the entire contract unenforceable if even one of its terms is declared invalid. Regardless of whether severability clauses are included, the courts may have a different view of the essential provisions of one or both parties. Since English law has traditionally ignored the intention of the parties, the risk of the contract`s survival, despite the significant failure of its business objective, may be more acute in English law than in New York law. For this reason, it makes sense to include a savings clause such as the following, which identifies critical terms in a framework agreement: « This Agreement will be considered invalid if any provision of Sections 1(c), 2, 5, 6 or 13 (or any related definition) is found to be invalid. » The following sentence in the introductory sentence reads: « This framework agreement and this 2002 timetable are collectively referred to as this `framework agreement.` » It is redundant, as is the defined term « framework agreement » because the previous sentence indicates that the framework agreement contains the timetable. Severability clauses are worded in such a way as to ensure that the non-infringing terms remain in effect and that the entire transaction remains in effect. A typical severability clause could read as follows: If any provision of this Agreement is held to be invalid or unenforceable for any reason, the other provisions of this Agreement will remain in full force and effect as if this Agreement had been performed with the deletion of the invalid provision. Some market participants choose not to add a severability clause to the framework agreement because the applicability of a severability clause depends on the choice of applicable law. Some fear that if the applicable law of the contract does not recognize severability clauses, the inclusion of such a clause in the contract itself could invalidate the contract.
In addition, even in jurisdictions such as New York, where severability clauses are enforceable, a party may decide that applicable contract law eliminates the need for a severability clause. Notwithstanding the importance of maintainability, the parties to a framework agreement must also ensure that the contract is terminated if one of its essential clauses is found to be invalid […].