Lloyd's Maritime and Commercial Law Quarterly
CONTRACTUAL SEVERANCE AND THE CORNERSTONE OF THE PARTIES’ INTENTIONS
Sandra Annette Booysen*
The ability to sever a defective phrase or term from a contract may be vital to its enforcement. It is argued in this paper that the test for the availability of severance is twofold: it must be consistent with the parties’ intentions at the time of contracting as well as prevailing public policy. While the role of public policy in the severance enquiry is well established, the role of the parties’ intentions is less recognised and is the focus of the discussion. With reference to English and Australian case law, the paper explores the operation of severance, defends its compatibility with fundamental contractual concepts, demonstrates the role of the parties’ intentions and rationalises the more traditional severance rules within this framework.
I. INTRODUCTION
Severance, in the contractual context, removes defective words or terms to allow for the continuation and enforcement of the contract. The availability of severance may, therefore, be critical to the outcome of a contractual dispute.1 Unfortunately, as numerous cases and authors have pointed out, questions of severance are often difficult.2 Professor Richard Buckley has noted that there is “continuing scope for further judicial clarification of the doctrine of severance in illegality cases”.3 In this paper, I suggest a framework for determining the availability of contractual severance at common law. This framework has
* Assistant Professor, Faculty of Law, National University of Singapore. My gratitude to Michael Bridge, Andrew Simester, Helena Whalen-Bridge and to the anonymous referee for their constructive comments on earlier drafts. Thanks also to Clement Khoo and Toh Hong Xiu for research assistance.
The following abbreviations are used:
Anson : J Beatson, A Burrows and J Cartwright (eds), Anson’s Law of Contract, 29th edn (Oxford University Press, 2010);
Buckley: RA Buckley, Illegality and Public Policy, 3rd edn (Sweet & Maxwell, London, 2013);
Cheshire, Fifoot & Furmston: MP Furmston, Cheshire, Fifoot and Furmston’s Law of Contract, 16th edn (Oxford University Press, 2012);
Chitty : HG Beale et al (eds), Chitty on Contracts, 31st edn (Sweet & Maxwell, London, 2012);
Enonchong: Nelson Enonchong, Illegal Transactions (LLP, London, 1998);
Treitel : E Peel (ed.), Treitel: The Law of Contract, 13th edn (Sweet & Maxwell, London, 2011).
1. As noted by Buckley, [19.01].
2. See eg Brew v Whitlock (No2) [1967] VR 803, 805–806; Brooks v Burns (1969) 121 CLR 432, 438; Kingsway Investments (Kent) Ltd v Kent County Council [1969] 2 QB 332, 354A; Carney v Herbert [1985] 1 AC 301, 309H. See also Anson, 435; Buckley, [19.01]; Enonchong, [20.1].
3. Buckley, [19.26].
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