What happens if part of a contract is illegal?

When can the rest of the contract still be enforced?

Whether the remaining terms survive often depends on how the agreement is structured, such as:

• Whether the illegal provision can be separated from the rest of the contract.
• Whether the remaining terms still make sense on their own.
• The importance of the illegal clause to the overall agreement.
• Whether the contract includes a severability clause.
• The intent of the parties when the agreement was made.
• Applicable laws governing the contract.

These factors can help determine whether the rest of the agreement remains effective.

What if the illegal provision is essential to the agreement?

Some illegal terms are so closely tied to the contract that removing them may change the entire bargain. Potential issues include:

• The illegal provision is a key reason the parties entered the agreement.
• The remaining terms cannot operate independently.
• The contract's main purpose cannot be achieved without the unlawful provision.
• The agreement conflicts with public policy.
• The parties dispute how the contract should be interpreted without the illegal term.
• Applicable law requires a different result.

The effect of an illegal provision depends on the facts and the governing law.

What to do next…

1. Identify the provision that may be unlawful.
2. Review the contract for a severability clause or similar language.
3. Gather documents and communications related to the agreement.
4. Consider how the contract would operate if the disputed provision were removed.

What to consider in your specific situation

• The type of contract and business relationship involved.
• The specific provision that may violate the law.
• Whether the provision is central to the agreement.
• Whether the contract includes a severability clause.
• The parties' intentions and actions after signing.
• Applicable federal, state, or local laws governing the agreement.

Since every situation is different, consider getting more information through Rocket Copilot or an attorney review to move forward more confidently.