What happens if a term of a contract is illegal or unenforceable?
One way to try to guard against this is to include in your contract what is known as an invalidity or severability clause such as this: “Each provision of this Agreement is severable and distinct from the others. If any such provision is or at any time becomes to any extent invalid, illegal or unenforceable, then, except to that extent, it and all the other provisions of this Agreement shall continue in full force and effect.” If such an invalidity clause is not included in the contract then the courts are allowed to remove parts of a contract which are illegal or against public policy without the whole contract being made void and unenforceable. This is commonly known as the “blue pencil rule”. However, the courts will not apply the rule if it will fundamentally change the scope of the contract and the intention of the parties. In other words it will only do this if it is possible for the invalid provisions to be removed without significantly affecting the interpretation of the contra
