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Assuming there is no "savings clause" or statement of the form "if a provision is found to be unenforceable, the rest still remain in effect", when can an entire contract be invalid because of one mistake?

For example, if you rent a car and sign a contract with the following provisions:

  1. You will return it with a full tank of gas
  2. You will be charged $1000 per hour if you return it late;

If 2) is found to be unenforceable then does that mean you also weren't responsible for 1)? What process would a court go through?

For another example: I have a lease where on the addendum there is a mistake. Instead of my name it's the old tenant's. Does this automatically mean I don't have to do any of the items on the lease, like mow the lawn? Obviously not, but how would the court decide?

If the written lease is just a reminder of the actual agreement, even though it doesn't have my name in the text, it's kind of obvious they meant I'm responsible for mowing the lawn and not the previous guy who moved out.

  • You'll most certainly need to specify which jurisdiction (country/state) you are considering. Also, in many jurisdictions, there may be significant differences between generic contracts and specific ones like property lettings, so you may want to concentrate on a single case rather than mixing several. – jcaron Jan 19 '16 at 16:28
  • @jcaron I was thinking about property in Canada. – Alex Jan 20 '16 at 9:09
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If 2) is found to be unenforceable then does that mean you also weren't responsible for 1)? What process would a court go through?

Probably not.

The Court would determine basically if invalidating the provision that violates the law or public policy or what have you still leaves a remaining contract that fairly be said to reflect the intent of the parties. If so, the offending provision will be severed or reformed, if not, the entire contract will be invalidated. In most cases, a "savings clause" is mere window dressing that only matters is a really close cases where the intent of the parties is ambiguous.

(On the other hand, an "anti-savings clause" which provided that if any provision of the contract was held to be invalid that the entire contract was invalid, would probably be upheld even if the offending clause would otherwise have been severed from the rest of the contract.)

In this case, "2" is probably invalid because it is a "penalty" rather than a "liquidated damages clause" that fairly attempt to estimate difficult to quantify harm associated with a particular kind of breach of contract, since the amount owed exceeds any reasonable estimate of such a harm. But, eliminating that clause doesn't really undermine the intent of the rest of the agreement and any specifically proven harm actually cased by the late return could still be imposed by a court as damages for a breach of the deadline to return the leased vehicle.

Also, usually invalidating a provision of a contract is an all or nothing thing, but if there is reason to think that the offending clause is problematic due to a clerical error or mutual mistake, the contract can be reformed to reflect the true intent of the parties. Furthermore, sometimes statutes allow a particular kind of offending term to be modified rather than stricken (something that is called, somewhat derisively "blue pencilling"). For example, usury statutes which prohibit the charging of interest above a certain amount often provide that interest be reduced to the maximum amount allowable by law when it is violated, rather than invalidating a provision charging interest entirely.

On the other hand, for example, if the agreement were to lease a particular model of vehicle which only used leaded fuel (something which has been prohibited in Canada for decades and is thus illegal to lease or operate), because that particular model was the only one the lessor owned that was available to lease, the entire agreement would probably be invalidated. This is because the invalidated provision goes to the heart of and central purpose of the agreement which cannot be fulfilled in any other way.

For another example: I have a lease where on the addendum there is a mistake. Instead of my name it's the old tenant's. Does this automatically mean I don't have to do any of the items on the lease, like mow the lawn? Obviously not, but how would the court decide?

This most likely would not invalidate either the lease or even the addendum. The lease would be reformed to reflect the true intent of the parties, because it was clearly and obviously a mutual mistake or clerical error.

  • "If so, the offending provision will be severed or reformed" assuming there's nothing else in the contract that would prevent severance or reformation. "still leaves a remaining contract that fairly be said to reflect the intent of the parties" covers the situation where a clause is tied to something else that prevents the severance or reformation. But there might be something in the contract that requires invalidation of the whole contract under some condition, which may be satisfied by the invalidation of the offending provision. At least, I don't think that would be covered otherwise. – Wm Wolff - Law Exam Guides Aug 25 at 17:40

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