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The document discusses the doctrine of severability in contract law. It provides an overview of key cases where this doctrine was applied, such as Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd, which established that unreasonable restrictions in non-compete agreements can be severed. The document also outlines rules for severability from Shin Satellite Public Co. Ltd. V. Jain Studios Limited, such as that severance is not possible if it eliminates the main intention of the agreement. Sections 57 and 58 of the Indian Contract Act are provided as examples incorporating the doctrine of severability.
The document discusses the doctrine of severability in contract law. It provides an overview of key cases where this doctrine was applied, such as Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd, which established that unreasonable restrictions in non-compete agreements can be severed. The document also outlines rules for severability from Shin Satellite Public Co. Ltd. V. Jain Studios Limited, such as that severance is not possible if it eliminates the main intention of the agreement. Sections 57 and 58 of the Indian Contract Act are provided as examples incorporating the doctrine of severability.
The document discusses the doctrine of severability in contract law. It provides an overview of key cases where this doctrine was applied, such as Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd, which established that unreasonable restrictions in non-compete agreements can be severed. The document also outlines rules for severability from Shin Satellite Public Co. Ltd. V. Jain Studios Limited, such as that severance is not possible if it eliminates the main intention of the agreement. Sections 57 and 58 of the Indian Contract Act are provided as examples incorporating the doctrine of severability.
In such cases, rendering the whole contract void is not needed. Here, the doctrine of severability comes to use. Also called the Doctrine of Blue Pencil. Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535. Nordenfelt, a manufacturer specialising in armaments, sold his business to Hiram Stevens Maxim. They had agreed that Nordenfelt would not make guns or ammunition anywhere in the world, and would not compete with Maxim in any way for a period of 25 years. The Court found the latter part of the restriction unreasonable and severed it to read: “for the next 25 years, would not make guns or ammunition anywhere in the world. The part would not compete with Maxim in any way for a period of 25 years. Unreasonable part is cut off. This is probably the first case where the Doctrine of severablity was used in contracts law. One of the major cases in which the Doctrine of Severability was put to use is
Shin Satellite Public Co. Ltd. V. Jain Studios Limited, SC
2006. Agreement made for the services for providing the satellite services by the respondent. Clause 23 of the agreement provided for Arbitration between the parties in case of dispute. Clause 20 provided for severability of the invalid provisions of the agreement. CK THAKKER laid down the following rules for the severability. 1. Severance is probably not possible where the objectionable parts of the contract involve illegality and not mere void promises. 2. Must be possible to strike out the offending part. 3. No severability if the severance wipes out the main intention of the agreement. SUBSTANTIAL SEVEREABILITY NOT TEXTUAL DIVISIBILITY. The following two sections of the Indian Contract Act, 1872 are clear cut examples of Doctrine of Severability. SECTION 57 and SECTION 58 SECTION 57 -Where persons reciprocally promise, firstly to do certain things which are legal, and secondly, under specified circumstances, to do certain other things which are illegal, the first set of promises is a contract, but the second is a void agreement. SECTION 58 - In the case of an alternative promise, one branch of which is legal and the other illegal, the legal branch alone can be enforced. In this case while dealing with the Securities and shares there was an inconsistencies with the RBI guidelines. There were two parts of the transaction, one was the ready part and one was the forward leg. From these two the first part was done rightly and completely but the second part remained to be executed. Neither the object nor the consideration of the ready leg is illegal, unlawful or prohibited under section 23 of the Contract act. Forward leg is illegal under Securities Control Regulation, Act.