united-kingdom contract-law employment
Is &#39;reading down&#39; clause optional?
<p>Specifically with regard to a UK/England employment contract. I am used to seeing clauses in contracts which state crudely that if one clause is found unreasonable, that clause alone will be struck out and the remainder of the contract left to stand. From <a href="https://law.stackexchange.com/q/9532/10852">this question</a>, I gather this is termed a 'reading down' clause. From comments, it can also be a <a href="https://www.macmillandictionary.com/dictionary/british/salvatorian-clause" rel="nofollow noreferrer">Salvatorian Clause</a> or <a href="https://en.wikipedia.org/wiki/Severability" rel="nofollow noreferrer">Severability Clause</a>.</p>

<p>Is this form strictly necessary (i.e. one unreasonable clause in a contract has significant risk to invalidate the whole), or is it simply additional security in capturing something which would typically occur regardless?</p>

<p>I find that Petri Mäntysaari: <em>The Law of Corporate Finance: General Principles and EU Law: Volume II</em>, p. 115-140 can pretty much explain the reasoning for this. It is in chapter 5.3 on Terms non-binding as intended. The contract might not contain all legal requirements for some reason, or a clause might become invalid due to law changes. Sometimes the contract becomes unenforceable for some reason or another in part or full.</p>

<p>The salvatorian clause is there to fix the defective clause to become the closest estimate to the written form that is legal and not deficient instead of being just dropped from the contract. This can save a contract from becoming unenforceable or making it void in whole. Especially look at Page 140:</p>

<blockquote>
  <p>If a contract term is invalid because of a mandatory provision of law, it will be replaced by legal background rules<sup>(<a href="https://www.gesetze-im-internet.de/bgb/__306.html" rel="nofollow noreferrer">§306(2) BGB</a>)</sup>. One of the standard ways to address the situation is to use a so-called salvatorian clause. [...] This [reinterpretation/fixing of deficiencies] would not happen without a specific contract term.
  <sup>(See <a href="https://www.gesetze-im-internet.de/bgb/__139.html" rel="nofollow noreferrer">§139 BGB</a>. On the other hand see also <a href="https://www.gesetze-im-internet.de/bgb/__140.html" rel="nofollow noreferrer">§140 BGB</a>. Compare DCFR II.-7:302 and II.-7:303)</sup></p>
</blockquote>

<p>A caveat though: if the alteration to the clause needed is too big and substantial, the contract as a whole can become void and null, no matter what the salvatorian clause said. It cannot overcome some burdens and there are regularly courts (I know this for Germany) voiding contracts due to such serious deficiencies.</p>

<hr>

<h3>Notes</h3>

<ul>
<li>BGB is the German "Bürgerliche Gesetzbuch", an <a href="https://www.gesetze-im-internet.de/englisch_bgb/englisch_bgb.html#p0420" rel="nofollow noreferrer">english translation</a> exists

<ul>
<li>§139 says "If a part of a legal transaction is void, then the entire legal transaction is void, unless it is to be assumed that it would have been undertaken even without the void part." <br>Example: a sale lacking any payment is <em>not</em> a sale (which starts a legally required warranty)</li>
<li>$140 says "If a void legal transaction fulfils the requirements of another legal transaction, then the latter is deemed to have been entered into, if it may be assumed that its validity would be intended if there were knowledge of the invalidity." <br>Example: a sale lacking any payment <em>can be interpreted</em> as a gift if the intent was to do so (and does not grant warranty)</li>
</ul></li>
<li>DCFR is the EU <a href="https://www.law.kuleuven.be/personal/mstorme/DCFR.html" rel="nofollow noreferrer">Draft Common Frame of Reference</a>, so the above rules are to be found in the document as follows

<ul>
<li>II.–7:302: Contracts infringing mandatory rules - p. 565. Paraphrased: "if a clause in a contract violates a law, substitute the law for it, courts shall decide if that alters or voids the contract. They may fix contracts to cure them."</li>
<li>II.–7:303: Effects of nullity or avoidance - p. 574. Paraphrased: "void contract (parts) can constitute unjustified enrichment, transfer of items might not have happened, courts may fix contracts to cure."</li>
</ul></li>
</ul>

<hr>

<p>From the <a href="https://www.law.kuleuven.be/personal/mstorme/european-private-law_en.pdf" rel="nofollow noreferrer">DCFR document</a> one can read what happens in absence of a Salvatorian clause, especially for UK law.</p>

<blockquote>
  <p>II.–7:302:</p>
  
  <p>I. Contracts contrary to law </p>
  
  <p>1 All European systems deal with contracts which contravene some rule of law, as
  opposed to contracts which are contrary to fundamental principles of morality or
  public policy.</p>
  
  <p>5 In ENGLISH, IRISH and SCOTTISH law the standard texts all include chapter
  headings such as “Illegality”, or “Statutory Invalidity”. See further Enonchong,
  McBryde, Law of Contract in Scotland1
  , paras. 19.28-19.36, and, for the confused
  development of Scottish law, Macgregor in Reid &amp; Zimmermann vol. II, chap. 5. </p>
  
  <p>II. Effects of infringement</p>
  
  <p>8 The general starting point in most European legal systems is that contracts violating
  legal rules are void. There is often, however, considerable flexibility in the law. </p>
  
  <p>14 In ENGLISH and SCOTTISH law, while an illegal contract may be void, it is more
  often presented as “unenforceable”, in that neither specific performance nor damages
  are available to the parties. Thus a party may withdraw from an illegal contract with
  impunity. Courts will take notice of illegality of their own motion and dismiss actions
  accordingly (Chitty on Contracts I27, no. 16-199; MacQueen and Thomson, Contract
  Law in Scotland, § 7.15; McBryde, Law of Contract in Scotland1
  , paras. 13.31-13.34,
  19.17-19.27).). Again, however, there is flexibility in the law on contracts infringing
  statutory provisions. There are several cases in which the courts have considered
  whether giving effect to the statute requires the nullity of the contract as a supporting
  sanction (see e.g. St John Shipping Corp. v. Joseph Rank Ltd. [1957] 1 QB 267;
  Archbolds (Freightage) Ltd. v. S Spangletts Ltd. [1961] 2 QB 374, CA). English law is
  currently under review by the Law Commission: see its Consultation Paper on Illegal
  Transactions. The Commission’s provisional proposals were to the effect that courts
  should have the discretion to decide whether or not illegality should act as a defence to
  a claim for contractual enforcement. But the discretion should be structured by
  requiring the court to take account of specific factors: (1) the seriousness of the
  illegality involved; (2) the knowledge and intention of the party seeking enforcement;
  (3) whether denying relief will act as a deterrent; (4) whether denial of relief will
  further the purpose of the rule rendering the contract illegal; and (5) whether denying
  relief is proportionate to the illegality involved. </p>
  
  <p>II.–7:303: </p>
  
  <p>Notes</p>
  
  <p>5 In ENGLISH law the general rule is against restitution but it is possible in exceptional
  cases where the claimant is not in pari delicto with the recipient, or the transaction has
  not been completely executed, or if the claim can be formulated without reference to
  the prohibited contract (Treitel, The Law of Contract9
  , 490-504). IRISH law is similar
  (Clark 314-19), and so is SCOTTISH law (Stair Memorial Encyclopaedia vol. 15,
  paras. 764-765), although in one Scottish case where, by statute, contracts using old
  Scottish measures were void, restitutionary recovery was allowed in respect of a sale
  of potatoes by the Scottish acre, on the ground that there was no moral turpitude in
  such a transaction (Cuthbertson v. Lowes (1870) 8 M 1073; see further Macgregor,
  (2000) 4 ELR 19-45; McBryde, Law of Contract in Scotland1
  , paras. 13.31-13.34,
  19.22-19.26). The English Law Commission in its Consultation Paper on Illegal
  Transactions suggested that a court should have discretion to decide whether or not
  illegality should be recognised as a defence to a claim for restitution, various factors
  being taken into account. In addition the court should have a discretion to allow a
  party to withdraw from an illegal contract and to have restitution where this will
  reduce the likelihood of the completion of an illegal act or purpose, although it must
  be satisfied that the contract could not be enforced against the claimant, that there is
  genuine repentance of the illegality, and that it is not too serious. </p>
</blockquote>
