A severable contract is a contractunenforceable that can still remain in effect despite those provisions which are void. In order for the blue pencil test to be satisfied, the phrase stricken by the court must not result in a change to the purpose for which the contract was created by the parties. The contract must still make grammatical sense after the edits have been made to the contract. Otherwise the contract will not be considered to have become a severable contract.

A severable contract can be formed if the parties who entered into the contract do not consider it essential that all the actions be performed together. Divisible contracts may exist if a convenience store orders the soda, chips and candy it sells from the same company in three separate clauses. An indivisible contract is formed if the store hired a vendor to provide the soda, chips, and candy in a single clause. 

Whether divisible contracts or indivisible contracts have been formed can often be determined by examining the terms under which consideration has been provided. If the set of contracts provide the consideration in a lump sum, it is usually an indivisible contract. If consideration is itemized for each thing exchanged, a severable contract often exists.

If a contract contains both legal and illegal clauses, the court will attempt to enforce only the legal clauses in the event the contract is already a severable contract. If the court can employ a blue pencil test to create a severable contract, it will.

Blue laws are a diminishing category of law in the United States. Despite being present in thirty-one states, the exact contents of each blue law varies from jurisdiction to jurisdiction. A law is classified as a blue law if it restricts commercial activity on a particular day. 

Normally a blue law prohibits the ability of a business to operate on a Sunday. The prohibition on commerce on Sunday derives from Christian religious tradition. As a result, blue laws in some states instead preclude businesses from being open on consecutive weekend days out of respect for different Sabbath observances by different religious groups.

Most states that contain blue laws apply them to the sale of alcohol. Alcohol sales may be restricted from being sold at all on Sundays. In blue law states which do not prohibit the sale of alcohol entirely on Sunday, limitations may be placed upon the hours during which alcohol may be sold. These blue law restrictions typically preclude the sale of alcohol to hours during which church sessions would not be held.

A blue law can also restrict the sale of alcohol between certain hours during the week. Restaurants in some blue law jurisdictions can obtain permits to allow the sale of alcoholic beverages so long as a particular percentage of their revenues come from food sales.

Depending on the State, towns may be allowed to opt out of observing blue laws. Some states allow local jurisdictions to opt in or out of blue laws by a majority vote. Other states restrict the ability of a local jurisdiction to opt out of blue laws based on particular criteria. In South Carolina, for example, an area can only opt out once it can demonstrate a certain level of sales tax receipts.

Blue laws may be supported for a variety of reasons. Car dealerships sometimes support blue laws because it allows them to afford their employees a day off without being concerned that a competitor is open.

There may not be support among voters to repeal blue laws. This is the situation in Bergen County in New Jersey, the only part of New Jersey with blue laws that prohibit commercial activity on Sundays. Despite pressure from the State Government to join the rest of the State in repealing blue laws, some Bergen County residents enjoy the fact that the large commercial centers in the county are relatively empty and peaceful on Sundays.

An unconscionable contract is unenforceable. It is immaterial whether a waiver is explicit or implicit. Procedural unconscionability also gives rise to an unconscionable contract if one of the parties is in a vastly superior bargaining position.

An unconscionable contract may also contain substantive unconscionability if the terms of the contract are excessively harsh or would be oppressive to implement. An unconscionable contract can also result if the party selling the goods marks up the price tremendously and attempts to hide how great the mark up is.

Whether a contract is conscionable or unconscionable can only be determined by a judge and never by a jury.

Non-fraudulent misrepresentation can take one of two forms: innocent misrepresentation or negligent misrepresentation. Negligent misrepresentation is considered in the eyes of the law to contain the same level of culpability as fraudulent misrepresentation.

Misrepresentation that is negligent in nature is treated by the courts in the same way as a fraudulent misrepresentation. Negligent misrepresentation occurs when a party to a contract does not carry out a reasonable effort to ensure that their claims as the material information at the heart of the contract are true.

If one of the parties to the contract in question does not act with the professionalism that would reasonably be expected from an individual in that position, and the other party relies on that professionalism when entering into the contract, then negligent misrepresentation may be determined by the courts to have happened.

Fraudulent misrepresentation by silence may result during a long contract negotiation if one of the parties to the contract withholds material information they learned during the negotiation process.

Fraud is voidable by the injured party. The justifiable reliance cannot be easily disproven and must constitute a claim that a reasonable person would believe. A promisee who entered into a contract with a car salesman that claimed that the car in the contract could go one hundred miles per gallon would not be able to claim justifiable reliance on the salesman’s claim because the claim is unjustifiable. 

The claim that a car is brand new, despite extensive and obvious damage to the car, would not be grounds for justifiable reliance by an individual claiming the salesman duped them. Justifiable reliance only applies to instances where the injured party relied upon a claim that could not be easily disproved.

A person could claim justifiable reliance if they bought a car they believed was in perfect working order but upon driving the car home discovered extensive body damage, a faulty ignition system, failing brakes, or other serious defects in the car. In such a situation, the person may be able to claim that they were damaged by a justifiable reliance on the salesman’s claims.

The party claiming that they were induced to enter into a contract due to justifiable reliance on misrepresentations by the other party must be able to show that their reliance was not based on something that they could reasonably be expected to discover on their own.

 

Contract laws generally prohibit contracts that restrain trade. Contracts restraining trade are defined as contracts that reduce the level of competition involved in the commercial exchange of goods or services. Contracts that restrain trade are considered a classification of contracts that are contrary to public policy.

These kinds of contracts are sometimes defined by contract laws as covenants not to compete and sometimes as non-competition contracts. Whichever they are known as, though, they are illegal and are thus considered unenforceable. 

Elements of contracts that restrain trade are generally permissible if they are limited in scope or duration. A contract is permissible if it compels a party to the contract to relinquish the right to make a particular thing, but not if it attempts to force one of the parties to the contract to not compete with the other in any way in the future.

Contracts are permitted to contain non-competition clauses if the clause exists in order to protect business secrets of the employer, or if the non-competition element of the contract seeks to limit a former employee from utilizing business contacts which are considered essential to the operations of the company with which the original contract was signed.