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2023.02.15 by 由布茶寮

What Is the General Rule to Decide upon a Partially Illegal Agreement/Contract

When it comes to agreements or contracts, there are certain rules that need to be followed to ensure that they are legal. However, there are times when certain clauses or terms in the agreement may be partially illegal. In such cases, a general rule needs to be followed to decide whether the agreement is still valid or not.

The general rule to decide upon a partially illegal agreement/contract is known as the ‘blue pencil rule’. This rule allows courts to strike out the illegal part of the agreement, while still enforcing the rest of it. In simple terms, the court has the authority to remove any unlawful terms from the agreement, while leaving the remaining parts intact.

However, there are certain conditions that need to be met in order for the blue pencil rule to be applied. Firstly, the illegal portion of the agreement should be easily separable from the rest of the agreement. This means that the remaining portion of the agreement must still make sense even after the illegal part has been removed.

Secondly, the remaining part of the agreement must not be dependent on the illegal part. This means that the illegal part should not be essential to the performance of the agreement. If the illegal part is essential, then the entire agreement will be rendered void.

Lastly, the agreement should not be against public policy. This means that even if the illegal part of the agreement can be removed, the remaining part should not be something that goes against the laws or morals of society.

In conclusion, the blue pencil rule is a general rule that is used to decide upon partially illegal agreements/contracts. It allows courts to strike out the illegal part of the agreement, while still upholding the rest of it, as long as the remaining part can be easily separated from the illegal part, is not dependent on the illegal part, and is not against public policy. It is important for individuals and businesses to ensure that their agreements and contracts are legally sound and do not contain any illegal clauses or terms.

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