Are Survival Clauses Enforceable?

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Last Updated on June 12, 2023 by Umar

Survival clauses are provisions in a contract that remain in effect after the contract expires or is terminated.

They are commonly used in non-disclosure agreements, non-competition provisions, indemnities, and insurance provisions

The enforceability of survival clauses depends on their wording and the jurisdiction in which they are being enforced

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This blog post will provide a comprehensive overview of survival clauses, their enforceability, and their importance in various types of contracts.

Purpose of Survival Clauses

The primary purpose of survival clauses is to ensure that critical provisions remain in place after a contract terminates

This strategy guarantees the continuation of a party’s rights upon project or service completion.

Examples of survival clauses include setting a case in arbitration as a form of alternative dispute resolution and holding product developers responsible for their representations

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Enforceability of Survival Clauses

The enforceability of survival clauses depends on their wording and the law of the jurisdiction in which they are being enforced

For example, New York and California courts tend to shorten the applicable statute of limitations

As a general rule, a survival clause may have the effect of shortening the default statute of limitations for breach of contract but may not extend survival beyond it.

Drafting Survival Clauses

When drafting a contract that contains a survival clause, it is important to:

  1. Have a clear understanding of the intent of the survival clause for both parties.
  2. Ensure that the wording of the clause is legally enforceable under the law and based on the intent of the parties.

A simple survival clause might start by stating: “The following sections will survive the expiration or termination of this contract and remain in effect until fulfilled.” It would also include a list of sections that will survive

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Importance of Survival Clauses in Various Contracts

Survival clauses are particularly important in contracts involving intellectual property, such as confidentiality agreements

They help protect the disclosing party’s rights and ensure that certain obligations persist after the contract’s termination

In non-compete agreements, survival clauses can help protect a company’s competitive advantage by preventing former employees from competing with the company for a specified period after the contract’s termination.

Conclusion

Survival clauses play a crucial role in maintaining the enforceability of certain provisions in a contract after its termination or expiration.

Their enforceability depends on the wording of the clause and the jurisdiction in which they are being enforced.

It is essential to draft survival clauses carefully, considering the intent of both parties and ensuring that the clause is legally enforceable under the applicable law.

By doing so, parties can protect their rights and interests even after the contract has ended.

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