This Presentation I am uploading just for the purpose of guiding on the subject. It might not give the reader whole explanation of the topic so it is advisable to refer other sources also in order to understand the topic. Publisher is not responsible for anything.
Power point on the information delivered in class about the Mischief rule, as well as recap questions for golden rule and a little intro to Purposive Approach.
This Presentation I am uploading just for the purpose of guiding on the subject. It might not give the reader whole explanation of the topic so it is advisable to refer other sources also in order to understand the topic. Publisher is not responsible for anything.
Power point on the information delivered in class about the Mischief rule, as well as recap questions for golden rule and a little intro to Purposive Approach.
This presentation is an attempt to explain the colourable legislation in a simple language with the limitations on it and supported by the landmark cases delivered by the apex court.
In common law legal systems, a precedent or authority is a principle or rule established in a previous legal case that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts. Common law legal systems place great value on deciding cases according to consistent principled rules so that similar facts will yield similar and predictable outcomes, and observance of precedent is the mechanism by which that goal is attained. Black's Law Dictionary defines "precedent" as a "rule of law established for the first time by a court for a particular type of case and thereafter referred to in deciding similar cases."[1] Common law precedent is a third kind of law, on equal footing with statutory law (statutes and codes enacted by legislative bodies), and Delegated legislation (in U.K. parlance) or regulatory law (in U.S. parlance) (regulations promulgated by executive branch agencies).
The adjudication of a civil court ends either in form of –
(i) Decree; or
(ii) Order
Decree means
According to section 2(2) "Decree" means the formal expression of an adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit.
This presentation is an attempt to explain the colourable legislation in a simple language with the limitations on it and supported by the landmark cases delivered by the apex court.
In common law legal systems, a precedent or authority is a principle or rule established in a previous legal case that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts. Common law legal systems place great value on deciding cases according to consistent principled rules so that similar facts will yield similar and predictable outcomes, and observance of precedent is the mechanism by which that goal is attained. Black's Law Dictionary defines "precedent" as a "rule of law established for the first time by a court for a particular type of case and thereafter referred to in deciding similar cases."[1] Common law precedent is a third kind of law, on equal footing with statutory law (statutes and codes enacted by legislative bodies), and Delegated legislation (in U.K. parlance) or regulatory law (in U.S. parlance) (regulations promulgated by executive branch agencies).
The adjudication of a civil court ends either in form of –
(i) Decree; or
(ii) Order
Decree means
According to section 2(2) "Decree" means the formal expression of an adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit.
CHAPTER 7 Formation and Modification of the Sales Contract.docxchristinemaritza
CHAPTER 7:
Formation and Modification of the Sales Contract
CHAPTER 8:
Performance of the Sales Contract and Risk of Loss
CHAPTER 9:
Warranties and Remedies for Breach
CHAPTER 10:
Commercial Paper
Unit III
The Uniform Commercial Code
rog80328_07_c07_134-156.indd 134 10/26/12 5:52 PM
O
ne of the drawbacks of our federalist system of government is that there can be signifi-
cant differences in the law from state to state and between the states and the federal
government. In general, differences in state laws present only minor inconveniences
to individuals and businesses that need to be aware of these differences when conducting
business across state lines. There are, however, some areas in the law that are of particular
importance to business and in which even small variations in the law from one state to another
can have a very negative effect. Because of this, the National Conference of Commissioners on
Uniform State Laws (NCCUSL) drafted the Uniform Commercial Code (UCC) in an attempt
to unify state laws affecting commerce into a single code that all states could adopt to make
interstate commerce easier and more efficient. As a result of this concerted effort by some of
this country’s leading legal experts, the UCC was enacted in whole or in part with only small
changes by the legislatures of all states. While the UCC represents a significant effort toward a
uniform national law, it should be remembered that there will still be variations from state to
state, as different courts interpret the provisions of the statute.
The articles of the UCC are as follows:
Article 1 General Provisions
Article 2 Sales
Article 2A Leases
Article 3 Commercial Paper
Article 4 Bank Deposits and Collections
Article 5 Letters of Credit
Article 6 Bulk Transfers
Article 7 Warehouse Receipts, Bills of Lading, and Other Documents of Title
Article 8 Investment Securities
Article 9 Secured Transactions; Sale of Accounts and Chattel Paper
A complete treatment of the UCC is not possible here (the full text of the UCC is nearly 1,000
pages), but in this unit we will explore the most notable provisions of Articles 2 and 3 (Sales
and Commercial Paper) that together make up the single most important statute in the field
of business law.
In Unit 2, we examined the basic elements of the law of contracts and explored its appli-
cation in a wide variety of business contexts. In the first three chapters of this unit, we
will examine significant statutory modifications to the common law of contracts brought
about by Article 2 of the Uniform Commercial Code with respect to contracts for the sale
of goods. In Chapter 10, we will explore the law of commercial paper under the Uniform
Commercial Code.
rog80328_07_c07_134-156.indd 135 10/26/12 5:52 PM
http://www.law.cornell.edu/ucc/ucc.table.html
rog80328_07_c07_134-156.indd 136 10/26/12 5:52 PM
Chapter Overview
iStockphoto
7
Learning Objectives
After studying thi ...
THE "JURISDICTIONAL FACT DOCTRINE" IN NEW SOUTH WALES LOCAL GOVERNMENT AND EN...Dr Ian Ellis-Jones
First Published: (2006) 12 LGLJ 16 - All Rights Reserved. Disclaimer: The information contained in this publication does not constitute legal advice of any kind. The author Ian Ellis-Jones does not guarantee or warrant the current accuracy, legal correctness or up-to-dateness of the information contained in the publication.
1. 0
Table of Contents
List of Cases........................................................................................ 1
What is Severability?............................................................................ 2
Origin of the Term ............................................................................... 3
Global Practice of Severability.............................................................. 3
United Kingdom.........................................................................................................3
United States ..............................................................................................................5
Australia .....................................................................................................................8
Malaysia ...................................................................................................................13
India..........................................................................................................................15
Position of Author.............................................................................. 22
Bibliography……………………………………………… ……..…………24
2. 1
List of Cases
1. Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Company Ltd 1894 AC
535
2. United States v. Reese, 92 U.S. 214, 221 (1876)
3. Trade-Mark Cases, 100 U.S. 82, 98−99 (1879)
4. Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 565 (1902)
5. Champlin Ref. Co. v. Corp. Comm’n of Okla., 286 U.S. 210, 234 (1932)
6. Ayotte v. Planned Parenthood of N. New Eng 546 U.S. 320, 329−30 (2006)
7. Free Enterprise Fund v. Public Co. Accounting Oversight Board 130 S. Ct.
3138 (2010)
8. Pidoto v. Victoria (1943) 68 CLR 87 at 108-110 and Strickland v. Rocla
Concrete Pipes Ltd (1971) 124 CLR 468.
9. The King v. Poole; Ex Parte Henry (No. 2) (1939) 61 CLR 634 at 652
10. Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242
11. Vancouver Malt and Sake Brewing v Vancouver Breweries [1934] AC 181
(1991) 31 FCR 242
12. Lloyd’s Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505
13. Pollock v Farmers’ Loan & Trust Co, (1895) 158 US 635
14. Lynch v US, (1933)292 US 571
15. El Paso R Co v Gutierrez, (1909) 215 US, 87
16. Poindexter v Greenhow (1885)114 US 270
17. Shankri Prasad v Union of India AIR 1951 SC 458
18. L.C. Golaknath v State of Punjab AIR 1965 SC 845
19. Kesavananda Bharati v State of Kerala AIR 1973 SC 1461
20. Initiative and Referendum Acts AIR 1919 P C 145
21. AK Gopalan v State of Madras(1950) SCJ 174
22. Punjab Province v Daulat, (1942) FCR 1
23. Chintaman Rao v State of Madhya Pradesh, (1950) SCR 759
24. State of Bombay v F N Balsara, (1951) SCR 682
25. State of Bihar v Kameshwar Prasad, AIR 1952 SCR 889
26. Harakcahand v Union of India AIR 1970 SC 1453 at 1468
27. RMDC v Union of India, (1957) SCR 930
28. Kihoto Hollohan v Zachilhu, AIR 1993 SC412.
29. State of Bombay v. Narayan, AIR 1952 Bom.84
30. State of Bombay v. F.N. Balsara A.I.R. l951 S.C. 318
31. D.S. Nakara & Others v. Union of India AIR 1983 SC 130
32. R.M.D. Chamarbaugwalla v. The Union of India AIR 1957 SC 628
33. Dashratha Rama Rao v State of A.P, AIR 1961 SC 564
34. Madhu Kishwar v State of Bihar AIR 1996 SC1864
35. Sheikriyammada Nalla Koya v Administrator, Union Territory of Laccadives
AIR 1967 Kerala 259
3. 2
What is Severability?
The Doctrine of Severability is a very important judicial innovation-cum-
judicial doctrine in the field of Constitutional Law. The primary purpose of such
a doctrine is to separate that portion of statutory legislation deemed to be void ab
initio (void from the very inception) from the part or portion considered being of
a valid nature. The word ‘severe’ has come from the Latin word ‘salvatorious’.
It means ‘to estrange’, ‘separate’, ‘isolate’ or ‘segregate’. Merriam-Webster’s
English dictionary defines severability as “…invalidation of some sections or
clauses in the document (that) will not affect the validity of the remainder.” The
Oxford Dictionary defines severability as “...a provision in a contract, statute, or
other legal document containing an exemption from one or more of its conditions
and provisions.” Similarly, various legal dictionaries define ‘severability’ as
“...that which is capable of being separated from other things to which it is joined
and maintaining nonetheless a complete and independent existence.” Cooley's
Constitutional Limitationsi states that if the valid and invalid provisions are so
inextricably mixed up that they cannot be separated from one another, then the
invalidity of a portion must result in the invalidity of the Act in its entirety. On
the other hand, if they are so distinct and separate that after striking out what is
invalid, what remains is in itself a complete code independent of the rest, then it
will be upheld notwithstanding that the resthas become unenforceable. Crawford
on Statutory Constructionii states that even when the provisions which are valid
are distinct and separate from those which are invalid, if they all form part of a
single scheme which is intended to be operative as a whole, then also the
invalidity of a part will result in the failure of the whole.
According to medical terminology, severability refers to something that
is “…broken off or detached.” Similarly, the Indian Contract Act (1872) defines
severability, although not directly, as “...an agreement not enforceable by law is
said to be void.” If we look at the common link that prevails in all these
definitions, we see that severability of something means that that particular thing
is no longer conjoined as a whole, but has now separated into two or more
4. 3
fragments. Therefore, according to judicial interpretations and various insights
made into the field of constitutional law, the concept of ‘Severability’ or
‘separability’ means that if an offending and inappropriate provision of statutory
legislation can be separated from that portion of the statute which is deemed to
be of a valid and constitutional nature, then only that part which is offending and
repugnant shall be declared as being void, and not the entire statute itself.
Origin of the Term
The Doctrine of Severability owes its origins to the Law of Contracts. In
the Law of Contracts, this Doctrine has been defined as “...if parts of the contract
are held to be illegal or otherwise unenforceable, the remainder of the contract
should still apply.” However this rule is not an indefeasible or absolute one.
There are certain limitations/restrictions that have been placed on such a rule.
These limitations clearly state that should the fundamental principles and
grounds of the(any) primary contract in question be changed, altered, modified,
restructured, rearranged, reshuffled, destroyed, or amended in any way without
altering the fundamental meaning and subsequent interpretation of such contract,
then the Doctrine of Severability shall not be applicable to such a contract.
Global Practice ofSeverability
United Kingdom
In England, the Doctrine of Severability traces its origins to the historic
case of Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Company Ltdiii.
In this case, a manufacturer (Nordenfelt) was specializing in the making of
certain armaments. He later on sold his business to a certain American inventor,
Sir Hiram Maxim. The agreement between the parties was that Nordfelt would
not make guns or ammunition anywhere else in the world. Neither would he
(Nordfelt) compete or attempt to compete with Maxim for a period of 25 years.
Subsequently, a case was filed before the House of Lords. Two contentious
questions/issues arose before the House of Lords in this case. The main (first)
5. 4
question that arose before the House of Lords was whether the Doctrine of
Severability would be applicable to such a scenario or not. And secondly, even
assuming that the restrictive covenants that were imposed on Nordenfelt were
deemed of a ‘reasonable’ nature indeed, the contentious issue(s) that the House
of Lords would need to debate on was whether such restriction(s) could, in fact,
be enforced when they were present in the same contract, but as ‘unreasonable’
and ‘unenforceable’ restrictions.
In this particular case, the House of Lords gave a two-fold judgment after
carefully ruminating and debating over the central fact-in-issues that were
deemed to be manifested on the surface of the case itself. Firstly, they held that
since Nordfelt had already paid a substantial sum amount of money as “legal”
consideration to Maxim in exchange to honor his (Nordfelt’s) promise to cease-
and-desist from manufacturing armaments, the contractual provisions that
sought to ban him from manufacturing armaments and guns around the world
were of a valid legal nature. But as far as the second condition of banning
competition for a period of 25 years was imposed, the House of Lords felt it was
unfair and fell more into the nature of a “restraint of trade”—a forbidden
commercial practice employed by proponents of monopoly and subsequently
prohibited by the law due to the obvious reasons of it being violative to the
principles of ‘fair’ free trade; a mode of trade practice, wherein fair competition
amongst sellers was being given a backseat to monopolistic trade practices of a
restrictive nature, thus being clearly violative of the ‘fair competition’ policy
enunciated and followed by many in a slowly-globalizing market. This was
because it was totally in direct contravention to the principle of ‘fair competitive
policies’ that were the basis of free trade. The House of Lords felt that such an
agreement between these two contracting parties in its express written format
would amount to monopolization of the business and lead to greater detriment of
Nordfelt’s business, including the fundamental principles of “fair competition”.
In a sense, the Court (through the House of Lords), whilst invoking the
“blue-pencil doctrine” philosophy, (a legal provision where the Court determines
6. 5
whether contractual obligations can be partly enforced when the main object of
the contract has certain elements of illegality embedded in it) held that the first
covenant ordering Nordfelt to not make guns or ammunition was warranted valid
because there was no concept of unreasonableness on the part of public policy.
Also, the legitimate interestsof both the contracting parties were being protected,
as was the reasonableness of the terms and conditions of the contract in question.
Hence, the Doctrine of Severability could be applied in separating the
unreasonable part of the agreement (viz. the portiondecreeing Nordfelt to abstain
or refrain from competition with Maxim) from the reasonable part (viz. the
protectionofpublic interestsand its attendants-- protectionof legitimate interests
including both parties’ contentions of the terms of the agreement being of a
reasonable and valid nature). This marked the beginning of the introduction to
(and subsequent entry of) the Doctrine of Severability in England.
United States
The Supreme Court decided its first severability case in 1876iv, which
quickly evolved into asking if Congress would have enacted the challenged
statute had it known the invalid provision at issue would be discardedv. In this
case, the question centered around the Fifteenth Amendment to the American
Constitution that talked of voting right not being denied to American male
citizens on the basis of race, color, or prior conditions of servitude. The core
issue(s) revolving around this case was whether the US Congress would have
enacted the said challenged statute had it known such a statute would have been
subsequently discarded. The Court held that although the Fifteenth Amendment
did not confer the right of suffrage, yet it prohibited exclusion of voting on racial
grounds. Additionally, the judges held that under Section 3 of the Enforcement
Act (1870), the Fifteenth Amendment’s words pertaining to race, color, and
servitude were not expressly reiterated in the Act itself. Hence, the Section
having overridden the provisions of the Act itself, the Court subsequently
declared such legislation void.
7. 6
The Court shortlythereafter added that provisions are non-severable when
retaining the statute without them would create effectsnot severability is whether
the statute will function in a manner consistent with the intent of Congress.”vi
After a half-century of developing the concepts explored in this Art., the Court
declared the first clear severability test in 1932vii. In Champlin Refining Co. v.
Corp. Commission of Oklahoma. An oil refining company challenged several
provisions of an Oklahoma statute, arguing that these provisions violated the
Commerce Clause and the Fourteenth Amendment’s Due Process and Equal
Protection Clauses. In determining whether one of these provisions could be
struck down and then separated from the residue of the oil and gas statute at
issue, the Supreme Court declared a general rule of severability that continues to
be invoked:
The unconstitutionality of a part of an act does not necessarily
defeat or affect the validity of its remaining provisions. Unless it
is evident that the Legislature would not have enacted those
provisions which are within its power, independently of that which
is not, the invalid part may be dropped if what is left is fully
operative as a law.
Then in 2006 the Supreme Court expounded three principles as an
underlying rationale to inform severability inquiriesviii. In Ayotte v. Planned
Parenthood of N. New Eng.ix, the Court laid down three principles of
severability, “First, we try not to nullify more of a legislature's work than is
necessary . . . . Second . . . we restrain ourselves from rewriting state law to
conform it to constitutional requirements even as we strive to salvage it. Third .
. . a court cannot use its remedial powers to circumvent the intent of the
legislature.”
In Cardegna. V Buckeye Check Cashingx, the defendant (Buckeye) took
a loan amount of $337.80 from a subsidiary of a certain cheque-recovery
business (Checksmart). Later on, he took another loan amount of a much higher
value (approximately $150), which he was unable to repay. He filed a class
8. 7
action suit with the help of an activist lawyers’ group, claiming that the fee
interest rates charged by the plaintiff-activist company (i.e. Checksmart) were in
excess of what ought to be charged by the said company (i.e. a whopping 45%
extra greater than the prescribed normal amount). The Fourth Court of Appeal in
Florida ruled that the whole contract had to be challenged and not a specific part.
Hence the doctrine of severability would not apply in this case. On further
appeal, the State Supreme Court opined that the contract was void ab initio on
the grounds that such void contracts that are absolutely void and useless from the
very beginning could never have any formal standing or supportive footing of
their own in the first place.
According to Raoul J. the majority of judges were in fact, ignorant of the
provisions set out in the Federal Aviation Authority (FAA) statute. However, on
further appeal, the State High Court of Florida, through Scalia J. opined that
“...the definition of contract included those that would or could be later voided
since it explicitly mentioned such contracts that might later be revoked.” This is
clearly indicative of the Doctrine of Severability at work, since it (the doctrine)
makes ‘void’ and ‘useless’ those legislative statutes that could be separated from
that which the legislature deemed to be ‘valid’—a happening that clearly is
indicated by the Court’s final decisionthat in any voidable contract, an arbitrator
rule on all legal issues in question(including the legality of the contract itself)
would be questioned itself till such time the entire arbitration clause itself would
be challenged.
Most recently, the Supreme Court synthesized decades of cases to restate
severability doctrine in the 2010 case Free Enterprise Fund v. Public Co.
Accounting Oversight Boardxi. This case should be construed as creating a two-
step test combining the previous test with various major severability cases.
Under Free Enterprise Step One, a reviewing court must determine whether all
of the remaining provisions of the statute are still fully functional without the
constitutionally infirm provision. If so, a court then asks under Free Enterprise
Step Two whether Congress would be satisfied with the remaining statute,
9. 8
invoking a century of case law concerning whether Congress would have passed
the abridged statute.
Also, in the current changing context of geopolitics in America, where
political trends on various topical issues (e.g. the ‘bouncing back to booming
business doctrine’ (BBBBD) vary from time to time, the concept of the
severability doctrine can be found in the Obama administration’s set of
government policies relating to healthcare issues in America. The Executive of
the United States of America is apprehensive as to what might be the negative
repercussions/negative aftermath that the applicability of this judicial doctrine
might have on its various introductory healthcare policies, in addition to the
endless number of insurance markets if “this individual mandate” (wherein
everyone buys a standard uniform healthcare insurance plan instead of selecting
different healthcare plans) overrides the American Congress’s statutory
constitutional powers
Australia
Section 15A of the Acts Interpretation Act 1901xii provides as follows:
Every Act shall be read and construed subject to the Constitution,
and so as not to exceed the legislative power of the Commonwealth,
to the intent that where any enactment thereof would, but for this
section, have been construedas being in excessof that power, it shall
nevertheless be a valid enactment to the extent to which it is not in
excess of that power.
Section 15A does not mean that a provision drafted without regard to the
extent of Commonwealth legislative power will be valid in so far as it happens
to apply to the subject matter of a particular power. The High Court has held that
section 15A is subject to limitations. To be effective, a severability provision
must overcome those limitations. The first limitation is, if there are a number of
possible ways of reading down a provision of general application, it will not be
so read down unless the Parliament indicates which supporting heads of
10. 9
legislative power it is relying onxiii. The Concrete Pipes case concerned a
severability provision which was held to be ineffective because the list of
supporting heads of legislative power did not exhaust the purported operation of
the operative provision in question.
The second limitation is that a provision of general application will not be
read down unless the Parliament indicates an intention that the provision is to
have a distributive operation: “… did [the Parliament] intend that the particular
command or requirement expressed in the provision should apply to or be
fulfilled by each and every person within the class independently of the
application of the provision to the others; or were all to go free unless all were
bound?xiv
An example will serve to demonstrate. For instance, in Australia the
common law doctrine of restraint of trade continues to operate where it does not
conflict with the Competition and Consumer Act 2010. Briefly, the doctrine
renders provisions which impose restrictions ona person's freedom to engage in
trade or employment illegal and therefore unenforceable at common law unless
they are demonstrated to be reasonable. The provision must be reasonable both
in the interests of the parties and in the interests of the public. In Australia the
doctrine of restraint of trade (RoT) is now limited in scope because of the
operation of the Competition and Consumer Act 2010, which captures much of
the sort of conduct that might previously have fallen for consideration under the
doctrine. There are, however, some exceptions. In particular, S. 4M provides that
the ROT doctrine continues to apply in so far as it can operate concurrently with
the Act and s 51(2)(b)(d)(e) excludes from the operation of Part IV of the Act
(other than s 48 governing resale price maintenance) provisions relating to:
restrictions on employment
restrictions between partners and
restrictions in a contract for the sale of a business.
Consequently it is in these areas that the RoT doctrine is most likely to operate.
11. 10
All agreements in restraint of trade are void unless:
they are reasonable inthe interest ofthe parties (onus on party relying
on restraint); and
they are reasonable in the interest of the public (onus shifts to person
seeking to strike down restraint to demonstrate they are not reasonable in
the interest of the public)
When assessing reasonableness the courts will first consider whether there is a
'legitimate interest' or interests that require protection and, if so, will assess
whether or not the restraint does not more than is necessary to protect that
interest; if the restraint goes beyond what is necessary then it will not be
considered reasonable. A wide range of interests may be considered legitimate,
including protecting trade secrets and protectionof business goodwill, and even
the creation or maintenance of an even sporting competitionxv. However, mere
protection against competition does not constitute a 'legitimate interest'xvi. The
time for assessing the reasonableness of the restraint is the date the restraint was
imposed; reasonableness is not assessed at the time the restraint is sought to be
enforced or is challenged. In Adamson v New South Wales Rugby League Ltdxvii
Gummow J stated:
But there always remains the basic proposition … that the
reasonableness of a restraint of trade must be tested, not by
reference to what the parties have actually done or intend to do,
but what the restraint entitles or requires the parties to do … in my
view it was not the case that the issue of reasonableness of the
restraint was to be determined by looking to the manner in which
from time to time it operated in practice or might operate in
practice. …
Parties will frequently draft restraint clauses toprovide fordifferent levels
of restraint, in the hope that if one or more restraints are found unreasonable,
others may nevertheless survive. These are known as ladder clauses and can be
effective, provided they are not uncertain (by reference to normal contractual
12. 11
principles) and provided that the parties have made a genuine attempt to define
a reasonable restraint and not left it to the court to 'make their contract for them.
The more numerous the restraints and/or combinations of restraint involved, the
more likely the parties have failed to make a genuine attempt to define the
protectionxviii.
Accordingly, S. 4M of the Competition and Consumer Act 2010 does not
affect the operation of the law relating to restraint of trade in so far as that law is
capable of operating concurrently with this Act …but nothing in the law referred
to in paragraph (a) or (b) affects the interpretation of this Act. S. 51(2) states that
“...In determining whether a contravention of a provision of this Part other than
section 45D, 45DA, 45DB, 45E, 45EA or 48 has been committed, regard shall
not be had:
a. to any act done in relation to, or to the making of a contract or
arrangement or the entering into of an understanding, or to any
provision of acontract, arrangement or understanding, to the extent
that the contract, arrangement or understanding, or the provision,
relates to, the remuneration, conditions of employment, hours of
work or working conditions of employees;
b. to any provision of a contract of service or of a contract for the
provision of services, being a provision under which a person, not
being a body corporate, agrees to accept restrictionsas to the work,
whether as an employee or otherwise, in which he or she may
engage during, or after the termination of, the contract;
c. to any provision of a contract, arrangement or understanding,
being a provision obliging a person to comply with or apply
standards of dimension, design, quality or performance prepared
or approved by Standards Australia or by a prescribed association
or body;
d. to any provision of a contract, arrangement or understanding
between partners none of whom is a body corporate, being a
13. 12
provision in relation to the terms of the partnership or the conduct
of the partnership business or in relation to competition between
the partnership and a party to the contract, arrangement or
understanding while he or she is, or after he or she ceases to be, a
partner;
e. in the case of a contract for the sale of a business or of shares in
the capital of a body corporate carrying on a business - to any
provision of the contract that is solely for the protection of the
purchaser in respect of the goodwill of the business; or
f. to any provision of a contract, arrangement or understanding,
being a provision that relates exclusively to the export of goods
from Australia or to the supply of services outside Australia, if full
and accurate particulars of the provision (not including particulars
of prices for goods or services but including particulars of any
method of fixing, controlling or maintaining such prices) were
furnished to the Commission before the expiration of 14 days after
the date on which the contract or arrangement was made or the
understanding was arrived at, or before 8 September 1976,
whichever was the later.
Likewise, S. 4 Restraints of Trade Act 1976 (New South Wales) prescribes the
extent to which restraint of trade is valid:
1. A restraint of trade is valid to the extent to which it is not against
public policy, whether it is in severable terms or not.
2. Subsection (1)does not affect the invalidity of a restraint oftrade
by reason of any matter other than public policy.
3. Where, on application by a person subject to the restraint, it
appears to the Supreme Court that a restraint of trade is, as regards
its application to the applicant, against public policy to any extent
by reason of, or partly by reason of, a manifest failure by a person
14. 13
who created or joined in creating the restraint to attempt to make
the restraint a reasonable restraint, the Court, having regard to the
circumstances in which the restraint was created, may, on such
terms as the Court thinks fit, order that the restraint be, as regards
its application to the applicant, altogether invalid or valid to such
extent only (not exceeding the extent to which the restraint is not
against public policy) as the Court thinks fit and any such order
shall, notwithstanding sub-section (1), have effect on and from
such date (not being a date earlier than the date on which the order
was made) as is specified in the order.
4. Where, under the rules of an association, a person who is a
member of the association is subject to a restraint of trade, the
association shall, for the purposes of subsection (3), be deemed to
have created or joined in creating the restraint.
5. An order under subsection (3) does not affect any right
(including any right to damages) accrued before the date the order
takes effect.
As a consequence of section 4(1), a restraint of trade clause may be read down
and enforced by a court in circumstances where it would not be possible to sever
all or part of the offending restraint at common law.xix Basically, this doctrine
seems to imply that if there is any trade activity that is deemed to be detrimental
or opposed to public policy, it shall be automatically restrained. And the doctrine
of severability shall apply to such context so as to separate that portion of the
legislation which is valid, from that part which is invalid ab initio.
Malaysia
The Doctrine of Severability has stretched its wings all the way up to the far
corners of the Eastern world; from India to Malaysia. This doctrine was invoked
by the Court in the landmark case of Malaysian Bar & Anr. V. Government of
Malaysia (1987). In this case, the contention raised by the appellants was that
15. 14
under S. 46(a)(1), Paragraph A, the contents of such Section denied the lawyers
representation in the Bar Council of Malaysia. The concerned High Court of
Judicature through HARUN J. held that paragraph (A) of Section 46(A)1 was
deemed as not being unconstitutional. The Justice based his reasoning on the
sound principle that because the provisions disqualifying a lawyer from
practicing in the Bar without no less than seven years practice was of a valid
nature, the statute itself ought to be declared “constitutional.” Also, the High
Court held that if any statutes are passed by the legislative body, then they would
always not be applicable to anybody and everybody—“all persons”In doing so,
the Court based its reasoning onthe sound ratio decidendi as laid out in “Lindsley
v. National Carbonic Gas Co.”xx on three grounds:
The equal protection clause of the 14th Amendment does not take
from the state the power to classify in the adoption of police laws, but
admits of the exercise of a wide scope of discretion in that regard, and
avoids what is done only when it is without any reasonable basis, and
therefore is purely arbitrary
A Classification having some reasonable basis does not offend against
that clause merely because it is not made with mathematical nicety or
because in practice it results in some inequality.
When the classificationin such a law is called in question, if any state
of facts reasonably can be conceived that would sustain it, the
existence of that state of facts at the time the law was enacted must be
assumed.
One who assails the classification in such a law must carry the burden
of showing that it does not rest upon any reasonable basis, but is
essentially arbitrary.
In doing so, the High Court also invoked other judicial precedents, some of them
being Datuk Haji Harun bin Idris v Public Prosecutorxxi. Additionally, the
Fourteenth Amendment to the American Constitution-“Right to due process of
the law” principle was invoked on the grounds that originally it was originally
16. 15
applicable to the Negroes, but now was applicable to all Americans irrespective
of class, creed, or color. These were principles later on invoked in cases such as
“Korematsu v. US” (1943), “Graham vs Richardson”(1981) and countless
others that bespoke volumes of the applicability of the Doctrine of Severability
in declaring legislation relating to segregation(as in the Korematsu case) and on
nationality (as in the Richardson case)
India
The doctrine of severability is an important aspect of understanding the
import of Art. 13 of our Constitution. Any resortto this doctrine can be had when
it becomes apparent that a part of any law offends the constitution. In the context
of Indian Constitution, it is the part dealing with fundamental rights that is the
determining factor as to when a law will be subjected to the above doctrine. DD
Basu says that ‘doctrine of severability is nothing but the common law rule of
ultra vires imported in the realm of constitutional law’xxii. Simply put, this
doctrine means that if any particular provision of the statute is unconstitutional
and that provision is independent of or severable from the rest, only the offending
provision will be declared invalid by the Court and if it is not separable, the
whole of the statute shall failxxiii. However, in Poindexter v Greenhowxxiv, the
American Supreme Court held that the doctrine cannot be applied to ‘substitute
forthe law intended by the Legislature one they may never been willing, by itself,
to enact’. In Pannalal Binjraj v Union of India, (1957) SCR 233, it was held that
Art. 13 has retrospective effect. Under the Indian Constitution, Clauses (1) and
(2) of Art. 13 provide for the application of the above doctrine. Both the clauses
deal with the contravention of fundamental rights as contained in the Part III.
The two clauses provide:
1 All laws in force in the territory of India immediately before the
commencement of this Constitution, in so far as they are inconsistent with
the provisions of this Part, shall, to the extent of such inconsistency, be
void.
17. 16
2 The State shall not make any law, which takes away or abridges the
rights conferred by this Part and any law made in contravention of this
clause shall, to the extent of the contravention, be void.
The expression ‘laws in force’ under Art. 13(3)(b) includes ‘laws passed or
made by a legislature or other competent authority in the territoryof India before
the commencement of the constitution not previously repealed. It includes
customs and usages and also the laws passed by the British Parliament and
applicable to India like the Fugitive Offenders’ Act 1881. However, it does not
include constitutional amendments under Art. 368. In ShankriPrasad v Union of
Indiaxxv, Supreme Court adopted a literal interpretation of the constitution, and
observed that an amendment under Art. 368 was enacted in the exercise of its
constituent power while the term law used under Art. 13 referredto the exercise
of ordinary legislative power conferred on the Parliament by provisions of the
Constitution other than Art. 368. Therefore, it was held that Art. 13(2) does not
affect the amendments made under Art. 368. In Sajjan Singh v State of
Rajasthan,xxvi the same question that was raised in Shankri Prasad was again
raised before the Court, and the majority reiterated the conclusion of Shankri
Prasad. However, in L.C. Golaknathv Stateof Punjabxxvii the majority (6:5) held
that an amendment made under Art. 368 is a law, and is subject to Art. 13. Thus,
the earlier two cases, Shankri Prasad and Sajjan Singh, were overruled. The
Constitution (Twenty Fourth Amendment) Act, 1971 inserted the Clause (4)
which provided that ‘Nothing in this Art. shall apply to any amendment of this
Constitution made under Art. 368.’ The Supreme Court in Kesavananda Bharati
v State of Keralaxxviii upheld the Constitutionality of the above amendment.
Therefore it is settled that ‘law’ under Art. 13 excludes an amendment of the
Constitution made under Art. 368. The doctrine simply implies that where only
a part of the offending law is inconsistent with or contravenes the fundamental
rights, it is that part only that shall be declared to be void, and not the entire law.
And the voidness is circumscribed by the expressions ‘to the extent of the
contravention’ and ‘to the extent of such inconsistency’. That is, the application
of the doctrine separates the invalid part of the law from the valid part. The
18. 17
resultant implication is that the valid part of the law continues to be law while
that part of it which offends the constitution ceases to have the content of law. It
no longer remains a law. H M Seervai observesxxix:
When a law is impugned as violating constitutional limitations, it
may be possible to save the law by applying the principle of
severability. There are two types of severability … the provision
violating the Constitutional limitations may be distinct and
severable, and the Court would uphold the rest of the Act by
severing such distinct provisions and declaring them void. But the
impugned law may be one and inseverable; so that no specific
provision of the Act could be declared to void. In such
circumstances, the doctrine of severability in application or
enforcement would apply. When the provisions of the impugned
law are so interwoven that they are not severable, then the entire
law, say the Act, is ultra vires.
The Privy Council in Initiative and Referendum Acts, observedxxx:
A particular section of an Act may not be an isolated and
independent clause, and may form part of one connected
indissoluble scheme for the attainment of a definite object; in
which case it would have to be considered as an inseparable part
of the whole. A law which is ultra vires in part only may thereby
become ultra vires in the whole, if the object of the Act cannot at
all be attained by excluding the bad part.
In AK Gopalan v State of Madrasxxxi, S. 14 of the Prevention Detention Act
1950 was declared to be ultra vires by the Supreme Court. The Court observed
that ‘the impugned Act minus this Section can remain unaffected. The omission
of this section will not change the nature of the structure of the legislation.
Therefore, the decision that Section 14 is ultra vires does not affect the validity
of the rest of the Act.’ However, the court has no jurisdiction to redraft the
legislation. The court cannot sever one single provision which covers valid as
19. 18
well as invalid subjects in order to save some portion of it. In RMDC v Union of
Indiaxxxii the Prize Competition Act 1955 was challenged on the ground of
violation of the fundamental rights of the petitioners as secured under Art.
19(1)(g) the court held that the provision of the Act were severable. It observed,
as has been previously discussed, that when a statute was in part void, it would
be enforced as regards the rest, if that was severable from what was invalidxxxiii.
Separability is a question of substance, not of form. Hence, while the substance
is to be determined from the provisions of the statute as a whole, it will also be
legitimate to take into account the history of the legislation and its object, apart
from its enacting provisions, title, and preamblexxxiv. According to Art. 13(1)(a)
the term law includes ‘any ordinance, order, bye-law, rule, regulation,
notification, custom or usage having the force of Law. However, it was held that
personal law such as Hindu Law or Muslim law are not covered by the term ‘law’
under Art. 13xxxv.
In Romesh Thapar v. State of Madras, SC held that only if the
unconstitutional portions cannot be removed then the whole act will be ultra
vires and thus unconstitutional. The doctrine was applied in DS Nakara v. Union
of India, where the Act remained valid while the invalid portion of it was
declared invalid because it was severable from the rest of the Act. In State of
Bombay v. F.N. Balsaraxxxvi, it was held that the provisions of the Bombay
Prohibition Act, 1949 which were declared as void did not affect the validity of
the entire Act and therefore there was no necessityfor declaring the entire statute
as invalid. In the case of Kihoto Hollohan vs Zachillhu And Othersxxxvii, it was
said that the doctrine of severability envisages that if it is possible to construe a
statute so that its validity can be sustained against a constitutional attack it should
be so construed and that when part of a statute is valid and part is void, the valid
part must be separated from the invalid part. In the case of D.S. Nakara & Others
v. Union of Indiaxxxviii, the court said that whenever a classification is held to be
impermissible and the measure can be retained by removing the unconstitutional
portion of classification or by striking down words of limitation, the resultant
effect may be of enlarging the class. In such a situation, the Court can strike
20. 19
down the words of limitation in an enactment. That is what is called reading
down the measure.
The doctrine of severability has been elaborately considered by the Supreme
Court in RMDC v. Union of Indiaxxxix, and the following rules regarding the
question of severability has been laid downxl :
1. The intention of the legislature is the determining factor in
determining whether the valid part of a statute are severable from the
invalid parts.
2. If the valid and invalid provisions are so inextricably mixed up that
they cannot be separated from another, then the invalidity of a portion
must result in the invalidity of the Act in its entirety. On the other
hand, if they are so distinct and separate that after striking out what is
invalid what remains is itself a complete code independent of the rest,
then it will be upheld notwithstanding that the rest had become
unenforceable.
3. Even when the provisions which are valid, are distinct and separate
from those which are invalid if they form part of a single scheme
which is intended to be operative as a whole, then also the invalidity
of a part will result in the failure of the whole.
4. Likewise when the valid and invalid parts of a Statute are independent
and do not form part of a Scheme but what is left after omitting the
invalid portion is so thin and truncated as to be in substance different
from what it was when it emerged out of legislature, then also it will
be rejected in its entirety.
5. The severability of the valid and invalid provisions of a Statute does
not depend on whether provisions are enacted in same section or
different section, it is not the form but the substance of the matter that
is material and that has to be ascertained on an examination of the Act
as a whole and of the setting of the relevant provisions therein.
21. 20
6. If after the invalid portion is expunged from the Statute what remains
cannot be enforced without making alterations and modifications
therein, then the whole of it must be struck down as void as otherwise
it will amount to judicial legislation.
7. In determining the legislative intent on the question of severability, it
will be legitimate to take into account the history of legislation, its
object, the title and preamble of it
R.M.D. Chamarbaugwalla v. The Union of India (UOI)xli is considered to be
one of the most important cases on the Doctrine of Severability. In this case, the
court observed that:
The doctrine of severability rests, as will presently be shown, on a
presumed intention of the legislature that if a part of a statute turns
out to be void that should not affect the validity of the rest of it,
and that that intention is to be ascertained from the terms of the
statute. It is the true nature of the subject-matter of the legislation
that is the determining factor, and while a classification made in
the statute might go far to support a conclusion in favor of
severability, the absence of it does not necessarily preclude it.
The court further said that:
When a statute is in part void, it will be enforced as regards the
rest, if that is severable from what is invalid. Another significant
canon of determination of constitutionality is that the Courts would
be reluctant to declare a law invalid or ultra vires on account of
unconstitutionality. The Courts would accept an interpretation,
which would be in favor of constitutionality rather than the one
which would render the law unconstitutional…….The court can
resortto reading down a law in order to save it from being rendered
unconstitutional. But while doing so, it cannot change the essence
of the law and create a new law which in its opinion is more
desirable.
22. 21
Notwithstanding the provisions of Art. 13, cases have come before courts
challenging features of non-codified law, particularly as they related to personal
law and custom. The courts have adopted an equivocal approach. The approach
of the court has been to hold that personal laws not compatible with fundamental
rights; to deny that personal laws fall within the sweep of Art. 13, and therefore,
these laws cannot be challenged on the ground of violating fundamental rights.
Gajendragadkar, J in State of Bombay v Narasu Appu Mali observed:
…[T]he framers of the Constitution wanted to leave the personal
laws outside the ambit of Part III of the Constitution (viz,
Fundamental rights). They must have been aware that these
personal laws needed to be reformed in many material particulars
and in fact they wanted to abolish these different personal laws and
to evolve one common code. Yet they did not wish that the
provisions of personal laws should be challenged by reason of the
Fundamental Rights…and so they did not intend to include these
personal laws within the definition of the expression “laws in
force”.
In Collector of Madura v Moottoo Ramalingaxlii it was stressed by the court that:
‘Under the Hindu system of law, clear proof of usage will
outweigh the written text of law. It has been repeatedly stated that
a custom may be in derogation of smriti law and where proved to
exist may supersede that law. The tenacity of family customs even
under the strain of migration has been repeatedly recognized in
decisions of the Courts. It may, however, be observed that though
local and family custom, if proved to exist, will supersede the
general law, the general law will in other respects govern the
relations of the parties outside that custom.’
By operation of Art. 13(3)(a) of the Constitution law includes custom or
usage having the forceoflaw. Art. 13(1)declares that the pre‐constitutional laws,
so far as they are inconsistent with the fundamental rights shall, to the extent of
23. 22
such inconsistency, be void. The object, thereby, is to secure paramountcy of the
Constitution and give primacy to fundamental rights. Customs are pre‐
constitutional and a part of existing laws. They furnish the rules that govern the
human conduct. These are observed by classes or groups of people, and exist in
every society. Constitution of India includes ‘customs’ within the meaning of
law to be applicable to Part III. Art. 13(3)(a) inter alia includes custom or usage
within the meaning of law. Therefore, a custom must yield to the fundamental
rightsxliii. However Madhu Kishwar v State of Biharxliv adopted a conservative
approach and desisted from declaring a tribal custom as being inconsistent with
Art. 14, the reason being that to do so ‘would bring about chaos in the existing
state of law’. The decision of the court assumes importance in the light of
Supreme Court’s observation in Narasu Appu Mali case where it had observed:
…[I]t is clear that if there is any custom or usage which is in force
in India, which is inconsistent with the fundamental rights, that
custom or usage is void. “Laws in force”was separately defined in
order to emphasize the fact that even though a law may not be in
operation at all or may be in operation in particular areas, even so
it should be considered to be a law in force for the purpose of Art.
13(1)…The Constitution has made it clear that no custom or usage
having the force of law can validly be made the basis of any law in
future if such custom or usage offends against the fundamental
rights.
In Sheikriyammada Nalla Koya v Administrator, Union Territory of
Laccadivesxlv, KK Mathew J. held that customs which are immoral are opposed
to public policy, can neither be recognized nor be enforced.
Position of Author
Johann Christiaan Kriegler, a former Constitutional Court and Appeal
Court judge from South Africa has aptly summed up the Doctrine of Severability
thus, “If the good is not dependent on the bad and can be separated from it, one
gives effect to the good that remains after the separation if it still gives effect to
24. 23
the main objectivexlvi.” Just because a limited portion of a pre-existing law
adversely affects the whole post-constitutional law does not necessarily imply
that the ‘bad’ portion cannot be excised by Courts after applying the tests of
reasonability, public interest and legislative intent. The important thing to bear
in mind is the legislative intent and their accordance with the public interest.
While some may argue that unbridled fundamental rights are undesirable and
must be limited by the power of legislative amendment, yet Courts have,
creditably, put up major hurdles in tampering with fundamental rights that seek
to use dated laws to ensure compliance to their regimes and grant it political
legitimacy. While certain nations like Australia have built the doctrine of
severability into their Constitutions, most have relied upon common law to do
so. In the ultimate analysis, severability remains a powerful tool in the hands of
the judiciary to strike a balance between often superfluous legislative action,
tradition and custom and contemporary needs.
BIBLIOGRAPHY
Books & Articles Referred
H M Seervai, Constitutional Law of India, 421(1991)
DD Basu, Commentary on the Constitution of India, Vol 1, 692 (2007)
D D Basu, Human Rights in Constitutional Law, 217(1994)
M P Jain, Indian Constitutional Law, 827(2005)
Rabindra Kumar Pathak: Untangling the Constitutional Labyrinth, Bond Law Review,
Vol. 22, Issue I, Article 3
Kenneth A. Klukowski: SEVERABILITY DOCTRINE: HOW MUCH OF A STATUTE
SHOULD FEDERAL COURTS INVALIDATE? Texas Review of Law & Politics, Vol.
16 No. 1 at 3-111
Citations
i Vol. 1 at pp. 360-361; Crawford on Statutory Construction, pp. 217-218.
ii Vol. 1 at pp. 360-361; Crawford on Statutory Construction, pp. 218-19
iii 1894 AC 535
iv United States v. Reese, 92 U.S. 214, 221 (1876)
25. 24
v Trade-Mark Cases, 100 U.S. 82, 98−99 (1879)
vi Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 565 (1902)
vii Champlin Ref. Co. v. Corp. Comm’n of Okla., 286 U.S. 210, 234 (1932) (“The
unconstitutionality of a part of an act does not necessarily defeat or affect the validity
of its remaining provisions. Unless it is evident that the Legislature would not have
enacted those provisions which are within its power, independently of that which is not,
the invalid part may be dropped if what is left is fully operative as a law.”)
viii 480 U.S. at 685
ix546 U.S. 320, 329−30 (2006)
x 546 US 440 2006
xi 130 S. Ct. 3138 (2010)
xiixii OPC, Federal Govt. of Australia: Drafting Direction 3.1 extracted from
www.opc.gov.au/about/docs/drafting_series/DD3.1.pdf on Sep 14, 2014
xiii Pidoto v. Victoria (1943) 68 CLR 87 at 108-110 and Strickland v. Rocla Concrete
Pipes Ltd (1971) 124 CLR 468.
xiv Dixon J. in The King v. Poole; Ex Parte Henry (No. 2) (1939) 61 CLR 634 at 652
xv Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242
xvi Vancouver Malt and Sake Brewing v Vancouver Breweries [1934] AC 181
xvii (1991) 31 FCR 242
xviii Lloyd’s Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505
xix www.comlaw.gov.au/Details/.../8fdea997-4e6d-4737-809c-8f53435eef75
xx 1911 220 US 61, 76-79, 55 L Ed 369
xxi[1977] 2 MLJ 155, 165-166
xxii D D Basu, Human Rights in Constitutional Law, 217(1994).
xxiii Pollock v Farmers’ Loan & Trust Co, (1895) 158 US 635; Lynch v US, (1933)292
US 571. In El Paso R Co v Gutierrez, (1909) 215 US, 87, it was held that if the Court
finds that an offending portion of the statute to be severable, it will be the duty of the
Court to declare only the offending part invalid and maintain the rest of the statute.
xxiv (1885)114 US 270
xxv AIR 1951 SC 458
xxvi AIR 1965 SC 845
xxvii AIR 1965 SC 845
xxviiiAIR 1973 SC 1461
xxix H M Seervai, Constitutional Law of India, 421(1991).
xxxAIR 1919 P C 145
xxxi (1950) SCJ 174
xxxii (1950) SCJ 174
xxxiii Punjab Province v Daulat, (1942) FCR 1; Chintaman Rao v State of Madhya
Pradesh, (1950) SCR 759 ; State of Bombay v F N Balsara, (1951) SCR 682. State of
Bihar v Kameshwar Prasad, AIR 1952 SCR 889 ; Harakcahand v Union of India AIR
1970 SC 1453 at 1468
xxxiv RMDC v Union of India, (1957) SCR 930. Also see, Kihoto Hollohan v Zachilhu,
AIR 1993 SC412.
xxxv(State of Bombay v. Narayan, AIR 1952 Bom.84)
26. 25
xxxvi A.I.R.l.951 S.C. 318
xxxvii 1992 SCR (1) 686.
xxxviii AIR 1983 SC 130
xxxix AIR 1957 SC 628
xl Legal Service India: Doctrine of Severability extracted from
http://legalservices.co.in/blogs/entry/Doctrine-of-Severability on Aug 1, 2014
xli AIR 1957 SC 628
xlii Youth Welfare Federation Rep by Its Chairman, K.J Prasad v Union of India, 1996
(4) ALT 1138.
xliii Dashratha Rama Rao v State of A.P, AIR 1961 SC 564
xliv AIR 1996 SC1864
xlvi Extracted from http://www.goodreads.com/author/show/6863329.Johann_Kriegler
on Sep 14, 2014