- Notional Severance
- Reading down a contractual provision so as to make it legal and enforceable.
Strictly speaking, the technique of notional severance is not actually a form of severance as it were as much as it is replacement; thus, notional severance.
An example would be to reduce an illegal interest rate down to an acceptable level.
A term of employment law to describe an option of a judge who is asked to rule on an employment contract, particularly restrictive covenants. Rather than cancel the entire agreement, a judge may prefer to reduce the scope of the offending provision so that it meets the legal norm; to notionally sever it.
In Shafron, Justice Rothstein of Canada's Supreme Court wrote:
"Severance, when permitted, appears to take two forms. Notional severance involves reading down a contractual provision so as to make it legal and enforceable. Blue-pencil severance consists of removing part of a contractual provision....
"(N)otional severance is not an appropriate mechanism to cure a defective restrictive covenant."
In Transport North American, albeit in disenting reasons, at ¶59, Justice Bastarache wrote:
"Under notional severance, courts will be permitted to literally add new words to the parties’ agreement. By doing so, courts will be substituting their intentions for those of the parties. Notional severance would extend the judicial role in what I consider to be an unfortunate way."
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