Is it legally permissible to remove illegal part of contract

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Reference no: EM131378726

Clear Channel Broadcasting, Inc., required Diane Ignazio to sign a new contract that included an arbitration clause under which she agreed that all grievances that she might have with Clear Channel would be settled by arbitration.

As part of the agreement, Ignazio gave up any right to bring a lawsuit against Clear Channel. When Ignazio was discharged, instead of moving to arbitration, she sued Clear Channel for discrimination and wrongful discharge. Clear Channel filed a motion to dismiss the case, arguing that Ignazio was bound by the arbitration agreement. Ignazio pointed to a clause in the agreement that rendered the entire agreement illegal.

The clause allowed the arbitration award to be reviewed by a court based on the same broad standards used by an appeals court in reviewing a trial court's decision. This provision contradicts state law, which states that if an appeals court reviews an arbitration decision, it can only use a very limited approach to the appeal, including only such things as clerical error or misconduct.

Clear Channel argued that even if the clause was illegal, it could be severed from the agreement, and the rest of the agreement could be enforced.

In fact, the contract even included a clause that stated that any clause found illegal ought to be removed from the contract, so that the rest of the contract could be upheld. The question before the court was whether the illegal clause could be removed from the agreement without changing the essential nature of the contract. Is it legally permissible to remove the illegal part of a contract so that the court can uphold the legal part? Should the court sever the illegal clause in this case? Explain.

Ignazio v. Clear Channel, 113 Ohio St.3d 276 (Ohio Supreme Court).

Reference no: EM131378726

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