This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The effect of a breach of one of a number of covenants in a contract, as discharge of the whole contract, depends upon whether such covenants in effect make one entire contract or a number of distinct contracts. Stating it in other words, the question is whether the contract is entire or severable. The question whether a contract is entire or severable arises in several different connections: (1) If one covenant of a contract is illegal, we have seen already1 that the validity of the remaining covenants depends on whether the contract is entire or severable, the remaining covenants being valid if the contract is severable and unenforceable if the contract is entire. Thus a contract of employment at a gross compensation for a certain period of time which specifically includes Sundays is an entire contract and no recovery thereunder can be had for work done on secular days.2 If a covenant is severable it may be enforced if itself legal, though it is joined with illegal covenants.3 (2)
9 Adie v. Clark, L. R. 3 Ch. Div. 134; Hall v. Conder, 2 C. B. N. S. 22; Lawes v. Purser, 6 El. & Bl. 930.
10 Harlow v. Putnam, 124 Mass. 553; Nash v. Lull, 102 Mass. 60; 3 Am. Rep. 435.
11 Chemical, etc., Co. v. Howard, 150 Mass. 495; 2 L. R. A. 168; 23 N. E. 317.
1 See Sec. 509.
2 Stewart v. Thayer. 168 Mass. 519; 60 Am. St. Rep. 407; 47 N. E. 420; Handy v. Publishing Co.. 41 Minn. 188; 16 Am. St. Rep. 695; 4 L. R. A. 466; 42 N. W. 872; Mc-Clanathan v. Friedel, 85 Hun (N. Y.) 175.
3 Robertson v. Hayes. 83 Ala. 290; 3 So. 674; Glaze v. Duson, 40 La. Ann. 692; 4 So. 861.
In cases arising under the statute of frauds, the enforceability of the contract may depend upon whether it is entire or severable.4 Under this statute this question may come up at least in two different ways: (a) If the contract is oral, and some of the covenants are within the statute of frauds, the remaining covenants are unenforceable if the contract is entire,5 but enforceable if the contract is severable.6 (b) Under the section of the statute which concerns the sale of personal property, the question whether the contract is entire or not is important where the different articles sold are each below the price fixed by the statute for its operation but the aggregate price exceeds such limit. In this case, if the contract is severable, it can be proved orally, but if entire, the statute of frauds applies, and the contract cannot be proved unless that section has been complied with.7 If personal property is delivered in part, as provided for by the seventeenth section of the statute of frauds, the whole contract is enforceable, if entire; while if severable, only that part of it under which such delivery is made is enforceable.8 (3) The question whether a contract is entire or severable is important in determining questions of performance where one covenant has been broken. Subject to the principles which control the right of the parties after breach, no recovery can be had on the covenants of an entire contract by the party who has broken one of them.9 Thus A, the owner of timber, agreed to cut and haul it to B's mill and there to make it into lumber, and pile it in B's yard. B was by the contract then to pay six dollars a thousand feet therefor. This was so far entire that A could recover nothing for cutting and hauling, where the logs were burned before they were made into timber.10 If, on the other hand, the contract is severable, it is in legal effect a number of distinct contracts; and a breach of one covenant does not operate as a discharge of other covenants between the same parties.11 Thus if two parties enter into two contracts at the same time, by one of which A sells a certain mine to B, in consideration of a certain portion of the net proceeds, and by the other of which B agrees to hire A as superintendent of a mine for a certain period of time, a breach by the employer, of the contract of employment, does not amount to a breach of the contract concerning payment of the net proceeds.12 So if two parties enter into contracts, by one of which A and B agree to form a stock company to manufacture machines, and by the other of which A guarantees that the machine manufactured can be placed on the market at a certain price, and the contracts are severable contracts, a breach of the contract of guarantee is not a breach of the contract for the organization of the corporation so as to justify abandonment thereof by the other party.13 So the party not in default may treat default as discharging one branch of a severable contract without seeking to avoid it all. Under an agreement to use "say ten thousand dollars " of certain negotiable paper, the discounting of three notes amounting to more than eleven thousand dollars constitutes severable contracts. Accordingly, the party who is to discount the notes is discharged as to one of the notes to be discounted if the maker is insolvent; and he may avoid such contract, recovering what he has paid thereunder.14
4 See Sec. 753.
5 In re Kessler's Estate, 87 Wis. 660; 41 Am. St. Rep. 74; 59 N. W. 129.
6 Lowman v. Sheets, 124 Ind. 416; 7 L. R. A. 784; 24 N. E. 351.
7See Sec. 753.
8 Weeks v. Crie, 94 Me 458; 80 Am. St. Rep. 410; 48 Atl. 107-
9 Easton v. Jones, 193 Pa. St. 147; 44 Atl. 264; Martin v. Friden-berg, 169 Pa. St. 447; 32 Atl. 429; Widman v. Gay, 104 Wis. 277; 80 N. W. 450; McDonald v. Bryant, 73 Wis. 20; 40 N. W. 665.
10 McDonald v. Bryant, 73 Wis. 20; 40 N. W 665.