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.
Even if the consideration is not apportioned, the contract when taken as a whole may show that the parties did not intend that the contract should be entire.1 If the risk under a policy of insurance is distinct, it is said that the contract is sever able, although a gross premium is paid.2 A contract for the sale of a stock of goods, a business and the good will, together with a covenant not to compete, is held to be so far severable that breach of the covenant not to compete is not a defense to an action on the note which is given as the entire consideration.3
In some cases the party who is not in default is held to have the option to treat contracts as severable, although the consideration is not apportioned and although the party who is in default might not be given the same option.4 If A has agreed to sell a number of tracts of realty to B at a gross price, and the title to one of such tracts fails, B has been permitted to treat such contract as so far severable that he may recover a fair proportion of the purchase money for the tract the title to which has failed.5 A sale of a carload of lumber has been held to be so far severable that the purchaser may accept the part thereof which conforms to the warranty under which it was sold, and reject the part which does not conform to such warranty.6
Even if the price is a gross sum and the articles which are sold are of such a sort that they must be used together, the fact that separate warranties are given for the different articles and that different consequences for breach of warranty are provided as to each article, has been held to show that the contract is severable.7
1 Goorberg v. Western Assurance Co., 150 Cal. 510, 110 Am. St. Rep. 246, 10 L. R. A. (NS) 876, 89 Pac. 130; Stearns Salt & Lumber Co. v. Dennis Lumber Co., 188 Mich. 700, 2 A. L. R. 638, 154 N. W. 91; Bradford v. Montgomery Furniture Co, 115 Tenn. 610,
9 L. R. A. (NS) 979, 92 S. W. 1104; Dorr v. Midelburg, 65 W. Va. 778, 23 L. R. A. (N.S.) 987, 65 S. E. 97.
2 Goorberg v. Western Assurance Co., 150 Cal. 510, 119 Am. St. Rep. 246,
10 L R A. (N.S.) 876, 89 Pac. 130.
In 6ome jurisdictions the fact that the premium is not apportioned is held to be conclusive as to the entire character of the contract. See Sec. 3004.
3 Bradford v. Montgomery Furniture Co., 115 Tenn 610, 9 L. R. A. (N. S.) 979, 92 S. W. 1104.
Contra, Ferris v. Pett, - R. I. -, 2 A. L. R. 768, 105 Atl. 369.
4 Stearns Salt & Lumber Co v. Dennis Lumber Co., 188 Mich. 700, 2 A. L R. 638, 154 N. W. 91; Dorr v. Midel burg, 65 W. Va. 778, 23 L. R. A. (N. S.) 987, 65 S. E. 97.
5 Dorr v. Midelburg, 65 W. Va. 778, 23 L. R. A. (N.S.) 987, 65 S. E. 97.
6 Steams Salt & Lumber Co. v. Dennis Lumber Co., 188 Mich. 700, 2 A. L. R. 638. 154 N. W. 01.
7 Nichols & Shepard Co. v. Wiedemann, 72 Minn. 344, 75 N. W. 208, 76
The fact that one of the articles is sold without any express warranty and that the other is sold on trial, has been held to show that the contract is severable, although the purchase price is a gross sum.8 Even the fact that separate warranties are given has been held, however, in some jurisdictions, not to render the contract severable.9 If the contract recites a gross sum and provides for separate warranties, the contract has been held to be severable, so that the purchaser can not rescind the entire contract for breach of warranty as to one of the articles,10 on the theory that the gross sum thus specified was ascertained by estimating the separate price of each article and adding the separate amounts.11