1. Entire Contract
What Is Entire Contract?
不可分契约 指契约的对价对于双方当事人皆不可分，任何一方对于承诺的完全履行是另一方履行其任何一部分承诺的前提条件。与之相对的是可分契约〔severable contract〕。
2. Severability
What Is Severability?
Severability, also known by the Latin term "salvatorius," is a provision in a piece of legislation or a contract that allows the remainder of the legislation’s or contract’s terms to remain effective, even if one or more of its other terms or provisions are found to be unenforceable or illegal. A severability clause in a contract states that its terms are independent of one another so that the rest of the contract will remain in force should a court declare one or more of its provisions void or unenforceable.
However, in some cases, a severability clause will specify that some provisions of a contract are so vital to its purposes that, if they are found to be unenforceable or illicit, the contract as a whole must be found to be illicit or unenforceable. Usually, a severability clause cannot be used to change the nature of a contract.
Severability should not be confused with severance, which is residual income paid out to a let-go employee under certain circumstances.
Understanding Severability
Without a severability clause, a contract could be deemed unenforceable because of a default on just one part of the contract. Sometimes though, severability clauses state that some of the contract’s provisions are so essential to its purpose that if they are illegal or unenforceable, the contract as a whole will be voided.
Severability clauses generally contain two parts. Savings language preserves the remaining agreement in the event a court finds a part to be unenforceable—which is why severability clauses are also known as savings clauses—and reformation language describes how the parties intend unenforceable parts to be modified to be enforceable, or simply deleted.
If a sentence, clause, or term in a contract is deemed invalid by a court, the problem area of the contract will usually be rewritten to fit both the contract's original intent and the requirements of the court, under the rule of reasonableness. But if the severability clause addresses the essential purpose of the agreement, then the entire agreement could be made unenforceable.
Severability clauses are also found in legislation, where they state that if some provisions of the law, or certain applications of those provisions, are found to be unconstitutional, the remaining provisions, or the remaining applications of those provisions, will, nonetheless, continue to remain in force.
Severability Clause Examples
An example of a severability clause in a contract might read:
“If a provision of this Agreement is or becomes illegal, unenforceable, or invalid in any jurisdiction, it shall not affect (1) the enforceability or validity in that jurisdiction of any other provision of this Agreement, or (2) the enforceability or validity in other jurisdictions of that or any other provision of this Agreement.”
In legislation, a severability clause might specify that if any “section, subsection, sentence, clause, phrase, word, provision or application” of the law shall be found to be invalid, illegal, unconstitutional, or unenforceable, that finding shall not affect or undermine the validity of any other “section, subsection, sentence, clause, phrase, word, provision, or application” which can be enforced without the use of the offending portion of the legislation.
3. Lien
What Is a Lien?
A lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt. A creditor or a legal judgment could establish a lien. A lien serves to guarantee an underlying obligation, such as the repayment of a loan. If the underlying obligation is not satisfied, the creditor may be able to seize the asset that is the subject of the lien. There are many types of liens that are used to secure assets.
KEY TAKEAWAYS
- A lien is a claim or legal right against assets that are usually used as collateral to satisfy a debt.
- The creditor may be able to seize the asset that is the subject of the lien.
- Bank, real estate, and tax are three types of liens.
- If a contract on a property is not paid, the lender has a legal right to seize and sell the property.
- Various types of liens can be established including by a creditor, legal judgment, or tax authority.
How Liens Work
A lien provides a creditor with the legal right to seize and sell the collateral property or asset of a borrower who fails to meet the obligations of a loan or contract. The owner cannot sell the property that is the subject of a lien without the consent of the lien holder. A floating lien refers to a lien on inventory or other unfixed property.
Liens can be voluntary or consensual, such as a lien on a property for a loan. However, involuntary or statutory liens exist whereby a creditor seeks legal action for nonpayment. As a result, a lien is placed on assets, including property and bank accounts.
Some liens are filed with the government to let the public know that the lienholder has an interest on the asset or property. A lien's public record tells anyone interested in purchasing the asset or collateral that the lien must be released before the asset can be sold.
Types of Liens
There are many types of liens and lien holders. Liens can be put in place by financial institutions, governments, and small businesses. Below are some of the most common liens.
Bank Lien
A lien is often granted when an individual takes out a loan from a bank to purchase an asset. For example, if an individual purchases a vehicle, the seller would be paid using the borrowed funds from the bank. In turn, the bank would be granted a lien on the vehicle. If the borrower does not repay the loan, the bank may execute the lien, seize the vehicle, and sell it to repay the loan.
Important:
If the borrower does repay the loan in full, the lien holder (the bank) then releases the lien, and the individual owns the car free and clear of any liens.
Judgment Lien
A judgment lien is a lien placed on assets by the courts, which is usually a result of a lawsuit. A judgment lien could help a defendant get paid back in a nonpayment case by liquidating the accused's assets.
Mechanic's Lien
A mechanic's lien can be attached to real property if the owner fails to pay a contractor for services rendered. If the debtor never pays, the contractor could go to court and get a judgment against the non-paying party whereby property or assets can be auctioned off to pay the lien holder. Many service providers have the option to place a lien to secure payment, including construction companies and dry cleaners.
Real Estate Lien
A real estate lien is a legal right to seize and sell real estate property if a contract is not fulfilled. Some real estate liens are automatically put in place, such as in the case of a mortgage lien. When a party borrows money from a bank to purchase their home, the bank places a lien on the house until the mortgage is paid off.
However, some real estate liens are due to non-payment to a creditor or financial institution and as a result, are involuntary and nonconsensual liens.
Tax Liens
There are also several statutory liens, meaning liens created by law instead of those created by a contract. These liens are very common in the field of taxation, where laws often allow tax authorities to put liens on the property of delinquent taxpayers. For example, municipalities can use liens to recover unpaid property taxes.
In the United States, if a taxpayer becomes delinquent and does not demonstrate any indication of paying owed taxes, the Internal Revenue Service (IRS) may place a legal claim against a taxpayer's property, including the taxpayer's home, vehicle, and bank accounts. A notice of federal tax lien notifies creditors of the government's claim and can lead to a sheriff's sale.1 A sheriff's sale is a public auction whereby assets are repossessed, sold, and the generated funds are used to repay a debt to a creditor, bank, or the IRS.
A tax lien also affects the taxpayer's ability to sell existing assets and obtain credit. The only way to release a federal tax lien is to fully pay the tax owed or reach a settlement with the IRS. The IRS has the authority to seize a taxpayer's assets who ignore a tax lien. Typically, the IRS uses liens for delinquent taxes as a last resort, following all other options being exhausted, such as collection, installment repayment plans, and settlement.1
What Is a Lien on My House?
When you buy a house using a mortgage, the lender has a legal right to seize your property, if you don't pay the mortgage. Your house basically is the collateral for the mortgage loan and when you borrow money to buy it, a mortgage lien is put on your house, until you pay off your mortgage.
What Does a Lien Mean?
A lien is simply the legal right of a lender to sell your property (a house or a car, for example) if don't meet your contractual obligations on the loan you took out to purchase it.
How Do I Get Rid of a Lien?
You can get rid of a lien on your property, car, or other asset by paying off your loan in full.