DOCTRINE OF BLUE PENCIL
Blue Pencil means censoring or making cuts in a manuscript, film or other work according to the Oxford Dictionary of English. Earlier, the editors used Blue Pencil to make corrections to the copy. The Doctrine of Blue Pencil is a legal principle according to Black's Law Dictionary for determining whether to invalidate the whole contract or only the objectionable terms. By this method, even offensive words are invalidated if it is possible to erase them simply by running a blue pencil through them instead of modifying, inserting or rearranging words. The Blue Pencil law only requires the courts to strike down the violating clauses and implement the remainder of the convention or agreement.
The basic rule of contract law is that the unlawful parts of a contract are illegitimate and thus unenforceable. But many contracts contain one part or a clause as illegal and the rest as legal. In such cases, the court breaks down the illegal part and enforces the legal part when the parts are degradable. This is known as the concept of severability. “This is done when the rest of the contract effectuate the intention of the parties.” The doctrine of severability caused some difficulty, i.e. it does not give the court the power to modify the restrictive covenant in the jurisdiction. Based on the doctrine of detachment, a new concept was developed in 1843 in the case of Mallan v. May, which later became known as the Blue Pencil. The Blue Pencil Doctrine is applied mostly in cases where “the non-compete agreement is a matter of controversy.” Any contract to limit trade is void. But the courts have begun to take a different approach and if reasonable, validate such a contract. In the event of an over-extended clause, the court overturned that part by running the Blue Pencil. Under the Blue Pencil law, the first method is to read the separable undue clauses of the contract and then to sever the part by running a blue pencil over it. By reforming the overbroad clauses, the courts had broadened the scope of operation of the blue pencil statute.
This rule can be applied only “if the valid stipulation is not affected by the illegality of the other part then the valid part remains intact.”
"In Halsbury's Laws of England (4th Edn. Vol.9), p.297, para 430, it is stated that a contract will rarely be illegal or void and certain parts of it may be entirely lawful in themselves. The question, therefore, arises whether the illegal or void parts may be separated or 'severed' from the contract and the rest of the contract enforced without them. Nearly all the cases arise in the context of restraint of trade, but the following principles apply to contracts in general.”
The courts have started using the concept of the blue pencil in contracts through which the court may strike the part of the non-compete covenants to make the arrangement reasonable. This was achieved to make the non-compete clause enforceable.