Also known as blue-penciling, blue pencil, or blue-pencil. In the US, blue penciling commonly refers to the practice of modifying, narrowing, or deleting an unenforceable contract or contractual provision so that the remainder of the agreement is enforceable. It is often used by courts adjudicating challenges to restrictive covenants. For example, if a non-compete agreement limits an individual's right to work for a competitor for an unreasonably long duration, a court may reduce the restricted time period and enforce the remainder of the agreement.

In some states, blue penciling refers solely to the modification of an overly broad or otherwise unenforceable agreement that can be accomplished by striking the offending words, phrases, or provisions, without making any other changes, while keeping the remainder of the agreement enforceable and grammatically correct after the deletion. Other states prohibit blue penciling or other contractual modifications in the adjudication of non-compete agreements (see Non-Compete Laws: State Q&A Tool).

For an up-to-date state-by-state comparison, see Quick Compare Chart, Non-Compete State Laws Chart and select the question "Do courts have authority to blue-pencil or otherwise modify an overbroad non-compete?"

For more information about non-compete agreements, see Practice Note, Non-Compete Agreements with Employees and Restrictive Covenants Toolkit. For a sample non-compete agreement, see Standard Document, Employee Non-Compete Agreement.

In some non-US jurisdictions, the term:

For more information on blue penciling, read-down, and notional severance in cross-border transactions, see Standard Clauses, Severance (UK Style) (Jurisdiction Neutral).