Where two or more persons are
liable in respect of the same liability, in most
common law
In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omniprese ...
legal systems they may either be:
* jointly liable, or
* severally liable, or
* jointly and severally liable.
Joint liability
If parties have joint liability, then they are each liable up to the full amount of the relevant
obligation
An obligation is a course of action that someone is required to take, whether legal or moral. Obligations are constraints; they limit freedom. People who are under obligations may choose to freely act under obligations. Obligation exists when th ...
.
So if a
married couple takes a
loan
In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that ...
from a
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Becau ...
, the loan
agreement Agreement may refer to:
Agreements between people and organizations
* Gentlemen's agreement, not enforceable by law
* Trade agreement, between countries
* Consensus, a decision-making process
* Contract, enforceable in a court of law
** Meeting of ...
will normally provide that they are to be "jointly liable" for the full amount. If one party dies, disappears, or is declared
bankrupt
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debto ...
, the other individual remains fully liable. Accordingly, the bank may sue all living co-promisors for the full amount.
However, in suing, the
creditor
A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
has only one cause of action; i.e., the creditor can sue for each debt only once. If, for example, there are three
partners
Partner, Partners, The Partner, or, The Partners may refer to:
Books
* ''The Partner'' (Grisham novel), by John Grisham, 1997
* ''The Partner'' (Jenaro Prieto novel), 1928
* ''The Partners'' (book), a 1983 book by James B. Stewart
* ''Partner'' (m ...
, and the creditor sues all of them for the outstanding loan amount and one of them pays the liability, the creditor cannot recover further amounts from the partners who did not contribute to the liability.
Several liability
The converse is several or proportionate liability, where the parties are liable for only their respective obligations.
A common example of several liability is in
syndicated loan
A syndicated loan is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial banks or investment banks known as lead arrangers.
The syndicated loan market is the dominant way for larg ...
agreements, which will normally provide that each bank is severally liable for its own part of the loan. If one bank fails to advance its agreed part of the loan to the borrower, then the borrower can sue only that bank, and the other banks in the
syndicate
A syndicate is a self-organizing group of individuals, companies, corporations or entities formed to transact some specific business, to pursue or promote a shared interest.
Etymology
The word ''syndicate'' comes from the French word ''syndica ...
have no liability.
Joint and several liability
Under joint and several liability or ''all sums'', a claimant may pursue an obligation against any one party as if they were jointly liable and it becomes the responsibility of the defendants to sort out their respective proportions of liability and payment.
This means that if the claimant pursues one defendant and receives payment, that defendant must then pursue the other obligors for a contribution to their share of the liability.
Joint and several liability is most relevant in
tort
A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishabl ...
claims, whereby a
plaintiff
A plaintiff ( Π in legal shorthand) is the party who initiates a lawsuit (also known as an ''action'') before a court. By doing so, the plaintiff seeks a legal remedy. If this search is successful, the court will issue judgment in favor of the ...
may recover all the
damages
At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised a ...
from any of the
defendant
In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case.
Terminology varies from one juris ...
s regardless of their individual share of the liability. The rule is often applied in
negligence
Negligence (Lat. ''negligentia'') is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as ''negligence'' involves harm caused by failing to act as ...
cases, though it is sometimes invoked in other areas of law.
In the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...
, 46 of the 50
states have a rule of joint and several liability, although in response to
tort reform
Tort reform refers to changes in the civil justice system in common law countries that aim to reduce the ability of plaintiffs to bring tort litigation (particularly actions for negligence) or to reduce damages they can receive. Such changes ...
efforts, some have limited the applicability of the rule. About two dozen have reformed the rule, with several (Alaska, Arizona, Kansas, Utah, Vermont, Oklahoma, and Wyoming) abolishing. In some instances it is abolished except where the defendants "act in concert".
Variations
Some jurisdictions have imposed limits on joint and several liability, but without completely abolishing that doctrine.
For example,
* In Ohio only defendants who are responsible for more than 50% of the tortious conduct can be held jointly and severally liable for economic losses. A defendant who bears responsibility for an injury but whose tortious conduct was less than 50% is only responsible for his or her share of the plaintiff's economic loss.
Non-economic losses (such as pain and suffering or loss of companionship) can only be assigned proportionately.
* California allows joint and several liability but only for economic damages.
* Hawaii allows joint and several liability for all economic losses but only for non-economic losses when the underlying tort is intentional, related to environmental pollution or selected other classes.
Examples
If Ann is struck by a car driven by Bob, who was served alcohol in Charlotte's bar (and the state has
dramshop A dram shop (or dramshop) is a bar, tavern or similar commercial establishment where alcoholic beverages are sold. Traditionally, it is a shop where spirits were sold by the dram, a small unit of liquid.
Dram shop liability refers to the body of l ...
laws), then both Bob and Charlotte's bar may be held jointly liable for Ann's injuries. If the
jury
A jury is a sworn body of people (jurors) convened to hear evidence and render an impartial verdict (a finding of fact on a question) officially submitted to them by a court, or to set a penalty or judgment.
Juries developed in England du ...
determines Ann should be awarded $10 million and that Bob was 90% at fault and Charlotte's bar 10% at fault:
*Under ''several'' or ''proportionate'' liability, Bob would have to pay $9 million (90% of $10 million) and Charlotte's bar would have to pay $1 million (10% of $10 million). If Bob does not have any money and is uninsured, Ann will only recover whatever sum(s) Charlotte's bar and/or her insurance provider are able to pay - up to the limit of any
liability insurance
Liability insurance (also called third-party insurance) is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims and protects the in ...
policy Charlotte may have (plus her own ability to pay, if any) ''or'' $1 million, whichever is ''less''.
*Under ''joint'' liability, Ann may recover the full damages from ''either'' of the defendants. If Ann sued Charlotte's bar alone, Charlotte's bar would be liable for the full $10 million despite only being 10% at fault for the injury. If Charlotte's bar had an insurance policy with a liability limit of less than $10 million, the bar would remain liable for any amount over and above the policy limit. Charlotte would have to
join Bob as defendant in Ann's suit against her. With ''joint and several'' liability, if Charlotte's bar paid the full award of damages, Charlotte's bar could pursue a separate contribution action against Bob for $9 million. Regardless of the outcome of a contribution action, Charlotte's bar would remain liable to Ann for the full $10 million.
Joint and several liability can make a defendant liable for the full amount of damages suffered by a plaintiff even if that defendant bears only slight fault for the injury. For example, if a child is injured due to the negligence of a crossing guard employed by a school district, and a court finds the crossing guard to be 99% at fault for the child's injury and the school district to be only 1% at fault, the school district would be liable to pay 100% of the damages. In contrast, under several liability, if the crossing guard was unable to pay money toward the judgment the most that the injured child could recover would be 1% of the judgment from the school district.
Arguments for and against joint and several liability
Joint and several liability is premised on the theory that the defendants are in the best position to apportion damages amongst themselves. Once liability has been established and damages awarded, the defendants are free to litigate amongst themselves to better divide liability. The plaintiff no longer needs to be involved in the litigation and can avoid the cost of continuing litigation.
*As each defendant has contributed to a single result, the injury of the plaintiff, although there may be differences in the character or scope of their duties, it may be argued that their joint contribution to the single result prevents any reasonable division of the damages.
*Although one defendant may end up paying more than that defendant
tortfeasor's proportionate share of the damages, it is nonetheless thought that it is better for a culpable defendant to overpay that defendant's share of the damages than for the injured plaintiff to be undercompensated for the injury.
Where a financially wealthy party can be named or
joined as a defendant, a plaintiff has a greater chance of recovering damages than when the defendants have very limited economic resources or are financially insolvent, or "
judgment proof
In the context of contract law, debt collection and civil litigation, the term judgment proof is commonly used to refer to defendants or potential defendants who are financially insolvent, or whose income and assets cannot be obtained in satisfa ...
". Opponents of the principle of joint and several liability argue that its use is unfair to many defendants.
* Joint and several liability will lead to cases in which a party who has a very small share of the responsibility for a plaintiff's injury may unfairly shoulder the burden of paying all of the damages.
* When defendants may be held jointly liable, the plaintiff may seek out a defendant with considerable resources ("deep pockets") to add to a case, hoping that the defendant will be found to be even 1% to 2% liable for the injury and thus be obligated to pay the entire judgment.
For example, where an uninsured drunk driver causes an accident that results in injury, the plaintiff may sue an additional defendant, along with the drunk driver, such as suing the state highway department alleging that a highway defect contributed to the accident, hoping that the additional defendant will be found partly responsible.
Microfinance
In trying to achieve its aim of alleviating poverty,
microfinance often lends to group of poor, with each member of the group jointly liable. That means that each member is responsible for ensuring that all the other members of the group repay too. If one member fails to repay, the members of the group are also held in default. Joint liability solves the information and enforcement problems associated with
credit markets
Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a ...
by encouraging
screening,
monitoring,
costly state verification, and
contract enforcement.
See also
*
Comparative fault
Comparative responsibility (known as comparative fault in some jurisdictions) is a doctrine of tort law that compares the fault of each party in a lawsuit for a single injury. Comparative responsibility may apply to intentional torts as well as neg ...
*
Tort reform
Tort reform refers to changes in the civil justice system in common law countries that aim to reduce the ability of plaintiffs to bring tort litigation (particularly actions for negligence) or to reduce damages they can receive. Such changes ...
*
Solidary obligations,
civil law
Civil law may refer to:
* Civil law (common law), the part of law that concerns private citizens and legal persons
* Civil law (legal system), or continental law, a legal system originating in continental Europe and based on Roman law
** Private la ...
equivalent
References
External links
*Joint and Several Liability: 50 U.S. State Surve
{{DEFAULTSORT:Joint And Several Liability
Common law legal terminology
Public liability
Tort law legal terminology