"Jointly and Severally:" What Does it Mean Exactly?
Dec 01, 2016 QuickCounsel Download PDF
By Paisley Simonnet, Nadine Nassef, Sabridass Ponnou, Charlotte Robin, University of Montpellier
When more than one person takes on an obligation under a contract, they may be bound:
• Jointly; or,
• Severally; or,
• Jointly and severally.
The definition of joint and several obligations is somehow confusing. On the one hand, this confusion can arise from the variety of relationships involved between co-debtors and with respect to creditors. On the other hand, plurality of meanings of such formula may arise in different legal systems.
These difficulties can be limited by a definition of the legal environment of a “joint and several” clause (I) and some drafting advice (II).
I - Defining the legal environment of a “joint and several” clause
In order to define the legal environment of a “joint and several” clause, general (1) and national (2) considerations may be studied.
1 - General considerations
1.1 - “Jointly” bound
Being jointly bound refers to the situation in which, with respect to the creditor, the latter may claim performance of the obligation from one or more of the joint co-debtors until full performance has been reached. Performance by one co-debtor discharges the others.
Among co-debtors, if one of them has paid more than his or her share to the creditor, will he or she be entitled to claim reimbursement from the other co-debtors? It is not clear and it calls for contractual clarification.
1.2 - “Severally” bound
Being severally bound refers to the situation in which, with respect to the creditor, the latter may only claim, from any co-debtor, the part of the performance for which he or she is bound.
When a co-debtor has exceeded his or her personal obligation, the latter will have the right to claim from the co-debtors who have not paid their share, a contribution corresponding to the amount that has exceeded his or her share.
1.3 - “Jointly and severally” bound
With respect to the creditor, the latter has the right to claim the execution of the obligation from any co-debtor. This relieves the creditor from pursuing all the co-debtors.
Between themselves, co-debtors are severally bound, held separately.
2 - National considerations
2.1 - French particularities since the Ordinance of February 10th, 2016
The Reform of contract’s law in France has transformed the regime of plural obligations. As a consequence of this reform, two main issues arise:
2.1.1 - First issue: Presumption of joint and several liability in commercial law
According to article 1309 of the French Civil Code, the regime of joint and several liability is an exception. In addition, article 1310 of the same Code provides that “joint and several liability results from the law or a convention; it cannot be presumed.”
2.1.2 - Second issue: Contribution to the debt among co-debtors
a - Article 1317 of the French Civil Code: General rule
2.2 - English law
The general definition of joint and several liability has been recently examined in the Marlbray Ltd v Laditi case. In this case, it was ruled that when one of the co-debtors proves that he did not authorize his co-debtor to act on his behalf and that he was not aware of the existence of a binding contract, then the contract was only binding between the creditor and the co-debtor who actually signed, even though the terms of the contract provided for joint and several liability.
2.3 - Spanish law
Article 1138 of the Spanish Civil Code expressly states as a matter of principle, the division of the obligation: “The debt shall be presumed divided in as many equal shares as there are creditors or debtors.” However, according to article 1139, if the division is not possible, the creditors have to initiate proceedings against all the debtors. “If one of them should be insolvent, the others shall not be obliged to make up for his failure” of this co-debtor.
Contractual provisions may bring light to several issues (1), which allow us to suggest a clause (2).
1 - Issues to be addressed in a “joint and several liability” clause
When drafting or reviewing such a clause, the following elements should be taken into consideration:
1.1 - Explicit reference to the existence of “joint and several liability”
In the absence of an express joint and several liability provision, courts have held that joint and several liability could be deduced from the factual elements of the situation.
However, court decisions are not binding. Therefore, it may be advised to provide in advance an express clause or provision determining the precise type of liability between the co-debtors and in respect to the creditor.
1.2 - Duty to notify co-debtors
When the creditor notifies one of the co-debtors to have the obligation performed, the clause could provide that the creditor should also send a copy of this notification to the other co-debtors, who are jointly and severally liable. The benefit of this notification is to allow the other co-debtors to be aware that the payment is due by a chosen co-debtor.
1.3 - Proportionality
Proportionate liability means that each co-debtor is only held liable up to a predefined share.
For example, regardless of the situation, whether it is in respect to the creditor or among co-debtors, the co-debtor bound up to 10% will only be liable for that 10%.
This specific feature must be distinguished from “caps” on liabilities, pursuant to which a debtor can only be held liable up to a certain level.
2 - Suggested drafting
In a contract in which there is a plurality of debtors, a “joint and several” clause such as the following can be encountered.
“Between the following parties:
In international agreements, two main issues may arise regarding joint and several liability clauses.
First, it is important that the drafting limits and defines precisely each and every term of this formula in order to insure that they are understood in the same way by all the parties.
Second, parties should verify before hand if mandatory rules exist. For example, tax law might affect the efficiency of these terms or even worse, declare such clauses null and void.
-White v. Tyndall, March 19th, 1888, House of Lords (Irl), accessible at: Principles of European Law - Personal Security prepared by Professor Ulrich Drobnig
-Article 1309 to article 1319 of the French Civil Code, Dalloz, Edition 2017
-Article 1202 of the French Civil Code, Dalloz, Edition 2016
-Article 1138 to article 1139 of the Spanish Civil Code, approved by Royal Decree of July 24th, 1889
-Nicolas Dissaux, Christophe Jamin, “Réforme du droit des contrats, du régime général et de la preuve des obligations”, Dalloz, 2017:
-Bruno Dondero, “La présomption de solidarité en matière commerciale: une rigueur à modérer” D.2009.1097
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