What does it mean jointly and severally?
Jointly and severally, is a legal term used to describe a partnership or any other group of persons in which each appointee also shares responsibility.
For example, if a judge decides that a certain number of people are jointly and severally liable for the injuries sustained by a plaintiff, any of these people can be prosecuted for the payment of the total amount of the judgment.
As the word indicates individually, the wording of certain contractual agreements may specify that certain parties have proportional responsibility. For example, a partner with a 10% stake in a company may have a liability proportional to this 10% investment.
Jointly and severally, we sometimes speak of joint and several liability.
Understand jointly and severally
In a legally binding document, the term jointly and severally clarifies the responsibility shared by each party to an agreement. Essentially, it states that all appointees are obligated to perform all of the actions required under the agreement.
Key points to remember
- The term jointly and severally indicates that all parties are equally responsible for the complete execution of the terms of an agreement.
- In a personal liability case, for example, each named party can be sued for reimbursement of the entire amount owed.
- However, in some contracts, financial responsibility is shared proportionately.
For example, if a bank lends $ 100,000 to two people jointly and severally, these two people are also responsible for ensuring that the full amount of the loan is repaid to the bank. If the loan is in default, the bank can choose to continue either for the repayment of the entire outstanding balance.
In such cases, the person who is obliged to repay the loan will have legal recourse against the other person named in the agreement, but only after full repayment from the bank.
If a bank lends $ 100,000 to two people jointly and severally, one or the other may be required to reimburse the total amount due in the event of default.
Joint and several liability is also cited in the laws. For example, employers are generally responsible for injuries suffered by their employees at work. If a construction worker breaks a pipe in a house, the owner and the employer can be held jointly and severally liable for damages under state law.
Jointly and severally in the securities sector
The expression jointly and severally is commonly used in the securities sector in agreements to subscribe to a new issue of bonds or shares. In such cases, the company that agrees to sell part of the total program is responsible for that agreed part plus a corresponding part of all unsold titles.
Thus, an underwriter who has jointly and severally agreed to be responsible for the sale of a 30% interest in a new issue must sell 30% of any remaining unsold portion. Each member of the syndicate is responsible for the remaining shares, in proportion to the size of each participation.