Difference Between Joint and Several Liability

Joint vs Several Liability
 

Joint liability and several liability describe how debts/liabilities/obligations are shared when a number of parties are involved. In a business operation, it is important that parties sign a contract that lay out how liabilities are to be shared so that there is no conflict among parties when faced with a situation in which an obligation is to be met. The article below offers clear examples and explanation on each concept and show how they are different to one another.

Joint Liability

Joint liability is a situation in which two or more individuals/parties are held legally responsible for a specific obligation such as a debt or damages caused to property, valuables, life, etc. Joint liability can be found between two (or more) parties or individuals who are connected in some way such as spouses, partners in a business operation, etc. A joint liability is created when the parties involved sign a written contract that makes them equally/jointly liable for the particular obligation in question.

A good example of joint liability would be a mortgage loan taken out on a new house by a married couple. If the couple signs a contract for joint liability on the loan, this means that they are both responsible to pay off their loan obligation. In the event that the two parties fail to meet their loan obligation, the bank can recover the total loan amount from either party; in this case, either the husband or the wife will have to pay up the total amount of the loan. Joint liability applies even if either of the parties concerned is not responsible for the obligation. For example, four partners Jason, Erica, Rachel and Will own a retail store. Jason was responsible for fixing a broken floor tile, which he had not done yet but had told the other 3 partners that he had. If a customer get injured from that, as partners had signed a joint liability contract, all four partners will have to pay liability, even though only Jason was responsible.

Several Liability

Several liability is a situation in which all parties are responsible only for their respective portion of liability/damage/obligation. A several liability maybe seen as a fairer way to divide obligations among involved parties as this ensures that only the ones responsible for the obligation will have to pay for it or will only have to pay for the portion of the obligation that they are responsible for. As in the example explained above, if the 4 partners signed a several liability contract only Jason would be responsible for the damage that was his fault to begin with (or the other parties would have to pay a smaller % than that paid by Jason).

If the several liability is on a loan, the parties involved would have to make payments only for the % of the loan for which they are responsible. As in the example, if the husband and wife shared 50% of the liability of the loan, the husband would pay his half and cannot be forced to pay the wife’s half if she defaults.

Joint vs Several Liability

Joint liability and several liability are terms that are closely related to one another in that they describe how debts/liabilities/obligations are shared when a number of parties are involved. Several liability is the complete opposite of joint liability. When there is a joint liability, all parties are obliged to pay for damages/loans regardless of who defaulted or whose fault the loss was or who defaulted on their portion of the loan obligation. However, when there is a several liability, parties are only responsible for their portion of the loss or obligation, and cannot be forced to pay another party’s obligation.

Summary:

Difference Between Joint and Several Liability

• Joint liability and several liability describe how debts/liabilities/obligations are shared when a number of parties are involved.

• Joint liability is a situation in which two or more individuals/parties are held legally responsible for a specific obligation such as a debt or damages caused to property, valuables, life, etc.

• Several liability a situation in which all parties are responsible only for their respective portion of liability/damage/obligation.