Difference between Joint and Several Liabilities

Joint and several liabilities are concepts which hold legal implications for the involved parties. While both notions involve the payment of debt or obligation to creditors or affected parties, the extent of the burden shared by the members will vary depending on the type of liability applied to a respective case.

Joint liabilities occur in cases where when two or more parties are held accountable for a specific obligation related to the payment of debt or compensating the injured party by paying the amount in damages. For better understanding, we can take the example of a married couple wishing to take out a mortgage loan from a bank. In such scenario, both may be held jointly liable for the entire loan amount. If one spouse defaults, dies, or goes bankrupt, the other spouse will still be held liable for all remaining loan amount which is yet to be paid. The same holds true in business contracts where all partners will be held accountable, regardless of the fact that only one partner was at fault.

In case of several liability, or proportionate liability, participants are only responsible for their own proportion of debt and damages. For instance, if partners have entered in a several liability agreement and agree to borrow loan for their business, then the lender will only sue the partner who has defaulted on the payments.

The other major difference between the two concepts lies in the fact that in joint liability, lenders can only take one course of action, which is to sue the obligated party for the debt only once. For instance, if there are four partners in a business and only one pays the liability, the creditor cannot hold other debtors accountable.

In some cases, there is a ‘joint and several liability’ agreement between the partners. Here the creditor will take action against one partner, who will then be responsible to divide the liability proportion among all other partners.