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Jointly and severally means shared responsibility in the US legal system, with applications in personal injury lawsuits, corporate partnerships, and financial situations. Joint liability can be controversial, with proponents arguing it aids injured parties and critics pointing to inequality. The phrase also appears in partnership agreements and incorporation documents. Joint liability rules vary by jurisdiction and consulting a lawyer is recommended.
The phrase jointly and severally is used in the United States legal system to indicate shared responsibility. The phrase has three main applications: personal injury lawsuits, corporate partnerships and business agreements, stock offerings, and bond subscriptions. In any case, the phrase indicates that all parties involved so closely share the central action that they can be treated as having sole responsibility. In other words, the parties are jointly and severally responsible for the actions that any other party takes individually or severally.
Joint and several liability may apply in a personal injury case when more than one defendant contributed to the injuries. Each state in the United States has its own set of tort or personal injury laws, and not all of them allow for joint and several liability. If permitted by state law, joint liability means that any defendant who caused a portion of an injury can be sued for the full amount of damages.
Whether defendants in personal injury cases should be held jointly and severally liable is a controversial issue, even in states that allow it. Proponents argue that shared liability makes it easier for injured parties to recover. Defendants, they say, are in a better position to apportion responsibility among themselves without involving the aggrieved party in extended court proceedings. On the other hand, critics point to the inequality of placing full responsibility on a party that has caused only a small fraction of the damage. Critics say joint liability encourages lawyers to strategically sue wealthier parties, regardless of their percentage of guilt.
When “joint and several” is used in partnership agreements or incorporation documents, the meaning is similar: all partners will be treated as any one. The parties usually use the language “together and separately” as a way to allow one partner to make decisions for the entire partnership. The shares of any partner who is a joint and several partner in a partnership may be vested in any other partner.
In some cases, a court will rule that joint and several liability applies to a partnership, even if it was not expressly chosen by the partners. For example, most incorporation laws require all partners to be jointly liable when a company makes an initial public offering (IPO) of its stock options. IPO documents need to make some important statements about the company’s profits, revenues and other facts. Forgery in IPO documents is sufficient to support a lawsuit against the company as a whole or any partner individually.
The phrase also appears in certain financial situations. Investment banks often structure loans to multiple borrowers with a joint liability designation clause, which allows the bank to recover the entire loan amount from any one of the borrowers. In bond underwriting scenarios, underwriters are often jointly and severally liable for a certain percentage of bonds owned by a joint or syndicated group. Under joint and several liability rules, an underwriter may be required to absorb the non-sale of shares by other syndicate members, even if the underwriter has already met the agreed percentage.
Whether joint liability applies to any given pattern of fact is largely a matter of local law. If a jurisdiction requires joint and several liability, that liability will often apply, even if not expressly agreed to by the parties. Conversely, if a jurisdiction does not allow shared liability, writing it into an agreement will not ensure that it will be enforced. The best thing to do when wondering whether it is possible to pursue joint liability or when considering including a joint liability clause in a contract is to contact a lawyer who is familiar with the local laws.
