Joint liability is when two or more parties are legally responsible for something, such as a debt or damages. Joint and several liability is common between spouses and business partners, and occurs when each party is liable for the full amount. It is different from multiple liability, where each party is only liable for their share.
When two or more parties are legally liable for something, such as a debt or potential legal damages, joint liability exists. Joint and several liability is especially common between spouses and business partners. It is often created when two parties enter into a written contract agreeing to be equally responsible for something. The concept of joint liability is also used by plaintiffs seeking to recover damages in civil cases.
Joint liability is often used in the area of debts. For example, suppose a husband and wife take out a $100,000 US dollar (USD) mortgage on a new home and have accepted joint liability on the loan. This means that each of them is responsible for the debt on the house. If they stop making payments, the bank could collect the entire $100,000 USD balance from the husband, wife, or both together. If the husband dies, the bank may still require the wife to make all payments.
Business partners often accept joint and several liability when securing loans. For example, suppose John and Jane have started a staffing agency and are general partners. Let’s say they get a business loan, accepting joint liability, in the amount of $50,000 USD from the bank, and John unofficially agrees that he is responsible for the payments. If John misses several payments and the bank wants to collect the loan, the bank can go to John or Jane for the money. This is true even if Jane was not at fault for missing payments.
Joint and several liability occurs when each party is liable for a total judgment, even if only one of the parties is liable for the damages caused. For example, suppose John and Jane co-own a grocery store and Rose is shopping at the store. The shop has a broken floorboard and John has been putting off fixing it, even though he told Jane it was done weeks ago. If Rose steps on the floorboard and injures herself, she can file a claim against John and Jane for negligently maintaining the floor. Rose can seek to recover all of her damages from John and Jane collectively, or she can seek judgment against John or Jane alone.
Joint liability is distinct from joint liability. In a multiple liability agreement, each party is only liable for their share. Consider, for example, a commercial agreement in which two banks have separately agreed to finance a loan for a borrower. If one of the banks fails to fund the loan, the other bank would not be liable under a liability agreement.
Protect your devices with Threat Protection by NordVPN
