Joint and Several Definition in Business

What Does "Jointly and Severally" Mean?

The term or phrase "jointly and severally" is a legal term used to describe a partnership whereby each party or member holds equal responsibility for liability. A common term for "jointly and severally" is "joint and several liability." In all partnerships or groups of people, it is important to determine and distinguish liabilities and to what extent each party is responsible for them.

Contractually, joint and several liability entails having one or more parties jointly promising to share certain responsibilities and/or promising to separately share the same responsibility. The legal term can be confusing; however, the term is used to clarify the responsibility shared by each person in a contract. The term essentially outlines that each party identified in the legally binding document or agreement is obliged to satisfy the terms, actions, and obligations set forth in the agreement.

Summary

• The term or phrase "jointly and severally" is a legal term used to describe a partnership whereby each party or member holds equal responsibility for liability. A common term for "jointly and severally" is "joint and several liability."
• To understand "joint and several liability," the concepts that are the foundation of the complete legal term have to be comprehended because when two or more parties are deemed to be liable for the same liability, they are said to be jointly liable, severally liable, or jointly and severally liable.
• Contractually, joint, and several liability entails having one or more parties jointly promising to share certain responsibilities and/or promising to separately share the same responsibility.

How the Legal Term Works

To understand "joint and several liability," the concepts that are the foundation of the complete legal term have to be comprehended. It is because when two or more parties are deemed to be liable for the same liability, they are said to be jointly liable, severally liable, or jointly and severally liable.

When persons are said to have "joint liability," it means that each natural person or party has equal responsibility and is liable for the full amount of action (as stipulated by their agreement and the nature of their dealings) relevant to the identified obligations.

An example is when a married couple seeks debt from an institution such as a bank. The loan agreement Commercial Loan Agreement A commercial loan agreement refers to an agreement between a borrower and a lender when the loan is for business purposes. Every time a substantial amount of money is borrowed, an individual or organization must enter into a loan agreement. The lender provides the money, provided the borrower agrees to all the loan stipulations typically states that the couple (both people) are "jointly liable" for the entire loan amount and any other fees. Should anything happen to either party (e.g., death, bankruptcy, or disappearance), the remaining party will remain obligated and liable for the full or outstanding amount on the loan.

When persons are said to have "several liability," it means that each natural person or party is responsible for their portion or respective obligations (as stipulated by their agreement and the nature of their dealings), relevant to the identified obligations.

An example is when a group of lenders provides a loan – referred to as a syndicated loan Syndicated Loan A syndicated loan is offered by a group of lenders who work together to provide credit to a large borrower. The borrower can be a corporation, an individual project, or a government. Each lender in the syndicate contributes part of the loan amount, and they all share in the lending risk. One of the lenders act as the manager . In such an arrangement, the loan agreement typically states that each lender (normally a bank) is severally responsible for their portion of the loan amount. If one of the lenders fails to meet its obligation to the borrower, the borrower can sue that particular lender. The other lenders will not be liable.

When parties are said to have an agreement under "joint and several liability," it means that each natural person or party is responsible for all liability. It is often also referred to as "all sums." If the claimant pursues legal action or obligation, they can do so against any party in the agreement, and the respective parties (the defendants) can internally discuss and decide what their respective obligations and proportions are for the liability and payment.

If one defendant is pursued by a claimant and pays the claimant, he/she/they can pursue the other parties (i.e., defendants or obligators) for contributions to satisfy the obligation.

More Resources

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To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

• Debt Covenants Debt Covenants Debt covenants are restrictions that lenders (creditors, debt holders, investors) put on lending agreements to limit the actions of the borrower (debtor).
• Married Filing Jointly Married Filing Jointly Married filing jointly for tax purposes refers to the filing status in the U.S. for a married couple that is married as of the end of a tax
• Subordination Agreement Subordination Agreement A subordination ggreement refers to a legal agreement that prioritizes one debt over another for securing repayments from a borrower.
• Unlimited Liability Unlimited Liability Unlimited liability is the legal obligation of company founders and business owners to repay, in full, the debt and other financial obligations of their

Joint and Several Definition in Business

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