Jointly and Severally

Jointly and Severally — Meaning and Implications

Key takeaways

• “Jointly and severally” (also called joint and several liability) means each party named in an obligation can be held responsible for the entire obligation, not just a portion.
• A creditor may pursue any one (or more) of the parties for full payment; the paying party can then seek contribution from the others.
• Some agreements specify proportional (several) liability instead, limiting each party to its share.
• In securities underwriting, syndicate members share responsibility for unsold securities in proportion to their commitments unless they agree to several-only liability.

What “jointly and severally” means

When parties agree to be jointly and severally liable, each person or entity is independently responsible for fulfilling the whole obligation. If the obligation is breached (for example, a debt is unpaid or a judgment is entered), a claimant can require any one of the parties to satisfy the entire amount. After paying, that party generally has a right to seek contribution from the other liable parties.

How it works — examples

• Loan: Two borrowers on a $100,000 loan who are jointly and severally liable each can be pursued by the lender for the entire $100,000 if the loan defaults. If one borrower pays the full balance, that borrower can later seek reimbursement from the other.
• Tort judgment: If multiple defendants are held jointly and severally liable for a plaintiff’s injuries, the plaintiff can collect the full judgment from any single defendant.
• Employment/operations: Employers, partners, or co-owners can be jointly and severally liable for workplace injuries or other obligations, depending on statutes and agreements.

Partnership agreements or articles of partnership should clearly define liability and contribution rules to prevent disputes when liabilities arise.

Jointly and severally in underwriting

In securities underwriting, syndicate members commit to sell portions of a new issue. When they accept joint and several liability, each member is responsible not only for its committed share but also for a corresponding portion of any unsold securities across the syndicate. If a member agreed to sell 30% of the issue, it would be responsible for 30% of any remaining unsold shares. Alternatively, if members are severally liable only, each is responsible strictly for its own commitment and not for others’ unsold shares.

Severally (but not jointly) — meaning and distinction

Severally liable parties are responsible only for their individual share of an obligation. If one party fails to meet its obligations, the shortfall does not automatically fall on the other parties. This allocation reduces exposure for each party but also shifts more risk to creditors and claimants, who must pursue each obligor separately.

Disadvantages and risks

• Unequal burden: A party with a small role or limited resources can be forced to pay a disproportionate share of damages or debt.
• Increased litigation: After one party pays in full, that party may need to sue co-obligors for contribution, creating additional legal costs and delays.
• Credit risk: Creditors may prefer joint and several liability, while potential obligors prefer several liability—negotiating the balance can be contentious.

Bottom line

Joint and several liability places maximum enforceability in the hands of claimants by allowing recovery from any liable party for the full obligation, while reserving contribution claims among obligors. Parties entering contracts, partnerships, or underwriting arrangements should clearly define whether liabilities are joint, several, or joint and several to manage risk and avoid unexpected financial exposure.