The term “jointly” and “severally” is an official term used to refer to the legal definition of a collaboration or other group of individuals where each person named is responsible equally.
For instance in the event that a judge determines that several people are jointly and severally responsible for the injuries sustained by the plaintiff, any of them may be held accountable for the entire amount of the judgement.
In the sense that the word “severally” suggests the wording used in certain contracts may stipulate that certain parties are subject to the same obligation. For example, a partnership who holds 10% stake in an enterprise could be subject to an obligation that is proportional to that stake.
Jointly and severly can be often referred to as joint and multiple liability..
Understanding Jointly and Severally
In an legally binding document the phrase “jointly and severally” defines the responsibility divided between all parties of an agreement. It basically stipulates that all the parties listed are bound to take all of the duties required in the agreement.
For instance If a bank loan $100,000 to two persons jointly and in combination each of them have the responsibility of making sure that the entire value of the loan has been paid back by the lender. When the loan becomes in arrears, the lender could pursue one of the options for the repayment of the whole remaining balance.
In these situations the person obliged to repay the loan will have legal recourse against another person in the contract however only after the bank has been fully repaid.
Joint and multiple liability is included in the laws. Employers are typically accountable for injuries that occur to employees working. If a construction worker breaks the pipe inside a home the owner and the employer may be jointly and severally accountable to pay for the damage in accordance with the law of the state.
Jointly and Severally in the Securities Industry
The term “jointly and severally” is frequently employed in the world of securities when negotiating an financing of a bonds or stock issues. In such instances the firm that has agreed to sell a certain portion of the issue is responsible for the agreed-upon portion, plus the equivalent portion of remaining securities.
So an underwriter that has signed a joint and severally negotiated agreement to sell 30% of the newly issued release has to sell 70% of the remaining un-sold portion. Every member in the syndicate is accountable for any remaining shares according to the size of the stake.
