The distinction between joint, several, joint and several liability and why it matters

A simple contractual provision by A and B to do something for C can bring with it contractual complexity. Whether you are drafting a contract or reviewing for where the liability falls, it's useful to understand the subtle distinctions between "joint", "several", and "joint and several" liability. This isn't just an academic curiosity, but can have real consequences to your risk management and success in litigation.

What language does your contract use?

A key, practical difference between "joint" and "joint and several" liability is the mechanics of suing for the liability. It's generally easier to sue a single party who is jointly and severally liable, particularly where the other liable party is outside the jurisdiction. For joint and several liability, it can be more effective to pick the best party to sue (deeper pockets, easier to locate) rather than chasing all potential co-defendants. By contrast, where someone is jointly (but not joint and severally) liable, the Court might stay proceedings until everyone who is liable under the contract has been joined as a defendant.

My contract isn't clear…

A good starting point is to check the "interpretation" section that often contains a boilerplate clause on liability.

If it's still unclear, then you may need to take legal advice as to the proper interpretation of the contract. An ambiguous allocation of liability may be destined for Court. General contractual interpretation principles will apply, so you'll need to look at the surrounding context and purpose.

• Where there is a promise by two or more persons, it is often presumed to have been made jointly. So where there is a contract that says "you and I will pay X", it will likely be treated as a joint promise (not joint and several).
• Where there is a promissory note that says “I promise to pay”, and it is signed by two or more persons, their liability is likely to be treated as joint and several.
• Where liability is incurred by a debtor and a guarantor, their liability is likely to be several.
• Where there are obligations or debts incurred by members of a partnership, their liability is likely to be joint.

They're suing me under the contract, but I think others are jointly liable

• If the contract is ambiguous, get legal advice on where the liability falls.
• Put the other parties on notice of the claim and ask them to secure all documents and witnesses that may be relevant to the claim. Often other parties will have key documents or people that you need to defend the claim.
• Build a strategy to join the other to the proceeding, or issuing third party notices for contribution or indemnity. It's generally an advantage to have multiple parties with joint resources defending the same claim. It is also common to argue "I am not liable, but if I am, X and Y are liable too".
• For joint liabilities, be prepared to pay the whole debt if you're found liable. It's generally not an excuse to say that a party should go after someone else unless that's specifically dealt with under the contract. You may be able to make claims against the other parties later, but that might not stop someone chasing you for the whole amount in the meantime.

What about claims outside contract?

Above, we discuss concurrent liability under contract. Commonly, claims are not only for breach of contract, but include negligence, and misleading and deceptive conduct. To add to the complexity, two people who commit the same tort are also sometimes called "jointly and severally liable" in tort.

Suffice to say here that negligence and trade practices claims will depend on the circumstances of each case and the allocation of liability may be significantly affected by the State and Territory "proportionate liability" provisions. Unlike some other States and Territories, you cannot contract out of Queensland's Civil Liability Act which can be problematic where there are both contract and tort claims on foot.