What is 'Jointly and Severally'

Jointly and severally, also referred to as joint and several-liability is a legal term describing the liability of a group of people bound together by an agreement. It is most often seen in the context of a loan.  The phrase is also used in underwriting syndicates to refer to the distinct responsibility of individual companies to sell a particular portion of the unsold new issue.

BREAKING DOWN 'Jointly and Severally'

In a legally binding document, jointly and severally determines a party's level of responsibility. The term most frequently used in the context of a joint action, taken by two or more people and is seen on loan documentation and in power of attorney forms. In its purest form, jointly and severally means that all parties to a contract are obligated to perform all of the actions required under the agreement, with any proportionality.

For example, if a bank lends $100,000 to two people, jointly and severally, then each person listed on the loan documents is responsible for repaying the total amount of the loan to the bank. For recovery, the bank may choose whom to enforce the loan against in case of default. The person with whom the bank seeks action against will likely have some recourse against the other partner or person named, but only after paying the bank in full. The bank has the option to sue the partner from whom it feels it will have the highest likelihood of full repayment.  

Joint and several-liability can also occur because of specific laws. For example, it is common for employers to be responsible for damages caused by their employees. For instance, if a construction worker ruptures a pipe in a home, his employer can be jointly and severally liable for the damages.

Jointly and Severally in the Securities Industry

The expression "jointly and severally" is also commonly used in the securities industry in the context of the underwriting of a bond or a new stock issue. In such cases, the firm that agrees to sell a portion of the total issue is responsible for that agreed upon portion and the unsold securities.

An underwriter who has jointly and severally agreed to a 30% stake in the sale of a new issue must sell 30% of any remaining unsold portion, even if that underwriter has already sold more than this amount in the initial sale. All members of the syndicate are responsible for any leftover shares.

RELATED TERMS
  1. Joint and Several Liability

    Joint and several liability is a legal instance where multiple ...
  2. Western Account

    Western account is an offering agreement in which each underwriter ...
  3. Joint Stock Company

    A joint stock company is an organization that falls between the ...
  4. Joint Float

    A joint float occurs when two or more countries agree to keep ...
  5. Joint Return

    A joint return is a U.S. income tax return that reports the combined ...
  6. Joint Credit

    Joint credit is credit issued to two or more people based on ...
Related Articles
  1. IPF - Banking

    Should You Open A Joint Bank Account?

    Joint finances may not be romantic, but it's an issue that serious long-term couples will have to confront at some point.
  2. Personal Finance

    Togetherness or Trouble? Simple’s New Shared Bank Account

    A new type of online joint account lets couples and other duos share their financial lives – as little or as much as they want.
  3. Personal Finance

    Should You Lend Money to Family or Friends?

    Find out how loaning cash to help family or friends can put a strain on your relationship and your bank account. Learn how to make family loans safer.
  4. Financial Advisor

    2016 Tax Code Changes Add Some Wiggle Room

    It's never too early to prepare for tax season. Next year features a host of tax law changes. Check our handy list to see which ones apply to you.
  5. Personal Finance

    Save Money With the Right Student Loan Repayment Plan

    Here is some information on two of the most advantageous student loan repayment plans available.
  6. Personal Finance

    Different needs, different loans

    When it comes to loans, there are many different types according to your needs. Find out what options are available when it comes to borrowing money.
  7. Personal Finance

    Gay Marriage and Taxes: Everything You Should Know

    Same-sex couples now have a variety of tax strategies to consider.
  8. Managing Wealth

    Unsecured Personal Loans: 8 Sneaky Traps

    If you are seeking a personal loan, be aware of these pitfalls before you proceed.
  9. Personal Finance

    The Rise of the Modern Investment Bank

    Get to know a little bit about investment banks, the institutions whose actions help guide free markets.
RELATED FAQS
  1. What are the primary advantages of forming a joint venture?

    Understand what the advantages of a joint venture are and discover what make this business strategy a good alternative to ... Read Answer >>
  2. What are the primary disadvantages of forming a joint venture?

    Learn the disadvantages to forming and maintaining a joint venture partnership, including factors business owners should ... Read Answer >>
  3. Do joint ventures need an exit strategy?

    Understand why an exit strategy is important for a business partnership such as a joint venture, and learn the options partners ... Read Answer >>
  4. What does the underwriter do in a new stock offering?

    Learn the role an underwriter plays for an initial public offering, and the steps an underwriter takes in preparing for an ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  2. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  3. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  4. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  5. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  6. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
Trading Center