What does Joint and Several Liability mean?

14 August, 2025 | Daniel Crawford

Joint and several liability is a common legal principle that is relevant to a wide range of legal circumstances. Many people agree to be bound by the term throughout their lives but fail to understand its practical significance until it is too late. This article will detail what joint and several liability means, how it arises and why it is important to understand.

What it is joint and several liability?

To be jointly and severally liable, means that each person involved is responsible for the obligation they share.

There are three components:

1. Joint Responsibility: Everyone involved collectively shares responsibility for the entire obligation, they are all jointly liable.
2. Several Responsibility: Each person involved is individually responsible for the entire obligation, they are all severally liable.
3. Right of Contribution: Everyone who is jointly and severally liable accepts that if one person pays more than their fair share, that person can seek compensation from the others, and they all have a right of contribution against each other.

How does joint and several liability arise?

Joint and several liability can arise because two or more people have entered a promise together or it can be imposed because they pursue the same purpose together.

Promises to be jointly and severally liable are common in shared agreements. Such as:

• Loan agreements and/or guarantees requiring co-borrowers or co-guarantors to be jointly and severally liable for the entire due debt.
• Leases and Tenancy agreements requiring all tenants and/or guarantors to be jointly and severally liable for the tenant’s obligations including rent and outgoings costs, and legal costs.
• Construction and Consultancy contracts often require different professionals (e.g engineers, architects) to be jointly and severally liable for defects or project failures.
• Commercial Partnerships require partners to be jointly and severally liable for debt the partnership or the partners incur.

When parties pursue the same purpose, joint and several liability terms can be imposed on them because of rules found in common law and statute. Such as:

• The parties are sued, and the court finds that everyone involved was causative of the damage for pursuit of the same purpose.
• The parties enter a pursuit where legislation provides that they are jointly and severally liable if they breach an obligation.

Why is joint and several liability important to understand?

If someone has entered into an agreement that provides that makes them jointly and severally liable for debts, they can be pursued for the whole debt – for example where the other jointly and severally liable party is insolvent or unavailable. This creates a significant amount of risk exposure and is important to consider before agreeing to a joint pursuit or promise, settling proceedings or providing indemnities.

From the perspective of a claimant, joint and several liability maximizes their chance of full recovery and mitigates risk of partial compensation. This is important to consider when making credit arrangements.

The principle affects how litigation will proceed. Defendants may seek contribution or indemnity claims against others they are jointly or severally liable with.

The principle demonstrates the importance of managing relationships under shared agreements and ensuring that those you are in business with do not breach the shared responsibility and are in a position to pay their portion.

The law in New Zealand offers exceptions where imposing joint and several liability would be unjust, such as for significant disparity In the parties’ culpability or financial resources towards the liability. Therefore, it is crucial that you seek legal advice if you are about to enter into an agreement that makes you jointly and severally liable or you receive notice that you are subject to joint and several liability.

If you wish to receive specific advice on this subject please contact us by completing the form below.