A contract is an agreement between two parties, which is known as a bilateral contract. A unilateral agreement cannot be tantamount to a contract. In a contract, there can be more than two parties. In a multiplicity or plurality contract, there may be many numbers of parties entering into one contract. In such a scenario, we will have more than one creditor or debtor in respect of a single obligation.
When there are many parties, then the question arises whether a co-debtor is liable for and/or a co-creditor is to accomplish either a proportionate or the whole performance share thereof. In this regard, there are the following three possible scenarios: (Bhana, Bonthuys & Nortje 2009: 196).
Simple entitlement or joint liability
When several debtors pledge to offer a divisible performance to a creditor, they are jointly liable. In other words, each party is liable to undertake an equal part of the performance. A separate duty or commitment will henceforth be established in respect of each performance due by each debtor.
Illustration: A contract is entered between A, B, and C in terms of which A, B, and C agree to donate £ 30000 to D. In this case, it is a simple co-debtorship as each will have to pay £ 10,000 each.
Simple Joint Entitlement
When several creditors are warranted to a divisible performance, each creditor will have a right to an equal component of the performance. A separate duty or obligation will be established about each performance that each creditor is authorized to have. (Bhana, Bonthuys & Nortje 2009: 196).
Illustration: A agrees to pay B, C & D £ 30000. This is a simple co-creditorship, each creditor will be authorized to receive £ 10000 from A.
Whether a contract is a simple co-debtorship or co-creditorship, this will finally depend upon the objective of the parties. Moreover, if there is a divisible performance and the parties do not mention otherwise, the above position will prevail.
Common Joint Liability or common co-debtorship or entitlement
Under this type, the creditor cannot claim either the whole performance or any part performance from one co-debtor alone. This is mainly due to a single obligation being established regarding the whole performance.
Illustration: A contract is entered whereby A, B & C agree to give a horse by way of donation to D. If this is a case of common co-debtorship, D will have to sue A, B, and C jointly to claim the horse. In this type of contract, D cannot sue B alone for the delivery of the horse. (Bhana, Bonthuys & Nortje 2009: 197).
Common Joint Entitlement or Common Co –Creditorship
Under this type, co-creditors have to conclude the performance jointly. Thus, the co-creditors cannot claim either individually or separately. This is mainly due to single duty being created about the whole performance.
Illustration: D enters into a contract for selling his house to A, B & C. If this falls under common co-creditorship, then A, B & C have to sue D jointly for taking possession of the house. D cannot be sued by A alone for the delivery of the house.
It is to be noted that ultimately, it is the intention of the parties as set out in the contract that is going to decide whether the performance is due to common co-creditorship or co-debtorship. Moreover, if performance is physically indivisible, then the above position will happen. (Bhana, Bonthuys & Nortje 2009: 197).
Joint and Several Entitlement or Liability
- The performance is owed by the individual (separately) and co-debtors jointly:
- The creditor could select to claim the complete performance jointly from all the co-debtors and this is known as joint liability.
- The creditor may opt to claim performance either in full or in part from any one or more of the co-debtors as debtors are having joint liability.
- If one of the co-debtors satisfies in whole, the commitment to a creditor is discharged and the other debtors are not answerable to a creditor.
- A creditor can claim either from all or from one of the remaining co-debtors if one co-debtor performs in part.
- Where the debt is to be repaid and however if the creditor releases one of the co-debtors, the other co-debtors are still liable but their liability is reduced proportionately. (Dwyer v Goldseller 1906 TS 126 & Boyce v Bloem 1960, (3) SA 855 (T).
- The association between the several and joint co-debtors themselves will depend upon the terms of the agreement between them. (Bhana, Bonthuys & Nortje 2009: 197).
- Illustration:
- A, B & C agree to donate £30,000 to D. If this is the case of joint and several liabilities, D, the Creditor may elect to claim the above amount from A, B & C 9 (the co-debtors) jointly, or he may select to claim the whole amount from any of the co-debtors alone. (For instance, A alone).
- If A pays D £10,000, then D can claim the balance of £20,000 from B and or from C only. (Bhana, Bonthuys & Nortje 2009: 197).
- If A pays D £30,000, then B and C will not be liable to D anymore.
- Whether A can claim £20,000 from B and C will solely depend upon the terms of the agreement between them.
Joint and Several Entitlement
The co-creditors are authorized to claim the performance individually and jointly.
- The co-creditors could select to claim together from the debtor.
- The debtor may select the co-creditor to whom he prefers to make a performance. Performance to such a creditor could discharge the obligation of the debtor to the other co-creditors.
- Anyone co-creditor may on his own volition either in full or in part from the debtor. In such a case, the debtor is not able to choose the creditor to whom to execute.
- The association between the several and joint co-creditors will rest on the terms of the agreement between them. (Bhana, Bonthuys & Nortje 2009: 198).
Illustration: D concurs to contribute £30,000 as a donation to A, B, and C.
- If this falls under the joint and several entitlements, A, B, and C (the co-creditors) may elect to jointly claim from D, the debtor.
- Though, D may elect to pay the £30,000 to either A, B, or C.
- Nevertheless, if A, B, or C claims performance, D cannot select the person to whom he wishes to pay.
- If D wishes to pay £30,000 to A incomplete, the issue, whether B and C can claim from A will rest upon the terms of the agreement between A, B, and C. (Bhana, Bonthuys & Nortje 2009: 198).
Joint Liability
The practical importance of the joint liability is to be considered particularly in cases where a retailer is unwilling or unable to execute his contract with a credit cardholder or has become insolvent. Moreover, joint liability connotes that the creditor can be held accountable for claims over the actual amount of credit granted. For instance, if A purchases an expensive mobile phone from B, paying a token amount by credit card and the balance of the price in cash, the credit card provider will be held responsible to refund the whole sum if B becomes insolvent and thus B could not fulfill his obligation to deliver the mobile phone. However, it is not clear whether the credit card holder can also terminate the credit card agreement for an infringement of the contract by the retailer. Further, it is to be observed that some credit cards like Diner’s Club and American Express are not falling under “Section 75 of the Consumer Credit Act of 1974 “ as they will apply only to regulated agreements. (Banakas 2007:239).
Often in a medical negligence case, more than a person may be involved in causing a patient’s total harm or injury. Under the doctrine of joint liability, several individuals (doctors, nurses, etc) may be held accountable for contributing to the injury. In such a type of case, a plaintiff may recover damages either from one or from all. (Banakas 2007:239).
For instance, if D is assured by A, B & C that they will pay £ 5000 to D, then D may compel either A or B or C or any two of them to pay £ 5000. Under English law, the liability of joint promisors is only joint and not several, and accordingly, all the joint promisors have to be sued jointly. Further, under English law, discharge or release of any of the joint promisors shall discharge all the joint promisors. For instance, in Kirtee Chander v. Struther (1878), 4 Cal.336. , some of the partners of a firm were sued by the plaintiff for damages. However, the plaintiff made a settlement of his claim with one of them and agreed to withdraw his claim and also case filed against them. It was held by the Indian court that a suit could be carried on the rest of the partners. However, the position under English law is different. Under English law, if the promise discharges one of the several joint promisors, such discharge will be construed as a discharge of all the joint promisors. Thus, under English law, a case has to be filed against all the promisors jointly. (Gulshan 2005:1-72)
In Byers v Dobey ( 1 H. Black.236), it was held that a contract entered by two defendants to pay a definite sum of money to a third party equally, out of their private cash was a joint contract. It was fruitless claimed that the wording “private cash “and “to be paid equally “demonstrated a separate liability. The wording “each” in this contract is not more several than “equally.” (Wyka, Mathews & Clark 2001:25).
In Lee v. Nixon 9 1 Ad.& E.201;s.c. 3 Law J.Rep ( n.s) K.B.160, though the specific contract was held not to be joint, it was admitted that though the terms of a contract are several, it may be considered as a joint contract if so meant.
In Byers v Dobey, though one of the provisions of the contract was that the defendants should pay a certain sum of money of all taxes whatsoever and that demonstrated that the agreement was joint, and it was deemed notwithstanding the word “equally”. Here, the connotation was that the plaintiff should be fully reimbursed by both the defendants.
In Collins v Prosser, 1 B. & c.682; s.c 1. Law J Rep. K.B 212, a bond by various obligors in £1000 each with a stipulation that G.B.M should submit a real account, was pronounced as several bonds, but the language was more distinct and definite.
The case Pollock, C.B is clear and is unambiguous and is differentiable from Byers v Dobey since one part of the contract was mentioned clearly as a joint. The main question is what did the parties have in mind? Surely, they intended to reimburse the plaintiff as to the whole, but only by paying 200/= against each of them and there was no joint liability on their part. (Great Britain verdict 1852: 555).
In Dwyer v Goldseller (1906 TS 126), the respondent was permitted to sue both partners, jointly and severally, for the whole amount of the disputed debt. The defendant was, therefore, authorized to have judgment entered against both partners, jointly and severally –the one paying, the other to be freed, for the sum agreed or admitted or the amount proven as in the case of the plaintiff.
In the given case, Bonnie and Clyde buy a yacht from Dagobert for £100,000.it is agreed that bonnie and Clyde owe the price jointly. When no payment is being made at all, Dagobert asks Clyde to pay the £100,000. Clyde tells Dagobert “while I am unable to pay £100,000, I would like to give you £50,000 if you agree that I owe you no more than that”.Dagobert answers “That’s alright as long as there is a chance to get the second half from Bonnie”. Shortly after this, Clyde pays Dagobert £50,000. A few months later bonnie, who has no surviving relatives, dies penniless. Dagobert asks Clyde to pay the remainder of £50,000. Clyde refuses to pay.
In this case, Clyde has to pay the balance which is payable by Bonnie, who has died penniless, or else he has to return the yacht to Dagobert and receive back his money.
This given case is more analog to the following situation, if A purchases an expensive mobile phone from B, paying a token amount by credit card and the balance of the price in cash, the credit card provider will be held responsible to refund the whole sum if B becomes insolvent and thus B could not fulfill his obligation to deliver the mobile phone.
Here, Bonnie expired and Clyde has the obligation either to pay the balance amount to Dagobert for getting the ownership of Yacht, or else he has to return the yacht to Dagobert and get back his money.
For instance, in a partnership, if a partner dies, the remaining partners have to meet the firm’s debt. In a joint bank account, if one account holder dies, the other account holder is responsible for the repayment of the loan received from the bank. Applying the above principles of joint –liability, Clyde must pay £50,000 to Dagobert being the amount payable by the deceased Bonnie.
List of References
Banakas Stathis. (2007). Intruding the contracting into others-the English way.
Bhana Deeksha, Bonthuys Elsje & Nortje Minette. (2009). Student’s Guide to the Law of Contract. London: Kluver.
Court of Exchequer. (1852) English Reports in Law and Equity; Containing Reports of cases in — Volume 11. London: The Law School Gift of Rufus E. Ragland.
Gulshan, S.S. (2005) Business and Corporate Law for C.S Professionals. New Delhi: New Age International.
Wyka, Kenneth A, Mathews, Paul Joseph & Clark, William F. (2001). Foundations of Respiratory Care. London: Cengage Learning.