Joint and Several Liability: The Creditor's Rights and the Internal Relationship Among Debtors

Under TBK m.162, where each of several debtors declares to the creditor that he accepts liability for the whole debt, joint and several liability arises. In the absence of such a declaration, joint and several liability arises only in cases provided by law.

Principal statutory cases include damage caused jointly (TBK m.61), partners in an ordinary partnership (TBK m.638), partners in a general partnership (TCC m.236) and heirs' liability for the debts of the estate (Civil Code art.641). Co-sureties, by contrast, are as a rule liable as simple sureties for their own shares; joint and several liability arises only where they have undertaken liability as joint and several sureties (TBK m.587).

The creditor may demand performance of all or part of the debt from any debtor of choice (TBK m.163/1). Until the debt is fully performed, all debtors remain liable. Partial collection from one debtor does not affect the creditor's right against the others for the remainder.

This rule offers great security: financial difficulty of one debtor does not affect the liability of the others. The creditor is free to target the financially strongest debtor; the internal allocation among debtors need not concern the creditor.

Unless statute or contract provides otherwise, the act of one joint debtor cannot aggravate the position of the others (TBK m.165). Personal defences available to one debtor cannot be raised by the others; but common defences are available to all (TBK m.164).

Performance or set-off by one debtor extinguishes the debt for all. Conversely, release granted to one debtor releases only that debtor as a rule; the others' liability is reduced only by the released debtor's internal share.

The debtor who has paid may, unless statute or contract suggests otherwise, recover from the others the portion exceeding his internal share (TBK m.167/2). The internal allocation is presumed equal unless otherwise required by contract or the nature of the matter.

Where a debtor cannot pay his internal share, the unpaid amount is distributed between the debtor seeking recourse and the other debtors (TBK m.167/3). Thus joint and several liability allocates risk not only to the creditor's advantage but also among the debtors themselves.

In contractual disputes, not only the signed text but also offer correspondence, revision history, invoices, delivery records, payment records, formal notices and the parties' subsequent conduct are taken into account. The formation, performance and termination of a contract often acquire meaning only through these ancillary documents.

Form requirements, authority of representation, penalty clauses, exclusion-of-liability provisions, standard terms and consumer-protection rules may all affect the validity or enforceability of a contract. For standard terms, the requirements of clear information, an opportunity to learn their content and acceptance under Article 21 of the Code of Obligations must be considered, together with any special consumer rules.

Before any dispute arises, the scope of obligations, delivery date, defect notice, default notice, interest and competent-court clauses should be drafted explicitly. Vague provisions may give rise to interpretation disputes and to difficulties of proof later on.