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Joint and several liabilities is a legal doctrine that holds two or more people liable for upholding a commitment or paying a debt both jointly and severally for the entire amount. This implies that the other parties may be held accountable for the full debt if one party is unable to pay their portion of the loan.
This idea is frequently used in agreements when several parties agree to be held jointly and severally liable for the whole amount of the loan, such as in loans. For instance, in a loan contract between three parties, each party could consent to bear joint and several liabilities for the entire loan amount in addition to their individual portions of the debt.
Creditors may benefit from joint and several responsibilities because it raises the likelihood that the debt will be paid back by allowing them to pursue repayment from any or all contract participants. Yet, it can be dangerous for those who consent to joint and several liabilities because they might be held accountable for the entire debt, even if they only received a portion of the loan.
