JOINT LIABILITIES

Posted On: 05/12/2015

JOINT LIABILITIES

When two or more persons promise jointly to perform to do something for consideration it is liability of all such persons who promised to perform or to do something. Such contractual obligations of the promises are joint liabilities, which are governed by Indian Contract Act 1872. We come across many such contracts in purchase, sale of the immovable properties and construction sector and also administration of partnership assets. The person who makes promise is promisor and to whom the promise made is promisee.

How joint liabilities devolve on the death of any one of the joint promisor?

Section 42 of the Indian Contract Act deals with the situation. It does not makes any distinction between joint promises and several promises. According to the said section in the absence of any contrary in the contract.

1. All the persons who made promise during their joint lives are to fulfill the promise ;

2. After the death of any of the promisor, legal heirs representative of deceased promisor along with surviving promisors are to fulfil the promise; and

3. After the death of the last surviving promisor, the legal heirs, representatives of all the promisors are bound to fulfil the promise.

But if the contract provides for any contrary intention the liability devolves according to the contract.

Can a promisee enforce the contract on any one of the promisor?

The promisee may enforce the contract against any of promisor in case of joint promise made by two or more persons, if the terms of contract do not provide any contrary intention.However, each of the joint promisors have a right against other promisors. They may compel the other promisors to contribute equally or as provided in the contract for performance of contract.

In case of any of the joint promisors defaults in contributing towards performance the remaining joint promisors must bear the loss arising from such default in equal shares.The section 43 of Indian Contract Act makes it very clear that in case the surety makes an payment on behalf of the principal, the surety is entitled to recover the same from the principal.

The provisions of section 43 apply where two or more persons have made a joint promise. But it does not apply in case where two or more persons have become jointly interested by inheritance in a contract made by a single person. When a mortgage was executed by a single mortgagor the mortgagee suing four out of five heirs is entitled to recover only four-fifth of the mortgaged amount from them. But if the mortgage is executed by several mortgagors then the mortgagee can enforce the entire liability against a part of mortgaged property. In case of joint family debts contracted by the managing member, are the debts due for all the members of joint family and all other joint family members are bound to repay the same but their liability is not personal but only to the extent of joint family assets.

Situation in case the promisee releases one of the joint promisor :In case of a joint promise made by two or more persons, the promisee may release any of joint promisors from performing the contract. But such release does release the other promisors from performing the contract and does nor discharge the released promisor of his liability, responsibility to other joint promisors.

Joint rights devolve:

This is quite a different situation from what we discussed earlier. Here a single person makes a promise to two or more persons jointly. The promisor is single person and promisee are more than one. All the joint promisees during their lifetime, on death of any of them, the legal heirs / representative of the deceased promisee with other surviving promisees and on death of the last surviving promisee the representatives of all promisees jointly acquire rights to enforce the contract.
Source : Realestate Law,Joint Liabilities