Joint and several liability is a legal concept where two or more parties are each fully responsible for a debt, not just a portion of it. A creditor can pursue any one of them for the entire amount, leaving that party to recover from the others.
Why it matters
It can come up where several entities borrow together. It is powerful for a lender because it gives more than one route to recover the full balance.
Reading any agreement carefully
If you ever sign something described as joint and several, understand that you could be asked for the whole amount, regardless of any informal split between the parties.
- Each party can be liable for the full debt.
- Internal splits do not bind the lender.
- It is common in shared borrowing arrangements.
Credicorp lends to a single limited company or LLP as the borrower, and does not take personal guarantees from directors. If any term is unclear in your agreement, ask us before you sign.
See also: How do multiple applications affect each other?, What is a guarantor in business lending? and What is a judgment debt?.