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Joint and Several Liability under an Intercorporate Guaranty
Joint and several liability occurs when two or more parties are liable for the same debt. As it relates to an inter-corporate guaranty, if joint and several liability is made a part of the contract, it means that both the guarantor and the debtor company are each liable for the entire debt. Therefore, the beneficiary of an inter-corporate guaranty may collect the entire amount due by demanding payment from either the debtor or the guarantor. The creditor need not exhaust legal remedies against the debtor before demanding payment from the guarantor, nor is the creditor limited to collecting half of the amount owed from each entity.
© 2011 by Michael C. Dennis. All Rights Reserved. Michael is the author of "Credit and Collection Handbook." E-mail questions or comments to him at mcdennis13@yahoo.com