Joint Obligation Contracts: Obligations and Promises of Parties

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  • 0:06 Parties in a Joint Contract
  • 2:36 Several Contracts
  • 4:32 Lesson Summary
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Lesson Transcript
Instructor: Kat Kadian-Baumeyer

Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses.

A joint contract involves two or more parties who are jointly obligated to a contract or whom receive the benefits of the terms and conditions of a contract. There are a few ways a joint contract can be written. Each type shifts liability in a different way.

Parties in a Joint Contract

When two or more parties jointly obligate themselves in a contract, they enter into a joint contract. By entering into a joint contract, all parties become equally and wholly responsible for the obligations of the contract or benefit wholly from the contract in its entirety. This sounds confusing. Let's use an example to help clear things up.

Jeffrey and Wayne are freshmen attending University of Smartsville. Neither student could afford their own apartment, so they decided to become roommates. Their landlord, Mr. Rupert, presented the boys with a lease agreement. In the lease, it stated that both Jeffrey and Wayne would be wholly responsible for paying the rent. This means that regardless of who coughs up the cash, the entire rent amount must be paid at month's end. Mr. Rupert doesn't much care how it happens, as long as it happens.

You see, the lease is worded in such a way that it obligates both Jeffrey and Wayne to the rent amount. If Wayne withdraws from college, Jeffrey is responsible for the entire rent payment. The elements of a contract remain the same as any bilateral contract one would enter into:

  • Offer that specifically details exactly what will be provided
  • Acceptance is the agreement by the other party to the offer presented
  • Consideration is the money or something of interest being exchanged between the parties
  • Capacity of the parties in terms of age and mental ability
  • Intent or mutuality of both parties to carry out their promise and
  • Object of the contract is legal and not against public policy or in violation of law

The only difference between a joint contract and a bilateral contract is the parties involved. In a bilateral contract, there are generally two parties, an offeror and an offeree and both have specific obligations. In a joint contract, the offeror or offeree can be more than one party, thus holding both jointly responsible for the contract terms. Joint contracts also have survivorship, meaning that should one of the jointly obligated parties die, the remaining party remains obligated to the conditions.

For Jeffrey and Wayne, if one of the students should face an untimely death, the other would remain responsible for the rent. Sometimes, joint contracts can be written so that they do not necessarily join two parties wholly. In this case, the contract would be shared in several.

Several Contracts

When a contract involves two parties who are not wholly joined, but joined severally, it takes on a slightly different liability. In contract law, severally obligates joint contract parties in the same way but changes the liability. To exemplify this, let's revisit Jeffrey and Wayne's lease agreement with Mr. Rupert. Jeffrey and Wayne entered into a lease agreement in where they owe $900 per month.

In a joint contract, if Wayne stopped paying, Jeffrey would have to pay the entire $900 to the landlord. In severalty, Mr. Rupert can go after Wayne's assets, Jeffrey's assets, or an equal share of both. This sounds confusing - it's really not!

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