Question: Devolution of joint liabilities | Discuss the principle of law in a contract, where two or more persons have made a joint promise and if one of such joint promisors dies after making such promise.

In a contract A, B and C jointly promise to pay D a sum of rupees 6,000. C is compelled to pay the whole. A has been declared insolvent but the value of his assets is sufficient to pay half of his part of the debt. What will be the extent of C’s right against A and B? Discuss. [BJS 2017]

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Answer

Section 42 of the Indian Contract Act, 1872 lays down the provision for the devolution of joint liabilities. It states as under:

“When two or more persons have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor, the representatives of all jointly, must fulfil the promise.”

Section 42 provides that the liability of a joint promisor is joint and several. All promisors are bound to perform the promise. On the death of any of them, the liability does not devolve by survivorship upon the surviving promisors alone, but upon the representatives of the deceased promisor along with the surviving promisors.

English Law Compared

Unlike English law, which applies the rule of survivorship to the case of joint creditors as well as joint debtors, Section 42-45 of this Act do not recognize the rule of survivorship. This appears to be in accordance with modern mercantile usage at the time of its enactment. The Act puts the representative, if any, of the deceased joint promisor in his place, failing whom; the rule of survivorship would apply.

This is a variation from the English law, under which upon the death of one of several joint contractors, the legal liability under the contract devolves on the survivors; and the representative of the deceased cannot be sued at law either alone or jointly with the survivors. Consequently, the whole legal liability ultimately devolves upon the last surviving contractor, and after his death, upon his representatives.

Unless a Contrary Intention Appears

Unless a contrary intention appears indicates that parties may make a contract, under which the promise of the joint promisors becomes binding on the survivor(s) after the death of any of the promisors. Such intention may also appear from the nature of the contract or other terms, or other circumstances.

Section 43 of the act talks about that anyone of joint promisors may be compelled to perform: “When two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any [one or more] of such joint promisors to perform the whole promise.

Each promisor may compel contribution: Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.

Sharing of loss by default in contribution: If any one of two or more joint promisors makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.

Explanation: Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payment made by the principal.”

This section lays down three rules:

1. Anyone compellable to perform: Firstly, when a joint promise is made, and there is no express agreement to the contrary, the promisee may compel any one or more of the joint promisors to perform the whole of the promise. For example, A, B and C jointly promise to pay D 3,000 rupees. D may compel either A or B or C to pay him 3,000 rupees.

2. Right of contribution [S. 43 (Para 2)]: Secondly, a joint promisor who has been compelled to perform the whole of the promise, may require the other joint promisors to make an equal contribution to the performance of the promise, unless a different intention appears from the agreement.

3. Sharing of deficiency [S. 43 (Para 3)]: Thirdly, if any one of the promisors makes default in such contribution, the remaining joint promisors must bear the deficiency in equal shares. A, B and C are under a joint promise to pay D, 3000 rupees. C is unable to pay anything. The deficiency must be shared by A and B equally. If C’s estate is able to pay one-half of his share, the balance must be made up by A and B in equal proportions.

Section 43 talks about joint and several liabilities of the promisors. The provision entitles the promisee to claim performance from anyone or more of the promisors. It also provides for a right of one or more promisors to compel contribution from the others, and the sharing of loss in the event of default in contribution. These provisions can be altered by providing to the contrary in the contract.

The above proposition in hand is borrowed from the illustration (b) appended to Section 43 of the Indian Contract Act. In the case, A, Band C jointly promise to pay D the sum of 3,000 rupees. C is compelled to pay the whole. A is insolvent, but his assets are sufficient to pay one-half of his debts. Then after C is compelled to pay the whole, he is also entitled to receive 500 rupees from A’s estate, and 1,250 rupees from B.

Thus, to conclude, when a contract is concluded with a joint venture group, all members are made jointly and severally liable, even if only one is capable of rendering the service in question.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
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8. Law of Contract Mains Questions Series Part-VIII
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