Edited by Jennifer H. Arlen
Chapter 8: Economic analysis of joint and several liability
A plaintiff sometimes has a common claim against multiple parties. In some of these instances, each defendant may be jointly and severally liable for the plaintiff’s harm. In others, the liability of each defendant is several only. Under joint and several liability, each defendant is liable for the entire harm though the total (judicial) recovery by the plaintiff is limited to the total harm. Under several-only liability, by contrast, each defendant is responsible for only her portion or share of the harm. The regime of joint and several liability has great practical importance as well as significant and subtle legal and economic consequences that were largely unnoticed prior to the use of economic analysis. Prior to the economic analyses of joint and several liability, conventional wisdom identified two major differences between regimes of joint and several liability and regimes of several-only liability. First, joint and several liability reallocates the cost of potential insolvency of a defendant from plaintiff to the solvent defendant. Second, under several-only liability, the plaintiff must collect from each (losing) defendant, while under joint and several liability, the plaintiff need only collect from a single defendant.
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