Introduction

Joint and several liability is a legal doctrine found in both civil law and common law systems. Although the two traditions reach it by different doctrinal routes, the practical outcome is the same:

  • a creditor owed a single obligation by two or more people can demand the whole amount from any one of them, from several of them, or from all of them together — without first having to work out each person’s fair share; and
  • whoever pays the whole amount then has a right to claim contribution back from the others, according to their respective shares of responsibility.

Where this comes up in practice. The doctrine appears most often in three settings:

  1. Contracts with more than one party on the same side — e.g., a sale and purchase agreement with multiple sellers or buyers;
  2. Financing documents involving multiple borrowers or multiple guarantors of the same debt; and
  3. Tort or statutory liability, where two or more persons jointly cause the same loss.

In each case, whether liability is joint, several, or joint and several is rarely an afterthought — it is one of the more heavily negotiated features of the deal, because it decides who bears the risk of a co-obligor’s insolvency, disappearance, or simple refusal to pay.

Figure 1 - How a joint and several liability claim works
Figure 1 - How a joint and several liability claim works

This article examines how English law (a leading common law system) and Vietnamese law (a civil law system with its own codified tradition) each define and apply joint and several liability, and then at how the doctrine plays out — and, in places, is under-addressed — in cross-border M&A and financing transactions involving Vietnam-domiciled obligors and a foreign obligee, drawing on market practice and on recurring drafting issues seen in Vietnamese corporate bond and guarantee documentation.

English Law Interpretation

English law draws a three-way distinction between joint liability, several liability, and joint and several liability. Which one applies is a matter of construction — i.e., what the parties actually agreed, read from the words of the contract in context — rather than a rule imposed regardless of intention.

The Three Types

  • Joint liability — arises where two or more persons jointly promise to do the same thing, creating a single, unified obligation. Historically, this had real procedural bite: at common law, all joint obligors generally had to be sued together, and — until statutory reform — a judgment against, or a release of, one joint obligor could bar or discharge a claim against the others for the same debt.
  • Several liability — arises where two or more persons make separate promises for what are, in substance, distinct obligations. Each obligor is liable only for its own specified share, and payment by one does not reduce or discharge the others’ liability.
  • Joint and several liability — arises where two or more persons under the same instrument each promise, individually and at the same time, to perform the same obligation to the same creditor. It combines both effects: the creditor may recover the whole amount from any one obligor (as under joint liability), but each obligor’s own promise also survives, so payment or performance by one discharges the others only to the extent paid — and the paying obligor may then seek contribution from the rest.

Because this is a question of construction, English-law contracts do not rely on any presumption in favour of joint and several liability. Market practice is to state the position expressly — the phrase “jointly and severally” is boilerplate precisely because leaving the question to implication invites disputes about what the parties intended.

Statutory Reform — the Civil Liability (Contribution) Act 1978

The old common law rule — that a judgment against, or release of, one joint obligor could bar or discharge a claim against the others — was substantially reformed by this Act:

  • Section 1(1) — gives any person liable for damage a statutory right to recover contribution from any other person also liable for the same damage.
  • Section 2 — directs the court to apportion contribution on the basis of what is “just and equitable having regard to the extent of that person’s responsibility for the damage in question.”
  • Section 3 — provides that a judgment recovered against one person liable for a debt or damage is not a bar to an action against any other person jointly liable for the same debt or damage — reversing the old common law trap.

The Act applies most prominently in tort (claims against multiple co-defendants, such as joint tortfeasors in negligence), but the underlying contribution mechanism — a right of the paying obligor to recoup an equitable share from co-obligors — is also the model commercial parties adopt by contract for joint and several obligations arising outside tort.

Vietnamese Law Interpretation

Vietnamese law addresses joint and several liability principally through the Civil Code 2015 (Law No. 91/2015/QH13), using the term “nghĩa vụ liên đới” — literally, a solidary or joint-and-several obligation.

The General Rule — Civil Code, Article 288

  • where an obligation is joint and several between multiple obligors, the obligee (creditor) may require any one obligor to perform the whole obligation;
  • an obligor who performs in full then has a right of recourse against the other obligors for their respective shares;
  • if the creditor releases the obligor who was designated to perform the whole obligation, all obligors are discharged;
  • but if the creditor releases an obligor only from that obligor’s own share, the remaining obligors stay liable for their shares.

Not Presumed by Default

As under English law, Vietnamese law does not generally presume that an obligation owed by multiple debtors is joint and several. The default for an ordinary multi-party obligation is closer to several liability — divided among the obligors — unless the contract, or a specific provision of law, states otherwise. Express drafting therefore matters just as much under Vietnamese law as under English law: parties cannot assume that multiple obligors named together in a Vietnamese-law contract are automatically jointly and severally liable.

Where Vietnamese Law Reverses the Default

There are specific statutory contexts where Vietnamese law imposes joint and several liability even without express agreement:

  • Co-guarantors — where an obligation is guaranteed by more than one guarantor, the co-guarantors are deemed jointly and severally liable unless the law or the parties’ agreement divides the guarantee into separate portions (Civil Code, Art. 338). This is a notable, lender-friendly default that runs the opposite way from the general rule.
  • General partners — general partners in a general partnership (“công ty hợp danh”) bear unlimited and joint liability for the partnership’s obligations — a creditor may require any general partner to pay the partnership’s debts in full (Law on Enterprises 2020, Art. 177).
  • Founding shareholders — where founders or shareholders sign a pre-incorporation contract and the company is never granted an enterprise registration certificate, all founding members or shareholders — not just the individual who signed — bear joint responsibility for that contract (Law on Enterprises 2020).

Application in Cross-Border M&A and Financing Transactions

Why Cross-Border Deals Are Different

Joint and several liability is a recurring negotiating point in M&A and financing deals generally. Where all obligors and the obligee sit in the same jurisdiction, giving effect to the clause is usually straightforward once it is properly drafted. Cross-border deals into Vietnam add a further layer of complexity: where the obligors are Vietnam-domiciled and the obligee is foreign-domiciled (the typical inbound M&A / offshore-to-onshore financing structure), the parties must consider not only whether Vietnamese contract law recognises the clause, but also whether Vietnam’s foreign exchange control rules will actually let the payment be remitted. A clause that is perfectly valid and enforceable as a matter of contract may still be difficult — or impossible — to give effect to if Vietnamese FX rules don’t accommodate the payment mechanics.

  • Unlike jurisdictions with fully liberalised capital accounts, money cannot move into, out of, or within Vietnam on an unrestricted basis.
  • Cross-border M&A and financing deals are subject to various State approvals and must be settled through specific, designated bank accounts.
  • It is this regulatory constraint — not the underlying contract law analysis — that is often the real obstacle to enforcing a joint and several liability clause in practice.
Figure 2 — Cross-border payments must pass through a controlled account
Figure 2 — Cross-border payments must pass through a controlled account

M&A Transactions

  • The purchase price payable by a foreign buyer for shares or capital contributions in FDI targets, or majority-foreign-owned targets, generally must be settled through a direct investment capital account (“DICA”) opened in the target’s name, or an indirect investment account (previously called an indirect investment capital account) opened in the foreign buyer’s name — in each case at a bank duly licensed to provide FX services in Vietnam.
  • The buyer may generally transfer only the specific amount approved under the relevant investment/acquisition approval; the receiving bank will typically decline a remittance that doesn’t match the approved amount, counterparty and payment schedule.
  • A joint and several claim relating to the purchase price itself (e.g., a buyer’s claim against multiple sellers for an overpayment, or sellers’ claim against the buyer for unpaid price) will generally need to be channelled back through that same DICA/indirect investment account mechanism — which may not readily accept a payment departing from the amount, direction or parties in the original approval.
  • By contrast, a claim not related to the purchase price (e.g., damages, indemnification, or a warranty breach) may arguably be remitted through the obligors’ ordinary current accounts, since it falls outside the restrictions that attach specifically to the purchase price.
  • This distinction should be addressed expressly in the transaction documents — it affects both how a joint and several clause would be enforced, and how payment mechanics for different types of claim should be structured from the outset.

Financing Transactions

  • Cross-border lending is, if anything, more restrictive. A Vietnamese borrower taking a medium- or long-term foreign loan must register it with the State Bank of Vietnam (“SBV”).
  • The registration regime is built around each individual borrower’s own registered loan amount and repayment schedule — it does not recognise, as a payment mechanic, any concept of joint and several liability among co-borrowers.
  • Disbursement and repayment of principal, interest and fees must be transacted through the borrower’s DICA (for a foreign-invested enterprise) or its own foreign borrowing and repayment account (for a borrower without a DICA) — and only amounts consistent with that borrower’s own SBV registration may flow through the account.
  • Practical consequence: even where a facility agreement expressly makes co-borrowers jointly and severally liable for the full loan, a Vietnamese co-borrower may in practice be unable to remit an amount referable to another co-borrower’s shortfall, because that amount falls outside its own registered loan amount and repayment schedule.
  • A joint and several clause that looks straightforward on paper may therefore be hard to enforce in substance against a Vietnamese co-borrower — not because Vietnamese contract law refuses to recognise it, but because the FX control regime restricts the channel through which payment can actually be made.

Practical Steps for Foreign Buyers and Lenders

These constraints do not mean joint and several liability clauses are without value in Vietnam-related cross-border deals — the clause remains fully effective as a matter of contract law, and still gives the foreign obligee a stronger, more direct claim than several liability would, including for negotiating leverage and recourse available outside Vietnam. But the FX regime should be factored into the transaction structure from the outset, rather than left to be resolved once a claim already exists:

  1. Obtain State approvals in a form and amount broad enough to accommodate a joint and several liability claim, where feasible;
  2. Structure each co-borrower’s registered loan amount with some regard to the possibility of another co-borrower’s default;
  3. Place particular weight on a Vietnam-domiciled guarantee as an additional layer of recourse, given that co-guarantors already default to joint and several liability under Civil Code Article 338;
  4. Seek specific confirmation from the licensed account bank or the SBV, at the outset, on how contribution or indemnity payments between co-obligors would be expected to flow through the relevant accounts.

None of these steps eliminates the underlying regulatory constraint — but each helps narrow the gap between the contractual promise of joint and several liability and its actual enforceability in Vietnam.

Conclusion

Joint and several liability is best understood as a shared legal concept expressed through two different doctrinal vocabularies, rather than a peculiarly common law device:

  • English law reaches the result through case law construction, refined by the Civil Liability (Contribution) Act 1978’s contribution machinery.
  • Vietnamese law reaches substantially the same result through the codified concept of “nghĩa vụ liên đới” in the Civil Code, supplemented by specific statutory defaults for guarantees, general partnerships, and pre-incorporation liability.

In both systems, the creditor’s ability to pursue any one obligor for the whole debt is paired with an internal right of contribution among the obligors — so the ultimate economic burden is, in principle, shared according to fault or agreement, even though the external liability is not divided at all.

The practical lessons for M&A and financing practitioners working on Vietnamese transactions:

  • Neither system reliably supplies joint and several liability by default for an ordinary multi-party obligation — the Vietnamese Civil Code’s guarantee-specific default under Article 338 is the notable exception.
  • Whether liability among multiple sellers, borrowers or guarantors is joint, several, or joint and several is a negotiated commercial term, not an incidental drafting choice — state it expressly, obligation by obligation, rather than applying one boilerplate label uniformly (e.g., a core payment obligation may warrant joint and several treatment, while an ancillary cost-sharing obligation may not).
  • In cross-border Vietnam deals, foreign exchange control — not contract law — is usually the real obstacle to enforcing the clause in practice, so the FX mechanics should be built into the deal structure from day one.

Bottom line: joint and several liability remains a powerful, worthwhile clause in both English- and Vietnamese-law documents — but in cross-border Vietnam transactions, its value depends as much on how the money can move as on how the contract is worded.