(1) The obligor may assert against any of the joint and several obligees all the defences and rights of set-off that are personal to its relationship to that obligee or that it can assert against all the co-obligees, but may not assert defences and rights of set-off that are personal to its relationship to one or several of the other co-obligees. 

 

(2) The provisions of Articles 11.1.5, 11.1.6, 11.1.7 and 11.1.8 apply, with appropriate adaptations, to joint and several claims.

 

COMMENT

 

1. Availability of defences

 

The defences which may entitle the obligor to refuse to perform do not necessarily exist against all obligees. Some of the defences may be personal to the obligor’s relationship with one obligee only. These defences can be asserted only against the obligee concerned.

 

Illustration

 

1. Grain producer X has agreed to supply a certain quantity of wheat seeds to companies A, B and C which are engaged in a common agricultural project in a developing country. The contract provides that A, B and C are joint and several obligees as concerns the deliveries. X discovers that the premises where it has to deliver the seeds are not equipped with appropriate facilities for convenient unloading, the availability of which only A has guaranteed. X may invoke this as a defence against A requiring delivery, but not against B and C which had not guaranteed that the premises for the delivery would be equipped with appropriate facilities.

 

The obligor may also assert defences that it has in common against all obligees.

 

Illustration

 

2. The facts are the same as in Illustration 1. X finds out that the agricultural project involves child labour by A, B and C in violation of applicable mandatory rules. This is a common defence that X may assert against any one of the obligees claiming delivery of the wheat seeds.

 

2. Effects of certain defences

 

Section 1 of this Chapter contains particular rules about the effects of certain types of defence (see Articles 11.1.5, 11.1.6, 11.1.7 and 11.1.8) available to joint and several obligors. Paragraph (3) of this Article provides that these rules apply, with appropriate adaptations, to joint and several claims.

 

a. Performance and set-off (reference to Article 11.1.5)

 

Article 11.1.5 provides that “Performance or set-off by a joint and several obligor or set-off by the obligee against one joint and several obligor discharges the other obligors in relation to the obligee to the extent of the performance or set-off”. Similarly, performance received by (or set-off exercised by) one of the joint and several obligees discharges the obligor towards the other obligees to the extent of the performance of set-off.

 

Illustrations

 

3. Companies A, B and C have jointly and severally loaned EUR 300,000 to X. A receives full payment. If B or C still claims reimbursement, X may assert that it has fully performed to A.

 

4. The facts are the same as in Illustration 3, except that X can claim EUR 300,000 from A for the sale of office equipment. X exercises the right of set-off under Article 8.3. Its obligation under the loan agreement is extinguished not only vis-à-vis A but also vis-à-vis B and C.

 

b. Release and settlement (reference to Article 11.1.6)

 

Article 11.1.6 provides that “Release of one joint and several obligor, or settlement with one joint and several obligor, discharges all the other obligors for the share of the released or settling obligor, unless the circumstances indicate otherwise”. Similarly, release granted to the obligor by one of the obligees (or settlement with the obligor by one of the obligees) discharges the obligor towards the other obligees to the extent of the release or settlement.

 

Illustrations

 

5. Pamela, a famous race horse, has been sold by its co-owners A and B to buyer X. Concerning payment of the price, the contract provides that A and B are joint and several obligees. If A releases X from A’s share of X’s obligation, B’s claim against X is reduced by the amount of A’s share. A has no contributory recourse against B under Article 11.2.4 (see Article 11.1.6(2)).

 

6. The facts are the same as in Illustration 3, but A, whose share in the loan is EUR 100,000, settles with X, accepting a payment of EUR 60,000, i.e. an amount below its share. The joint and several claims of B and C against X are reduced by the full amount of A’s share, i.e. by EUR 100,000, and both remain X’s joint and several obligees for EUR 200,000. Settling obligee A has no recourse under Article 11.2.4 against B or C (see Article 11.1.6(2)).

 

As in Article 11.1.6, with appropriate adaptations, the reference to settlement concerns the special case where a separate settlement intervenes between the obligor and one of the joint and several obligees for the latter’s share. In this case the issue to be solved is that of the consequences of such a settlement for the other obligees’ claims. 

 

In the more frequent situation where the settlement concerns all the joint and several claims, the consequences for the different obligees’ claims are determined by the terms of the settlement agreed by all parties and the contributory claims are adjusted accordingly.

 

c. Expiration of limitation periods (reference to Article 11.1.7)

 

Article 11.1.7 provides that the expiration of the limitation period of the obligee’s rights against one joint and several obligor affects neither (a) the obligations to the obligee of the other joint and several obligors, nor (b) the rights of recourse between the joint and several obligors under Article 11.1.10. Similarly, the expiration of the limitation period of one of the obligees’ rights against the obligor affects neither (a) the obligor’s obligations towards the other joint and several obligees, nor (b) the rights of recourse between the joint and several obligees under Article 11.2.4.

 

Illustration

 

7. Obligor X has three joint and several obligees, A, B and C. A’s claim against X is time-barred. This does not affect B and C’s claims against X. If B or C receives performance from X, A can claim its share from the co-obligee having received payment.

 

Article 11.1.7 also provides that if the obligee initiates proceedings under Articles 10.5, 10.6 or 10.7 against one joint and several obligor, the running of the limitation period is suspended also against the other joint and several obligors. Similarly, if one of the obligees initiates proceedings against the obligor, the running of the limitation period is also suspended in favour of the other joint and several obligees.

 

d. Effect of judgment (reference to Article 11.1.8)

 

Article 11.1.8 provides that a decision by a court as to the liability to the obligee of one joint and several obligor affect neither (a) the obligations to the obligee of the other joint and several obligors, nor (b) the rights of recourse between the joint and several obligors under Article 11.1.10. Similarly, a decision by a court as to the obligor’s liability towards one of the joint and several obligees affects neither (a) the obligor’s obligations towards the other joint and several obligees, nor (b) the rights of recourse between the joint and several obligees under Article 11.2.4.

 

Illustration

 

8. Obligor X has three joint and several obligees, A, B and C. A, acting alone, sues X for performance. The judgement grants A only part of its claim. Such judgment does not affect the obligations of X towards B or C, nor the recourses between the co-obligees under Article 11.2.4.

 

However, Article 11.1.8(2) also provides that the other joint and several obligors may rely on such a decision, except if it were based on grounds personal to the obligor concerned. In this case, the rights of recourse between the joint and several obligors under Article 11.1.10 are affected accordingly. Similarly, the other joint and several obligees may rely on the decision if they find it in their interest, except if it was based on grounds personal to the obligee concerned.

 

Illustration

 

9. The facts are the same as in Illustration 8. This time, however, the judgment gives full satisfaction to A, including the awarding of additional damages. The other obligees may avail themselves of this favourable decision.

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