What's the difference between 'several' liability and 'joint and several' liability among multiple sellers?

The rule

No statute overrides an express contractual allocation of several liability among co-sellers. Where the purchase agreement affirmatively chooses several liability in stated proportions — typically by a schedule tied to each seller's percentage shareholding — that choice is enforced as written regardless of how any one seller's solvency turns out afterward.

The one Ontario statute that touches joint obligations at all, the Mercantile Law Amendment Act, R.S.O. 1990, c. M.10, s.4, does not reach this situation. It provides that where a joint obligor dies, “the person interested in the contract, obligation or promise entered into by such joint contractors, obligors or partners may proceed by action against the representatives of the deceased contractor, obligor or partner in the same manner as if the contract, obligation or promise had been joint and several.” That converts a joint obligation into one enforceable as if joint and several, and only where a co-obligor has died — not where an already-several obligation is simply held by someone who has become insolvent or has spent the proceeds.

When this changes

Buyers who want protection against a co-seller's later insolvency have to negotiate for joint and several liability, or a several-with-a-backstop structure, up front — there is no statutory rule that upgrades several liability into joint and several after the fact just because one seller turns out to have nothing left to collect against.

Where this plays out in the Case Files

These questions come up because a specific deal turned on them. Three from this hub:

• • Four sellers, several liability, and a valid claim the buyer only partly collected — four sellers under an expressly several allocation; the buyer's valid environmental claim went uncollected against the one seller who had already spent his share.
• • The $140,000 the seller owed back — after paying it out to its own shareholders — the related collection problem of a seller corporation, rather than an individual co-seller, that has already distributed the money a later claim needs.

Sources

• • No statute overrides an express several-liability allocation freely negotiated among co-sellers in a share purchase agreement.
• • Mercantile Law Amendment Act, R.S.O. 1990, c. M.10 — s.4, checked and found not to reach an insolvent (as opposed to deceased) co-obligor.
• • Treadstone Law's library does not have an article comparing several and joint-and-several seller liability in a multi-seller business sale specifically; its Litigation-section piece on joint and several liability addresses tort claims under the Negligence Act, a different context, so no link is included here.