International Construction Law Review
PROPORTIONAL LIABILITY IN AUSTRALIA— THE DEATH OF CERTAINTY IN RISK ALLOCATION IN CONTRACT
ANDREW STEPHENSON
Partner, Clayton Utz Lawyers, Melbourne, Australia
1. INTRODUCTION
This article is current as at 13 October 2004 and relates to significant amendments and proposed amendments to the common law of Australia relating to (among other things) the capacity of parties to allocate the risk of a venture by contract and the concept of joint and several liability (both in contract and tort).
Joint and several liability can arise under Australian common law in a number of circumstances. The most common are:
- (a) pursuant to a contract; and
- (b) in tort, where the joint or several acts of two or more joint tortfeasors have contributed to a single loss.
Where two or more parties make a promise, their liability in respect of that promise is often joint and several.1
Of course, it is possible to stipulate several liability in predetermined proportions, as is often done in mining joint ventures. Joint and several liability means that either of the parties can be sued in the event of damage due to their wrongful conduct (i.e., where that conduct, for example, amounts to either a breach of contract or a breach of duty). Any party jointly and severally liable is liable for the whole of the loss (irrespective of the level of responsibility).
In contract law, this is especially useful where the same promises are made severally by two companies, where one company is of substance and the other is not. In those circumstances the parties receiving the benefit of the joint promise have comfort in knowing that at least one of the promisors is capable of meeting a damages claim in the event that the promise is not fulfilled.
This is particularly important in very large projects, such as large private infrastructure projects. The existence of several liability allows debt,
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Proportional Liability in Australia
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