INTRODUCTION

Most contractual dealings are bilateral, the parties are a single debtor and creditor. However,
this is not always the case as it is also possible to have multilateral contracts, in which several
debtors and creditors exist. The existence of several debtors and creditors that are bound by
and entitled to a single obligation or right creates solidarity of obligations and rights. In such
cases, there may be multiple creditors and one debtor, several debtors and one creditor, and
multiple creditors and debtors. Contracts with many creditors and debtors are referred to as
contracts based on joint obligations.1

When there are multiple debtors in a contract, the obligations are either joint, several, or joint
and several, depending on the intention of the contracting parties. The intention is gathered
from the construction and interpretation of the language used.2

Contract based on joint obligations Is regarded as elementary one in contract law, but its
difficulties have received remarkably little attention in treatises on contract law or in essays.
So, in order to clarify such difficulties, this paper attempts to discuss the rules governing the
plurality of debtors and creditors under Ethiopian law. These rules are found in Book lV,
Chapter 5 of the Civil Code, from article 1896 to 1951. From article 1896 to 1909, the first
section of this chapter is about debtors who are jointly and severally liable. The second
section, which runs from article 1910 to 1916, contains rules for joint creditors. Articles 1917
to 1919, third section, provide rules for obligations other than joint obligations. Articles 1920
to 1951 cover the rules of suretyship, which are the fourth and similar section to joint
obligations.

SECTION ONE: DEBTORS JOINTLY AND SEVERALLY LIABLE

The principle of presumption of solidary obligations has it that unless the instrument
expressly provides otherwise or provided by law, joint debtors are always solitarily (jointly
and severally) liable.3 This implies that so long as the parties do not clearly state that they are
not jointly liable they are automatically considered as joint and several debtors. The law by
itself may also impose joint obligations in various cases; to mention some, in case of debts

1
Tilahun Teshome, basic principles of Ethiopian contract law (2nd edn, Addis Ababa university, Addis
Ababa 2002) p. 199.
2
A. I. D. “Contracts: Joint or Joint and Several?” (1917) CLRC, vol. 5, no. 2, JSTOR,
https://doi.org/10.2307/3474253. Accessed 5 Jan 2023.
3
Art 1896 of the civil code of Ethiopia.
contracted by spouses, for persons jointly liable to pay maintenance, persons involved in the
same criminal act and persons required to make good the same damage.4

In such cases the law gives the creditor the right to require performance or discharge of the
obligation in whole or in part from all the debtors or one of them. And it is also provided that
all debtors are liable until the obligation is fully discharged. 5 therefore it can be said the
extent of liability of each co-debtor is not limited to his share of the debt, and there is an
implied guarantee between the co-debtors as far as meeting the claims of the creditor is
concerned.

1.1 EFFECT OF JOINT AND SEVERAL OBLIGATIONS ON RELATIONS

BETWEEN CREDITOR (S) AND CO-DEBTORS

Res judicata; Proceedings instituted against one debtor may not prohibit the creditor from
resorting to other creditors. This is a way of protection for the creditor. The creditor has the
right to institute as many actions of recourse as there are debtors for the recovery of his claim.

Notice: Placing one debtor in default notice amounts to placing all others in the same, this is
however only where notice is necessary.6 All effects such as computation of interest, transfer
of risk and interruption of period of limitation do hold good for other co-debtors in as much
as they do with the one on whom notice is served.

Nullity; If the contract is void, any debtor can set up against a creditor defense based on the
nullity of obligation. If the contract is voidable, though, only those debtors affected by the
vitiation may do so.7

Payment and limitation: All co-debtors may invoke defenses based on full or partial
performance or on limitations of actions.8

Remission of debt: Remission of one co-debtor amounts to remitting all unless made
specifically for the exclusive advantage of that debtor. 9 In this case, the share of the debt of
the other debtors is reduced to the extent of the amount remitted in favor of that particular
debtor. Regarding sub article 3 of Article 1902 the English version is not correct hence the
Amharic version should be referred as it is the one that prevails in case of contradiction.

4
See Articles 819, 2155/2 and 2255.
5
Art 1897.
6
Art 1899 cum Arts. 1772& 1775.
7
See Art 1900 cum Art 1808.
8
Art 1901.
9
Art. 1902 cum Art 1825.
Novation: Where the creditor agrees with one of the co-debtors to substitute a new
Obligation for the original one, the provisions of Article 1902 will be applied.10

Set-Off: Art. Co-debtors may invoke the defense of set-off against the creditor only to the
extent of the obligation of the debtor who is owed by the creditor. 11This article also has
problem in the English version, the Amharic version is much better in terms of clarity.

Merger: where one debtor becomes creditor, his share may be reduced from the total debt. 12
Here again the English version has a problem.

1.2 THELATIONSHIP BETWEEN CO-DEBTORS

The relationship between co-debtors can be explained by the following four points as
provided under our civil code.

 A co-debtor is duty bound to promote the betterment of the condition of all of them
and consequently should refrain from acts that increase the liability of other co-
debtors. More over a co-debtor who fails to raise common defense to all like period
of limitation is liable to the other debtors. 13
 Unless agreed otherwise agreed by co-debtors or provided by law amongst the co-
debtors, shares in the debt are presumed to be equal. 14 This means the fact that each
debtor is held liable for performance of the obligation to the creditor does not prevent
the debt from being divided.
 A co-debtor who has paid more than what he was actually supposed to pay as his
share has the right to seek contribution from the other co-debtors. 15 In such situation
the presumption of solidarity comes to an end as each debtor is only liable to his
share in debt. However, if one of the co-debtors cannot pay his share, his part shall be
apportioned amongst the other co-debtors.16
 A party paying in excess of his share and entitled to claim contribution will therefore
be substituted with the creditor to the extent of the amount paid by him by virtue of
right of subrogation. In such cases the creditor has the duty of collaboration by

10
Art 1903.
11
See the Amharic version of Article 1904.
12
Here also the Amharic version of Article 1905 should be referred.
13
Art 1906.
14
Art 1907.
15
Art 1908 sub art 1.
16
Art 1908 sub art 2.
 handing documents and information in relation to the debt, but if he fails to do so he
will be liable for the damages resulting from his failure.17

SECTION TWO: JOINT CREDITORS

The civil code unlike the case of joint debtors does not presume solidarity rights. Unless
agreed or provided by law joint creditors are not presumed to be Jointly and severally entitled
to claim payment.18 The instrument that created solidarity of creditors is always required to
clearly show prevalence of solidarity in order for the creditors to enjoy this right.

The right of the creditor is not only limited to his own share of the whole claim, as far as their
right to claim against the debtor is concerned there is an implied duty between the co-
creditors. For his share of the claim each co-creditor is regarded as the principal creditor and
for the shares of the other creditors, he is considered as an agent.

Each joint creditor can ask the debtor to pay the whole debt. And payment made in part or
whole to one of the creditors is effective against all the creditors. The debtor in performing
his obligation have the right to pay to any of the creditors so long as he is not expressly
instructed by one or some of the creditors.19

2.1 EFFECTS OF PLURALITY OF CREDITORS

a. Interruption of limitation of action; any act interrupting the period of limitation

made by one of the creditors benefits all.20
b. Remission of debt; remission made by one co-creditor only release the debtor in
respect of the share of remitting creditor. Hence it does not affect other co-creditors.21
c. Novation; novation agreement made between one of the creditors and the debtor does
not affect the right of the others.22
d. Set-off; where the debtor is owed by one of the creditors, he may invoke a set-off
only to the extent of that creditor’s share without affecting right of the other
creditors.23

17
See Art 1909.
18
Art 1910.
19
See Art 1911
20
Art 1912 cum Arts 1851 and1852.
21
Art 1913.
22
See Art 1914 cum 1913
23
Art 1915.
The above three cases serve as limitations for the power of each creditor to act as an agent or
to represent the other joint creditors.

2.2 THE RELATIONSHIP BETWEEN CO-CREDITORS

The law expressed the relationship between co-creditors in two cases. The first one is the case
of Presumption of equality of shares; unless specified in the contract or provided by law joint
creditors are presumed to be entitled to an equal share of the payment made by the debtor.
The second one is a joint creditor who received more than his share is obliged to distribute
the excess to the co-creditors in proportion to their respective shares.24

SECTION THREE: SIMPLE JOINT OBLIGATIONS (NONE JOINT

OBLIGATIONS)

Plurality of debtors and creditors alone does not always bring about solidary obligations and
rights. Contracts having plurality of parties with separate and defined obligations and rights
may not be regarded as having joint obligations or rights even if it is made in one document.
These contracts are called simple joint obligations. In simple joint obligations, there are as
many contracts as there are debtors or creditors despite the fact that these contracts stem from
the same instrument. Under such contract each debtor is only liable for his own share and so
is the creditor.25 That means there are as many contracts as there are debtors or creditors even
if they’re made in the same document. Where the nature of the obligation is indivisible by
operation of the law or by the nature of the debt, simple joint obligations may sometimes be
regarded as joint obligations.26 These are what are sometimes known as indivisible
obligations.

SECTION FOUR: SURETYSHIP

The general principle in the law of obligations has it that the property of a debtor is the
pledge of his creditor (general security). But in the real world, this is not always the case due
to reasons like insolvency of the debtor, multiplicity of creditors and improper conducts of
the debtor. Suretyship is defined as a contract in which a person binds himself for another
already bound and agree with the creditor to satisfy the obligation if the debtor does not.
Suretyship is thus a means of minimizing the risks that may befall on a creditor on account of
the inability of the debtor to perform his obligations.

24
Art 1916.
25
Article 1918 and 1919
26
Article 1917
4.1 CHARACTERISTICS OF SURETY

A. Form of suretyship; under the section of suretyship the code didn’t provide
requirements of form. But when we consult other provisions of the code we can
observe that suretyship contract has to be made in writing in special document and
signed by the surety and the two witnesses.27 As Suretyship is unilateral contract the
creditor is not required to sign.
B. Suretyship is required to be clear and unequivocal as the obligation of suretyship
is not presumed. If not, Suretyship will be considered invalid as being uncertain.28
C. A Suretyship must have limits; contract of suretyship must specify the maximum
amount of which the surety will be held liable for otherwise it would be invalid. 29
However the cases of interest and legal costs are exceptions to this rule where the
surety may pay in excess of his maximum suretyship.30
D. Suretyship is an obligation that is not more onerous than the primary obligation;
suretyship cannot exceed that which is due by the debtor or be contracted on more
onerous condition. Where such is so, the excess is reduced to the limit of the primary
obligation.31
E. Suretyship is an accessory obligation; Its existence and validity is dependent on the
existence and validity of the main contract. 32 Extinction of principal obligation by any
cause results release of surety. There are, however, exceptions to this general rule
where the primary obligation is voidable as is the case under Arts. 1923/2 and 1926/3.
F. obligation secured may be a future obligation or a conditional one; suretyship
may be undertaken for future or conditional obligations.33

27
See Art 1725 cum 1727.
28
Article 1922/1&2.
29
Article 1922/3.
30
See Articles 1930 and 1931.
31
Article 1924.
32
Articles 1923/1 and 1926/1.
33
Article 1925.
4.2 EFFECTSETYSHIP

4.2.1 EFFECT OF SURETYSHIP BETWEEN THE CREDITOR AND SURETY

Moment of action: proceedings against the debtor shall interrupt the period of limitation for
the surety. Because any action against the debtor shows that the creditor is diligent and has no
intention of not being paid.34

Maturity of debt; the surety may not be demanded to perform his obligation prior to the
maturity of the debt. But where the due date is not provided the surety can put an end to the
suretyship. If there is agreement to notice, the surety should be given such notice.35

Simple suretyship; the surety undertakes to discharge his obligation should the debtor fail to
discharge it. The action of the creditor against the guarantor may only be initiated After the
contractual term set for the execution of the principal debtor’s obligation. However, there is a
defense for the surety, that may require the creditor to first proceed against the debtor prior to
resorting to him.36

Benefit of discussion; has to be required by the guarantor when he is himself sued. If it is not
invoked at the time of the suit, it is deemed waived. Where insolvency of debtor is
established discussion can not be claimed. Surety is also required to adequately describe the
assets of the principal debtor against which the creditor may take actions. In addition, the
surety is duty bound to advance sufficient money to cover the cost of the discussion the assets
to be discussed has to be unencumbered by other creditors and not to be out side the judicial
jurisdiction of the court. In addition, the surety is duty bound to advance sufficient money to
cover the cost of the discussion. The advantage of discussion is the surety will be discharged
partially or totally. Incase of failure of creditor to action and the debtor becomes insolvent,
where the surety indicated assets and covered costs of discussion, he is liable to the extent of
value of assets indicated. 37

Summons to proceed; the surety has the right to demand the creditor to bring an action
against the principal debtor within six weeks where the obligation falls due. The surety shall
be released if the creditor fails to do so.38

34
See Article 1929.
35
See Article 1932 of the civil code.
36
Article 1934.
37
See Articles 1935 ,1936 and 1937.
38
Article 1938.
Tender of payment; Where the debt is due, the surety may require the creditor to accept
performance and/or payment. He shall be released if the creditor does not accept payment or
refuses transfer the securities that would entitle him to proceed against the debtor.39

4.2.2 RELATIONSTHE PRINCIPAL DEBTOR AND THE SURETY

Right to indemnification; Normally a surety is one who pays for another and, as such, he
has the right to get back what he pays from that other. Once the creditor is paid, the surety
becomes the new creditor on the same debtor. This right extends to the principal debt, the
interest and the cost incurred. Moreover, it extends to damages sustained because of debtor’s
fault. Failure by the surety to deliberately raise defenses of the principal debtor may result in
the loss of the surety’s indemnity claim. Such are what are known as traditional defenses of
nullity, payment and extinction of obligations.40

Second payment; Surety’s failure to inform his payment to the creditor to the debtor may
deprive him of his right of indemnification in the event the debtor settles accounts with the
creditor without any prior knowledge of this payment. But the surety may claim from the
creditor what he received from the debtor the simple reason that one cannot be paid twice.41

Benefit of subrogation; The surety steps into the rights of the creditor to the extent of
payment made by him. The benefit may not be contracted away in advance. Creditor is also
bound to hand over all securities and documents of title to the surety under pain of loss of his
right against the latter.42

Rights of surety against the principal debtor before payment; he may demand securities
from the debtor where the debtor has been notified to pay his debt, declared bankrupt,
Surety’s obligation become onerous and Extension of the time given to the debtor by the
creditor without the agreement of the surety.43

4.3 RELATIONS AMONG CO-SURETIES

39
Article 1939.
40
See Articles 1940, 1941 and 1942 of the civil code.
41
Article 1943.
42
Article 1944 and 1945.
43
Article 1948 of the civil code.
The case of counter-surety and the secondary surety

A counter-surety covers the risk of the surety, not liable to the creditor. His responsibility is
to cover the damage caused to the surety on account of failure by the principal debtor to
discharge his obligations. A secondary surety is, however, liable to the creditor should the
surety and the debtor fail to discharge their obligation.44

Plurality of guarantors

Where there are several guarantors to the same debt, each are liable as simple guarantor for
their own share and secondary surety for the others share. So, co-sureties, the shares of co-
sureties are presumed to be equal. And co-surety who paid above his share can claim for
contribution from the other co-sureties.45

4.4 EXTINCTION OF SURETYSHIP

Payment or performance by the principal debtor of his obligation being the most important
ground, A suretyship may come to an end on grounds that are applicable to extinction of
contractual obligations.46 And also Suretyship may be extinguished in case Acceptance by the
creditor immovables from the debtor liberates the surety even if the creditor is evicted
afterwards.47

Conclusion

As stated above in this paper usually contracts are made between single creditor and single
debtor. However, in the real world there are contracts which involve several creditors and
debtors, in this case the contracts are more complex and need more rules and explanation in
addition to the general law of contracts as it was mainly based up on the assumption of single
debtor and single creditor. So, the rules regarding plurality of debtors and creditors provided
under Book lV chapter t of the civil code are of great importance in many aspects.

REFERENCES

BOOKS

44
See Articles 1949 and 1950.
45
Article 1951.
46
See Articles from 1806 to 1856 about extinction of obligations as the extinction of the principal obligation
ceases the existence of suretyship.
47
Article 1927.
Balew Mersha and Kahsay Debesu, Law of contract ll, Teaching Material (justice and legal
system institute, 2009).

Tilahun Teshome, Basic principles of Ethiopian contract law ( 2 nd edn, Addis Ababa
university, Addis Ababa 2002).

LAWS

The Civil Code of Ethiopia, Proclamation No. 165/1960.

JOURNALS

A. I. D. “Contracts: Joint or Joint and Several?” California Law Review, vol. 5, no. 2, 1917,
pp. 163–64. JSTOR, https://doi.org/10.2307/3474253. Accessed 5 Jan. 2023.

Williston, Samuel. “Releases and Covenants Not to Sue Joint, or Joint and Several Debtors.”
Harvard Law Review, vol. 25, no. 3, 1912, pp. 203–22. JSTOR,
https://doi.org/10.2307/1324909. Accessed 4 Jan. 2023.