Contribution


Also found in: Dictionary, Thesaurus, Medical, Financial, Encyclopedia, Wikipedia.

Contribution

In maritime law, where the property of one of several parties with interests in a vessel and cargo has been voluntarily sacrificed for the common safety of the vessel—as by casting goods overboard to lighten the vessel—such loss must be made up by the contribution of the others, which is labeled "general average." In Civil Law, a partition by which the creditors of an insolvent debtor divide among themselves the proceeds of the debtor's property in proportion to the amount of their respective credits. The right of a defendant who has paid an entire debt, or common liability, to recoup a proportionate share of the payment from another defendant who is equally responsible for the payment of that debt or liability.

Certain principles apply when contribution is sought in contractual situations. Where the parties are severally (individually) liable for a specific portion of a debt, one person who pays in excess of his or her proportionate share has no legal right to contribution from the others for the excess. Where the parties are jointly liable (as a unit) for the payment of a debt, a party who pays in excess of his or her ratable share can seek contribution from the others for the amount of his or her overpayment. If the parties are jointly and severally liable for a debt, both as a unit and as individuals, any party who pays in excess of his or her proportionate share can seek contribution.

To entitle a person to contribution, the payment of the debt or liability must arise from a legal obligation to pay. The payment of the entire debt or liability is unnecessary, but the payment must have exceeded the share of the person seeking contribution.

A plaintiff who procures a judgment (a final court decision that resolves a controversy and determines the rights and obligations of the parties) against two or more joint tortfeasors (those who together commit a civil wrong) can collect that judgment from all, any one, or less than all of them. The English and early U.S. Common Law held that if one such defendant did in fact pay less than a proportionate share of the judgment, that defendant should reimburse the other defendant(s) who paid more, except in cases of intentional torts or acts of the defendant that did not justify the court's assistance. During the past century, however, the majority of jurisdictions in this country expanded this exception and denied all common-law contribution among joint tortfeasors regardless of the basis of liability, including cases of Negligence and Strict Liability.

Statutes—some of which are patterned after the Uniform Contribution Among Tortfeasors Act—supersede the common law in more than half the states and provide for contribution in some form. Several jurisdictions continue to permit contribution by judicial decision, never having adhered to the majority rule disallowing it, although some states still generally deny contribution.

Of those states allowing contribution, the majority allocate the damages among the defendants in proportion to their relative fault. In the remainder, which includes almost all those without a statute, the damages are divided equally. Certain defendants, such as an employer and his or her employee, are aggregated and assessed a single share.

Contribution is still generally but not universally denied to willful tortfeasors. If the plaintiff has sued and obtained a judgment against fewer than all joint tortfeasors, some statutes prohibit contribution from one against whom there is no judgment. Other statutes permit contribution in this instance, subject to satisfactory proof of liability.

It is generally held, unless there is a statute requiring otherwise, that a tortfeasor who settles prior to trial—and therefore against whom there is no judgment—can nevertheless obtain contribution from other joint tortfeasors, but must prove the liability to the plaintiff of the other tortfeasors, the amount of the damages, and the reasonableness of the prior settlement.

In an action for contribution, the party seeking it must ordinarily establish that the tortfeasor from whom contribution is sought was subject to liability to the injured plaintiff, if no judgment has been obtained determining that liability. Certain defenses usually bar contribution, such as automobile Guest Statutes and the Immunity granted to employers under the Workers' Compensation acts, which only the defendant in the action for contribution could have asserted against the injured person. There is some authority to the contrary, however.

Cross-references

Joint and Several Liability.

contribution

n. 1) donation to a charity or political campaign. 2) the sharing of a loss by each of several persons who may have been jointly responsible for injury to a third party, who entered into a business which lost money, or who owe a debt jointly. Quite often this arises when one responsible party pays more than his share and then demands contribution from the others in proportion to their share of the obligation. Example: three partners own equal shares in a building from which a cornice falls and injures Bobby Hardhat. One partner pays the demand of $9,000 for Hardhat's injury; he is entitled to a contribution of $3,000 from each of his partners.

CONTRIBUTION, civil law. A partition by which the creditors of an insolvent debtor divide, among themselves the proceeds of his property, proportionably to the amount of their respective credits. Civ. Code of Lo. art. 2522, n. 10. It is a division pro rata. Merl. Rep. h.t.

CONTRIBUTION, contracts. When two or more persons jointly owe a debt, and one is compelled to pay the whole of it, the others are bound to indemnify him for the payment of their shares; this indemnity is called a contribution. 1 Bibb. R. 562; 4 John. Ch. R. 545; 4 Bouv. Inst. n. 3935-6.
     2. The subject will be considered by taking a view, 1. Of right of the creditors where there are several debtors. 2. Of the right of the debtor who pays the whole debt. 3. Of the liabilities of the debtors who are liable to contribution. 4. Of the liability of land owned by several owners, when it is subject to a charge. 5. Of the liability of owners of goods in a vessel, when part is thrown overboard to save the rest.
     3.-1. The creditor of several debtors, jointly bound to him, has a right to compel the payment by any he may choose; but he cannot sue them severally, unless they are severally bound.
     4.-2. When one of several debtors pays a debt, the creditor is bound in conscience, if not by contract, to give to the party paying the debt all his remedies against the other debtors. 1 Cox, R. 318 S. C. 2 B. & P. 270 2 Swanst. R. 189, 192; 3 Bligh, 59 14 Ves. 160; 1 Ves. 31 12 Wheat. 596 1 Hill, Ch. R. 844, 351 1 Term. St. It. 512, 517; 1 Ala. R. 23, 28; 11 Ohio It. 444, 449 8 Misso. It. 169, 175.
     5.- 3. A debtor liable to contribution is not responsible upon a contract, but is so in equity. But courts of common law, in modern times, have assumed a jurisdiction to compel contribution among sureties, in the absence of any positive contract, on the ground of an implied assumpsit, and each of the sureties may be sued for his respective quota or proportion. White's L. C. in Eq. 66. The remedy in equity is, however, much more effective. For example, a surety who pays an entire debt, can, in equity, compel the solvent sureties to contribute towards the payment of the entire debt. 1 Chan. R. 34 1 Chan. Cas. 246; Finch, R. 15, 203. But at law he can recover no more than an aliquot part of the whole, regard being had to the number of co-sureties. 2 B. & P. 268; 6 B. & C. 697.
     6.-4. When land is charged with the payment of a legacy, or an estate with the portion of a posthumous child, every part is bound to make contribution. 3 Munf. R. 29; 1 John. Ch. R. 425 2 Bouv. Inst. n. 1301.
     7.-5. Contribution takes place in another case; namely, when in order to save a ship or cargo, a part of the goods are cast overboard, the ship and cargo are liable to contribution in order to indemnify the owner of the goods lost, except his just proportion. No contribution can be claimed between joint wrong doers. Bac. Ab. Assumpsit A; Vide 3 Com. Dig. 143; 8 Com. Dig. 373; 5 Vin. Ab. 561; 2 Supp. to Ves. jr. 159, 343; 3 Ves. jr. 64; Wesk. Ins. 130; 10 S. & R. 75; 5 B. & Ad. 936; S. C. 3 N. & M. 258; Rast. Entr. 161; 2 Ventr. 348; 2 Vern. 592; 2 B. & P. 268; 3 B. & P 235; 5 East, 225; 1 J. P. Smith 411 5 Esp. 194; 3 Campb. 480; Gow, N. P. C. 13; 2 A. & E. 57; 4 N. & M. 64; 6 N. & M. 494.

References in periodicals archive ?
If there are large disparities in contribution rates between HCEs and non-highly compensated employees (NHCEs), a plan may not pass its' actual contribution percentage (ACP) Test, either resulting in additional contributions needing to be made to NHCEs or HCEs receiving a return of some of their contributions.
To encourage employee savings, the employer will typically match a portion or all of the employees' contributions. Although employee contributions are not deductible, employer-matching contributions are typically excludable from the employee's taxable income.
While a traditional IRA may be converted into a Roth IRA, there is no provision for converting a pretax elective contribution account under a 401(k) to a designated Roth account.
National Insurance contributions are payments which most employees make towards the National Health Service and to enable the to get entitlement to some social security benefits.
As of 2006, total annual contributions to a Solo 401(k) can be up to $44,000 or 100% of compensation.
* Employee automatic-enrollment contribution percentages.
In addition to determining the impact of a Roth IRA contribution on the Retirement Savings Contributions Credit, there are several factors to consider before advising a taxpayer to use a Roth IRA as a vehicle for current-year savings.
To satisfy the automatic enrollment safe harbor, elective contributions must fall within a range from a minimum contribution of 3 percent up to 10 percent of compensation depending on, and increasing with, the employee's length of participation.
Individuals, including partnerships, LLC's, S-corporations and trusts that pass tax benefits through to individual shareholders or beneficiaries, are limited to an annual charitable contribution deduction of 50% of the adjusted gross income prior to the charitable contribution deduction in which the non-cash component (i.e., the conservation easement) cannot exceed 30% of the adjusted gross income.
They created new programs to take advantage of BCRA's higher party contribution limits, whereby an individual donor can give up to $25,000 to each party committee subject to an aggregate limit of $57,500 in party contributions every two years.
From the point of view of the later development of modern science, perhaps the most important scientific contribution of Ibn Sina, outside the field of medicine, was to dynamics and the study of projectile motion.
The transfer price should be equal to the variable costs of the goods or services, plus the contribution margin per unit that is lost.

Full browser ?