Legal Definitions - in suo ordine

In suo ordine is a Latin legal phrase meaning "in its proper order" or "in its turn." It refers to a legal principle that dictates a specific sequence or priority must be followed before certain obligations or liabilities can be enforced against a secondary party. Essentially, it means that one party's responsibility only arises after another, primary party's responsibility has been addressed or exhausted.

• Example 1: Co-signer on a Loan

  Imagine a situation where a parent co-signs a car loan for their adult child. The loan agreement specifies that the bank must first attempt to collect payments from the child, who is the primary borrower. Only if the child defaults and the bank's efforts to recover the debt from the child are unsuccessful can the bank then pursue the parent, the co-signer, for the outstanding amount.

  This illustrates in suo ordine because the parent's liability (the secondary party) only becomes active after the child's liability (the primary party) has been addressed and proven insufficient. The bank must proceed "in its proper order" by first seeking payment from the primary borrower.

• Example 2: Corporate Guarantees

  Consider a large corporation that has several subsidiary companies. When the parent company provides a financial guarantee for a loan taken out by one of its subsidiaries, the terms often state that the lender must first exhaust all avenues to recover the debt from the subsidiary itself. This includes liquidating the subsidiary's assets if necessary. Only after these primary efforts fail can the lender then turn to the parent company to fulfill the guarantee.

  Here, in suo ordine applies because the parent company's obligation to pay (as the guarantor) is secondary and conditional. The lender must first pursue the subsidiary "in its order" before the parent company's guarantee becomes enforceable.

• Example 3: Multi-Layered Insurance Policies

  In some complex insurance arrangements, such as those for large construction projects, there might be multiple layers of insurance policies. A primary policy covers the initial amount of potential damages, and an excess or secondary policy kicks in only after the primary policy's limits have been reached. If an accident occurs, the primary insurer is responsible for paying claims up to its maximum coverage. Only once that limit is exhausted does the excess insurer become liable for any remaining damages.

  This demonstrates in suo ordine because the excess insurer's responsibility is activated "in its turn," after the primary insurer has fulfilled its obligation to the maximum extent of its policy. The sequence of liability is clearly defined and must be followed.