Legal Definitions - pari causa, in

The Latin phrase in pari causa translates to "with equal right" or "on an equal footing." It is used in legal contexts to indicate that multiple parties, claims, or obligations are to be treated equally, without preference or priority for one over the others.

Here are some examples to illustrate this concept:

• Example 1: Bankruptcy Proceedings

  Imagine a small business files for bankruptcy, and after selling off its assets, there isn't enough money to pay all its creditors in full. If the court determines that several unsecured creditors (like suppliers who provided goods on credit, or a bank that gave an unsecured loan) have claims that are in pari causa, it means they all stand on equal ground. Instead of one creditor getting paid entirely while others receive nothing, the remaining funds will be distributed proportionally among these creditors based on the amount they are owed. No single unsecured creditor's claim is considered superior to another's.

• Example 2: Inheritance Without a Will

  Consider a situation where an individual passes away without leaving a will (known as dying intestate). State laws often dictate how their estate should be distributed among their heirs. If the deceased had three children, and the law states that all direct descendants inherit in pari causa, it means each child will receive an equal share of the estate. The law treats each child's right to inherit as equally valid and deserving, ensuring no child is favored over another in the distribution of assets.

• Example 3: Corporate Bond Agreements

  A large corporation might issue different series of bonds to raise capital, such as "Series A Bonds" and "Series B Bonds." The legal agreement for these bonds could specify that both series are in pari causa regarding repayment in the event the company defaults on its debt. This provision ensures that if the company faces financial distress and cannot pay all its bondholders, holders of Series A bonds and Series B bonds will be treated equally. Neither group will have a preferential claim over the other for the available funds, meaning any recovery will be shared proportionally between both series.