A net contribution clause is common in appointments and collateral warranties on construction projects. It was the bane of my life as a lawyer!
Sharing Losses with Contributions
An architect had written his own appointment and included his own version of a net contribution clause, which stated:
Our liability for loss or damage will be limited to the amount that is reasonable for us to pay in relation to the contractual responsibilities of other consultants, contractors and specialists appointed by you.
Essentially, the idea is that the court decides how much of the compensation claimed by the home-owner was caused by the architect and how much was caused by others. It divides the compensation between the project team based on their responsibility. This is a great idea in theory but in practice it can be very complex. In this case, the contractor was now insolvent.
Understand Your Clause
The court noted that the architect took no steps to explain what the clause meant “if indeed, he understood it himself” (paragraph 31). It is highly unprofessional and embarrassing to tell a court that you have no idea what your clause means, so make sure you only use clauses and terms you really understand!
If you have any terms and conditions you want me to review, comment on or revise, then drop me a line.
Case: West & Anor v Ian Finlay & Associates (A Firm)  EWHC 868.