Net contribution clauses in construction contracts

The following Construction practice note provides comprehensive and up to date legal information covering:

  • Net contribution clauses in construction contracts
  • What is a net contribution clause?
  • Why have a net contribution clause in an appointment or collateral warranty?
  • Resistance to net contribution clauses
  • Case law
  • Effectiveness and enforceability
  • Apportionment
  • Net contribution clauses in standard forms

Net contribution clauses in construction contracts

This Practice Note examines net contribution clauses (sometimes known as proportional or proportionate liability clauses) and their inclusion in collateral warranties and consultants’ appointments. It looks at why consultants, some contractors, and their professional indemnity insurers frequently request that a net contribution clause be included in collateral warranties and appointments and why employers are reluctant to accept them. It also considers the ability to claim a contribution from others under the Civil Liability (Contribution) Act 1978 in the absence of a net contribution clause and looks at case law regarding the effectiveness and enforceability of net contribution clauses.

What is a net contribution clause?

In modern construction projects, there are often numerous parties who are engaged to input into the design. In the event that the design is subsequently found to be defective, this can create difficulties in attributing responsibility for defects and to recover the resulting losses. Losses suffered by an innocent party may be attributable to two or more parties who contributed to defective design, or the defect (and thus the losses) may be partly attributable to a consultant’s defective design but also partly to the contractor’s defective workmanship.

In such a scenario where two or more parties have contributed to the losses suffered, the claimant can choose who, of those who contributed to the damage, it wants to bring

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