Do You Need to Consider a Net Contribution Clause When Negotiating Your Contract?

In a recent case, a Scottish judge struck down a consultant’s net contribution clause. Despite a flurry of complaints, the judge ruled that a net contribution clause was not unreasonable under the Unfair Contract Terms Act 1977. Most consulting firms and contractors, however, want this clause to be in most contracts. This article will discuss whether you need to consider a net contribution clause when negotiating your contract.

Net Contribution Clause

The first thing you need to know about a net contribution clause is that it is a limitation clause. If your client has suffered a loss because of a consultant’s negligence, you are 100% liable for that loss.

This means that a contract containing a net contribution clause is unlikely to limit your liability. This provision is a vital part of your contract This website. If it’s not included, you could be held liable for it.

A net contribution clause applies when two parties are jointly liable for the damages. In this scenario, if a consultant is found to be at fault for the loss, the client may choose to sue both of them. If one of them is successful, the other will be 100% liable for the damage. In such a case, the consultant can also seek contributions from other consultants, but this option isn’t very useful if the consultants are insolvent.

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