Net contribution clauses are a common and often heavily negotiated feature of consultant appointments and collateral warranties. As with most contract clauses, they come in different shapes and sizes and can be extremely complex, but the essence is this: where a consultant and other defaulting parties have all contributed to a loss suffered by the employer, the consultant’s liability is limited by reference to its “share” of the blame.  

It alters the position at common law that allows the employer to recover all of its losses from any of the defaulting parties that contributed to the loss.  Thus, under the common law a consultant who was 20% to blame for the loss may end up picking up the tab for 100% of that loss. While the unfortunate consultant in this example would have a separate statutory right under the Civil Liability (Contribution) Act to recover the remaining 80% from the other defaulting parties, this will be of little comfort if those other parties have become insolvent. The common law may seem unfair, but it seeks to protect the “innocent” employer from the risk that the other “guilty” defaulting parties become insolvent, albeit at the expense of the “guilty” party against which it makes the claim.

…