Category: Construction contracts and liability · Reviewed by the Apex broking team · Last reviewed 2026-08-20
Category: Construction contracts and liability Also known as: NCC, net contribution provision Related concepts: joint names insurance, contractors all risks insurance
Under the general law, where two or more parties are each liable for the same damage, their liability is joint and several: the claimant may recover the whole loss from any one of them, leaving that party to seek contribution from the others under the Civil Liability (Contribution) Act 1978. A net contribution clause reverses this as a matter of contract. It provides that the party’s liability is limited to the sum it would be just and equitable for it to pay having regard to its responsibility, on the assumption that the other named or described parties have paid their proper shares.
Net contribution clauses appear most often in professional appointments for architects, engineers and other construction consultants, and in the collateral warranties given to funders, purchasers and tenants. On a typical project a defect may be attributable partly to design and partly to workmanship. Without a net contribution clause, an employer can sue the consultant alone — particularly attractive if the contractor is insolvent — and recover in full, leaving the consultant to chase a worthless contribution claim. With the clause, the consultant pays only its share, and the risk of another party’s insolvency sits with the employer or beneficiary rather than with the remaining defendants.
The clause does not change who was at fault; it changes who bears the insolvency and enforcement risk of the other wrongdoers. For the party giving it, and for its professional indemnity insurers, it is a substantial protection: exposure is capped at the party’s own apportioned responsibility. For the beneficiary it is a corresponding dilution of the warranty or appointment, which is why funders and purchasers frequently strike the clause out or resist it in negotiation. Whether a clause is effective depends on its drafting; the courts have upheld clearly worded net contribution clauses, including in consumer-facing appointments, so beneficiaries should assume a well-drafted clause will bite.
Points that decide how much protection the clause really gives include which other parties are within its scope (all consultants and the contractor, or a narrower list), whether the assumption is that others have paid or merely that they are liable, and how the clause interacts with any overall liability cap. From an insurance perspective, professional indemnity insurers generally welcome net contribution clauses in the documents their insured signs, and some ask about them at proposal stage; agreeing onerous warranties without them is one of the ways a construction professional’s risk profile quietly worsens.
On a project where several parties touch the same work, the difference between joint and several liability and net contribution can be the difference between paying a fifth of a loss and paying all of it. Anyone signing or accepting appointments and warranties should know whether the clause is present, what it covers, and what its absence means for their insurance programme.
This entry is part of the Apex Insurance Wiki. Last reviewed 2026-08-20. Next review: 2027-02-20.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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