Net contribution clauses in UK construction PI

Reviewed by Matthew Bartlett, Director · Last reviewed 2026-06-22

What a net contribution clause is

A net contribution clause (NCC) is a contractual term that limits a defendant's liability to the share of loss that is fairly attributable to that defendant, rather than to the full loss under the joint and several liability default. Without an NCC, a claimant suing one of several defendants can recover the full loss from any one of them under joint and several liability (see joint and several liability), leaving that defendant to pursue contribution from the others under the Civil Liability (Contribution) Act 1978. An NCC reverses the position by capping the defendant's liability at its fair share from the outset.

Typical wording in UK consultant appointments

Two wordings are widely used. The Association for Consultancy and Engineering (ACE) and Royal Institute of British Architects (RIBA) standard forms include NCCs as standard. A common form reads, in summary, that the consultant's liability is limited to the proportion of loss which it would be just and equitable to require the consultant to pay having regard to the extent of the consultant's responsibility, on the assumption that all other parties have provided contractual undertakings of equivalent scope and have paid to the claimant the proportion of loss attributable to them.

How the courts have treated NCCs

English authority on NCCs is limited but generally supportive. In West v Ian Finlay & Associates [2014] EWCA Civ 316 the Court of Appeal upheld an NCC in an architect's appointment against a consumer client, applying the Unfair Contract Terms Act 1977 and the (then-applicable) Unfair Terms in Consumer Contracts Regulations 1999. The court treated the clause as fair in the commercial context and as having been adequately drawn to the client's attention. The case sets the practical test: an NCC in a consultant's appointment should be visibly drafted, explained to the client where the client is a consumer, and consistent with other limitation provisions in the appointment.

The practical effect on a defendant's PI exposure

For a defendant architect, engineer, quantity surveyor or D&B contractor, the NCC determines how much of the claimant's total loss the defendant can be required to pay. Three scenarios illustrate the effect.

Scenario one — no NCC

A £2m loss is found to have been caused 30 per cent by the architect, 50 per cent by the contractor and 20 per cent by a subcontractor who is insolvent. Under joint and several liability the claimant can recover the full £2m from the architect. The architect's PI policy pays £2m (less excess) and the architect's insurer pursues contribution from the contractor's insurer for £1m. The £400,000 attributable to the insolvent subcontractor lands with the architect's policy in practice.

Scenario two — NCC in place

The same facts, but with an effective NCC in the architect's appointment. The architect's liability is capped at 30 per cent of £2m — £600,000. The PI policy pays £600,000. The remaining £1.4m is the claimant's problem to recover from the others.

Scenario three — NCC challenged

The same facts again, but the claimant successfully challenges the NCC under UCTA 1977 on the basis that it was not reasonably brought to the consumer client's attention. The court applies joint and several liability and the architect's policy pays the full £2m. The lesson from West v Ian Finlay is that the clause needs to be visible at the contracting stage, not buried in the small print of the appointment.

PI insurer expectations

Most PI insurers writing construction professionals expect an NCC in the appointment and in any collateral warranty the consultant gives. A warranty that does not include an NCC may be queried at renewal and, in some cases, may not be supported by the policy. Apex reviews the appointment and warranty position at the point of inception and flags clauses that diverge from the PI insurer's expectations.