Civil Engineering Reference
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is being granted rights beyond those otherwise available to it at law, there is sound
commercial sense for the grantor to place limitations on the period during which
such rights may be exercised. Pragmatic considerations may also apply. For instance,
a funder may consider it unnecessary to require a limitation period longer than the
periodforrepaymentoftheloan.Clausesofthistypefalltobeconstruedstrictly,see
Port Jackson Stevedoring Ltd
v.
Salmond & Spraggon (Australia) Pty Ltd ('he New York
Star')
(1980).
13.3.4 Net contribution
The liability of the Consultant for costs under this Agreement shall be limited to
that proportion of the Beneficiary's losses which it would be just and equitable to
requiretheConsultanttopayhavingregardtotheextentoftheConsultant'srespon-
sibilityforthesameandonthebasisthat[listnamesofotherConsultants]shallbe
deemed to have provided contractual undertakings on terms no less onerous than
this Clause [ ] to the Beneficiary in respect of the performance of their services in
connection with the Development and shall be deemed to have paid to the Benefi-
ciarysuchproportionwhichitwouldbejustandequitableforthemtopayhaving
regard to the extent of their responsibility.
The above is commonly known as a 'net contribution' clause and is intended to allevi-
ate what are regarded (at least in the eyes of grantors and their insurers) as the harsh
consequences of joint and several liability. This arises where damage to the benefi-
ciary is caused as a result of a breach of duty by more than one party. If each breach
of duty has materially contributed to the same damage to the beneficiary, the benefi-
ciary is entitled to recover the losses arising from such damage from any or all of the
parties in breach. Thus one sub-contractor may (in the absence of a net contribution
clause) be pursued for the whole of the loss, notwithstanding that other consultants
or contractors may have contributed to that loss.
heclausecreatestheictionthatalltherelevantpartiesaredeemedtohavegranted
collateral warranties (whether, in reality, they have or not) to the beneficiary. To the
extent that they have a responsibility, they are deemed to have already paid their
fairshareoftherecoverablelossordamagesuferedbythebeneiciary.herelevant
grantoristhenletliableonlyforitsshareofthelossonthebasisthattheothergrantors
aredeemedtohavepaidtheircontribution.Careneedstobetakenwhenagreeingthe
terms of a net contribution clause in a consultant collateral warranty in the context
ofadesignandbuildcontract,thatthedesignandbuildcontractorisnotnamedas
one of the parties 'deemed' to have provided similar undertakings and paid the rele-
vant proportion according to its responsibility. Since the design and build contractor's
responsibility is for the whole of the design, its 'deemed' payment will be for the whole
oftheclaimandsotheconsultantwhohasthebeneitofsuchanetcontributionclause
couldunintentionallyendupescapingallliabilityasaconsequence.
he foregoing passage also appeared in the second edition of this topic and was the
subject of adverse criticism by Lord Tyre in the case of
he Royal Bank of Scotland Plc
v. Halcrow Waterman Ltd
(2013). The net contribution clause considered in that case
