CAREFUL CONTRACTS to rely on a net contribution clause in their appointment , the relevant part of the clause read as follows :
“ Our liability for loss or damage will be limited to the amount that it is reasonable for us to pay in relation to the contractual responsibilities of other consultants , contractors and specialists appointed by you .”
The judge was therefore required to consider whether the clause was effective in limiting the architects ’ liability where the main contractor was also liable . In doing so , he considered the clause in the context of what was known by the parties at the time they entered into the appointment and in particular the fact that the architects knew the Wests would themselves procure several aspects of the work , which would not form part of the main building contract .
The judge considered that the net contribution clause was ambiguous ; particularly the words “ other consultants , contractors and specialists appointed by you ” could be interpreted in two ways : A ) Everyone with whom Mr & Mrs West entered into a contract in relation to the project apart from the architect , or
B ) Limited to the various specialist contractors or suppliers with whom Mr & Mrs West were proposing to enter into direct contracts outside the main building contract .
The judge decided that since there was doubt as to the meaning of the net contribution clause , the court was required to give the clause the interpretation that was most favourable to Mr & Mrs West , which was the second meaning above . As a consequence the clause did not limit the architects ’ liability in respect of losses incurred by the main contractor breaching its contract , it merely limited the architects liability in respect of breaches by the specialist contractors appointed by Mr & Mrs West outside the main contract . Mr & Mrs West could recover 100 percent of the damages from the architects , who had no means of obtaining a contribution to those damages from the now insolvent main contractor .
The decision was reversed in the Court of Appeal but it serves to show how careful those operating in construction must be when agreeing the wording of net contribution clauses .
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