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Court of Appeal considers net contribution clauses

The recent Court of Appeal decision of West and Another v Ian Finlay & Associates [2014] EWCA Civ 316 overturned the first-instance decision and found that a net contribution clause contained in an architect’s appointment with domestic clients (the Wests) relating to a domestic property was effective. In doing so, the Court of Appeal considered some interesting points on net contribution clauses.

The dispute in this case arose in relation to the renovation and improvement works to a property owned by Mr and Mrs West. The project ran into difficulty and extensive damp issues arose, among other problems. The Wests blamed both the contractor, Maurice Armour (Contracts) (Armour), and the architect, Ian Finlay & Associates (IFA). Armour subsequently became insolvent so a claim against it could not be pursued. The Wests brought a claim against IFA. One of the issues the Court of Appeal had to consider was the interpretation of the net contribution clause contained in the agreement between the Wests and IFA. The clause provided:

‘Our [IFA’s] 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 the other consultants, contractors and specialists appointed by you.’ …

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