A recent decision of the High Court in Scotland has provided overdue judicial guidance on a controversial clause often used in construction contracts. The normal legal position where one or more people contribute to the same loss is that the innocent party can sue any one of them for the whole amount – a concept known as joint and several liability – leaving the defendant which has paid out to seek contributions from its fellow wrongdoers.
Net contribution clauses change this rule by limiting the damages payable by each wrongdoer to that proportion of the loss for which it is directly responsible. The clauses are controversial since they require the innocent party – for example, a health trust employing a team of designers and a contractor – to give up rights which the law says we all enjoy as a matter of right.
Because of this, there had always been a doubt as to whether or not net contribution clauses would be upheld. This case, Langstane v Riverside Construction, removes that doubt, at least so far as Scottish law is concerned. The court saw no reason why they shouldn’t be upheld. This decision is of persuasive effect rather than binding on contracts governed by English law.