Joint and several liability in building design and construction contracts
In construction it is not unusual for more than one party to be responsible for a breach of contract. For example, there may be a design fault, a failure to inspect, and poor workmanship, all contributing to a defect in the works. Under common law (the Civil Liability (Contribution) Act 1978) all parties can be jointly and severally liable for the loss or damage that flows from the breach.
This means that the client can pursue the parties either jointly, or individually (severally) for the full amount of the loss. If the client decides to pursue one of the parties for the full amount, then that party may in turn pursue the other parties that contributed to the breach to recover their share of the amount claimed.
In practice, the claimant may decide to pursue the parties jointly, and allow the court to apportion liability between them (NB: This is not a matter of proportionate liability, which does not exist in English law, but is simply the apportionment of the full liability in contribution proceedings). However, 'several' liability can be of benefit to the client, if for example, the contractor becomes insolvent, allowing them to recover all of their losses from the remaining parties.
This can leave consultants and contractors open to very large claims, making them jointly and severally liable with parties that they did not themselves appoint, and whose performance they have little influence over.
The Latham report proposed that joint and several liability should be replaced by 'proportionate liability'. However, this was rejected by the Secretary of State for Trade and Industry Peter Mandelson. His position was endorsed by the British Property Federation (a body that represents the interests of construction clients).
The amount that can be recovered from one party can be limited by a net contribution clause. This restricts liability to the amount for which the party being pursued is responsible. Other amounts must be recovered from the other parties. Net contribution clauses assume that parties responsible for the same loss or damage are all contractually liable to the other party to the contract, and that they have paid the share that they would have been apportioned under common law.
Clients tend to resist net contribution clauses as they transfer the risk of not being able to recover losses onto the client. Whilst this is fair in that the client did appoint all the parties, the client themselves are completely innocent of the breach.
Net contribution clauses have become increasing popular in appointment agreements and collateral warranties. Questions remain however about whether they are always enforceable, for example where one of the parties to whom liability is apportioned is not present in court. However, in 2009, in the Scottish case of Langstane Housing Association v Riverside Construction (Aberdeen) Ltd, the court seemed to accept that this sort of clause was not unusual and that the client could, if they wanted, insure themselves against unrecoverable losses.
[edit] Related articles on Designing Buildings Wiki
- Causes of construction disputes.
- Civil procedure rules.
- Contract claims.
- Contribution and apportionment.
- Defects.
- Design liability.
- Latham report.
- Net contribution clauses.
- Loss and expense.
- Professional indemnity insurance.
- Strict liability.
[edit] External references
- Building: Latham's legacy.
- Joint and Several Liability in the Construction Industry: Is it time for law reform in the UK? (2004).
- Hugh James: Net Contribution Clauses in Construction Contracts - Are they fair and reasonable?
- Civil Liability (Contribution) Act.
Featured articles and news
Professional practical experience for Architects in training
The long process to transform the nature of education and professional practical experience in the Architecture profession following recent reports.
A people-first approach to retrofit
Moving away from the destructive paradigm of fabric-first.
International Electrician Day, 10 June 2025
Celebrating the role of electrical engineers from André-Marie Amperè, today and for the future.
New guide for clients launched at Houses of Parliament
'There has never been a more important time for clients to step up and ...ask the right questions'
The impact of recycled slate tiles
Innovation across the decades.
EPC changes for existing buildings
Changes and their context as the new RdSAP methodology comes into use from 15 June.
Skills England publishes Sector skills needs assessments
Priority areas relating to the built environment highlighted and described in brief.
BSRIA HVAC Market Watch - May 2025 Edition
Heat Pump Market Outlook: Policy, Performance & Refrigerant Trends for 2025–2028.
Committing to EDI in construction with CIOB
Built Environment professional bodies deepen commitment to EDI with two new signatories: CIAT and CICES.
Government Grenfell progress report at a glance
Line by line recomendation overview, with links to more details.
An engaging and lively review of his professional life.
Sustainable heating for listed buildings
A problem that needs to be approached intelligently.
50th Golden anniversary ECA Edmundson apprentice award
Deadline for entries has been extended to Friday 27 June, so don't miss out!
CIAT at the London Festival of Architecture
Designing for Everyone: Breaking Barriers in Inclusive Architecture.
Mixed reactions to apprenticeship and skills reform 2025
A 'welcome shift' for some and a 'backwards step' for others.
Comments
To start a discussion about this article, click 'Add a comment' above and add your thoughts to this discussion page.