Be aware! Be very aware!!  “Net Contribution Clauses”

One way of managing this risk is to limit or exclude liability in contractual documentation.

You can now do this by way of contractual caps or “net contribution clauses” (NCCs), also  know known as Proportionate Liability Clauses (PLC’S). But how effective are they in reducing exposure to negligence or damage claims?

By way of example

If a consumer employs professionals, bricklayers or designers by way of contractual arrangements, you are the employer of services yet to be rendered. If that contractor messed up, breach the terms of the contract or generally did not provide what they said or implied they would.

Can you sue and would you receive fair and reasonable damages?

You now could be at risk.

In legal claims there are two elements “Liability and damages”.

For instance you can succeed on liability but fail in damages. In short there seems little point going to court, so as to prove you are right only to win nothing. In reality you will gain (whilst in the litigation process) many stresses and if and when you do win you get nothing (if you lose equally you get nothing).

Companies now see an opportunity in respect to damages and are putting into “the small print” a term which limits their exposure to any damage award.

Most solicitors may now raise an eyebrow, as historically the insertion of such a term could be deemed unfair.

Recently a case was placed before the courts and then appealed to the Court of Appeal in London.

The case revolved around a construction contract/project valued at £300,000. The work centred on the ground works elements of a construction.

The couple who owned the property found that there were considerable damp problems after the work had been completed.

The work was done by a building firm under the supervision of an architectural firm who the couple employed.

The consumer claim was litigated against the architects only, mainly because the builder was by then broke. The architects relied on an NCC to limit their liability and the argument over its effectiveness went for determination to the Court of Appeal. Essentially, the owners argued that consumer legislation prevented the limitation of their rights in the way the NCC purported to do.
The Court ruled that the wording of the NCC was “clear and enforceable”. It caused no imbalance between the respective rights of the couple who commissioned the work (and who had made the ultimate decision about which builder to use) and those who carried it out.

Furthermore, other measures, such as the use of a performance bond, could have been put in place to limit the owners’ risk.

The contents of this article are intended for general information purposes only.

Beware of Contract Terms

Having this in mind and knowing the complex nature of timeshare contracts and cluster companies, the TCA believe that Laws should be introduced so that no timeshare or long term holiday product can be binding unless and until a consumer has received legal assistance from their own legal advisors as to the rewards and burdens of a contract.

This would ensure that the choice to enter into a contractual arrangement was fair, explained and enforceable.

For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk