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LPA 55 – Net Contribution Clauses

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Published in May 2014

Where two or more parties are responsible for part of the same loss, under common law they are jointly and severally liable, meaning that one party may have to pay up to 100% of the loss, despite being only partially liable. This can be avoided by the inclusion of a net contribution clause in a contract or collateral warranty. This LPA provides background and guidance on the use of net contribution clauses.