NAEA

National Association of Estate Agents

Negligence

A civil wrong whereby a person breaches a duty of care owed to another causing them Loss. Every man has a common law duty of care to his neighbour. If a person fails to exercise reasonable skill and care to ensure their actions do not cause their neighbour loss and provided the loss is foreseeable and proximate, they can be held by the injured party to be negligent. Professional Negligence imposes a higher degree of reasonableness as the professional is holding himself out to be an expert. Thus he must exercise the reasonable skill
and care to be expected from a professional in his particular field and of his particular qualifications and experience.

 Net contribution clause

A net contribution clause may also be known as a proportional liability clause. Such a clause is a common feature in many standard form contracts used in the construction and engineering industry, such as the appointment of an architect or an engineer.

In the context of construction, if there is a problem with a construction project resulting in a loss, this is often the fault of more than one of the parties designing or constructing the project. The party suffering the loss can sue any of the parties at fault and each will be 100% liable for damages, whatever their share of the blame.

A net contribution clause states that where two or more parties involved in a construction project are each jointly liable for the same loss or damage, the liability of each party will be limited to the amount which would be apportioned to that party by a court. The net contribution clause may include assumptions, which will affect this apportionment.

Without a net contribution clause, if an architect and a contractor are each liable to a developer for the same defective work, the developer could recover 100% of its damages from the architect, despite the joint liability of the contractor. The architect could then seek to recover a share of those damages from the contractor under the Civil Liability (Contribution) Act 1978. The effect of a net contribution clause is that if the court found the architect 60% liable for those damages and the contractor 40% liable, the developer can recover only 60% of its damages from the architect. The developer could bring a claim against the contractor to recover the remaining 40% of its damages.

With a net contribution clause, if the contractor is insolvent when the developer brings a claim against an architect who is 60% liable, the developer may in practice recover only 60% of its damages in total. Without a net contribution clause, the architect could be liable for 100% of the damages.

The professional indemnity insurers of architects and other professional consultants usually request that a net contribution clause is included in a collateral warranty.                         

Notification

The disclosure to an insurer that a circumstance has arisen which by virtue of the policy wording must be disclosed

No Claims Declaration

A declaration stating that you are not aware of any further claims being made or any circumstances arising that could give rise to a claim since the last declaration made to an insurer, for example a proposal form.

Non-disclosure

Failure by the Insured or his Broker to disclose a Material Fact or circumstance to the Underwriter before acceptance of the Risk.