Loss Prevention Alerts

Loss Prevention Alert No 42

Deleterious Materials Clauses

This loss prevention alert has been produced by the Loss Prevention Working Group (LPWG) of the AGS.  It highlights issues that the LPWG considers may be of relevance to members.  It is not intended to provide a definitive response to any issues and before taking action members should consider carefully whether they need to seek independent legal advice.

Introduction

Since the 1980s, following a number of high profile product failures, the inclusion of deleterious materials clauses in appointment documents and collateral warranties has become commonplace.  Such clauses give rise to a number of issues that consultants and contractors should be aware of.

1. Types of Deleterious Materials Clauses

Deleterious materials clauses can take many forms but are usually variations of two main types.  The first type lists all the materials that are barred from use.  These lists are usually prepared by lawyers and have grown in length over the years as the same lists are copied from one contract to another.  They are rarely specific to the work which is the subject of a contract.  They are usually prepared with construction, as opposed to ground works in mind and are relevant where there is a design element to the services.  It may therefore be appropriate, in the first instance, for AGS members to argue for the removal of any such clauses from their contracts.

Lists of deleterious materials are redundant in any event because most of the items listed will either be banned from use by specific legislation, or their proper use will be governed by British or European standards and codes of practice which the consultant’s duty to exercise reasonable skill and care already obliges him to comply with.  In addition, such lists may unnecessarily subject materials to a blanket ban when many of them would be entirely acceptable if used appropriately.  This unreasonably restricts the choice of materials available, with cost and/or quality implications.

The second type of deleterious materials clause requires good practice in the selection of construction materials.  In response to industry concern about the growing length of lists of deleterious materials, the BRE was commissioned to investigate the issue and the result was Ove Arup’s Guide to “Good Practice in the Selection of Construction Materials” (published on 1 June 1997, reprinted in 2002 – copies are available to order from the BPF website www.bpf.org.uk/document/order/18971) which encourages a change in emphasis from the exclusion of materials to, as the name suggests, good practice in their selection.  Many deleterious materials clauses now take the form of a generally worded clause which requires the consultant to use reasonable skill and care in the selection of materials, with reference to the Ove Arup guide.  Consultants and contractors should try to agree a provision of this second type of deleterious materials clause in preference to the list type.

2.  In-situ Remediation of Contaminated Land

A list-type deleterious material clause may have the effect of prohibiting in-situ remediation of contaminated land (where remediated soils are re-deposited on site) as 100% clean up of contaminated soils is rarely practicable.  For example, such lists often impose a blanket ban on asbestos, whereas soils containing up to a certain percentage or less of bonded “ACMs” (Asbestos Containing Materials) can often be safely reused on site.  A poorly worded deleterious materials clause would require any contaminated materials to be disposed of once disturbed by site operations, leading to a substantial additional cost.

AGS members should be mindful of the strict contractual effect of this type of deleterious materials clause which means that even if the re-use of contaminated materials were approved by the Environment Agency, for example, their re-use would be a breach of contract.  To allow the re-use of contaminated materials, where this is appropriate, the deleterious materials clause should be qualified (for example by insertion of a phrase such as “unless authorised by the client in writing”) so as to give the client the option to authorise the use of specific materials where the consultant considers it beneficial to do so.

3. Collateral Warranties

As always, if any alterations are made to the wording of the deleterious materials clause in the main contract, the terms of the equivalent clause in any collateral warranties must be altered so as to mirror it.  For further guidance in respect of collateral warranties, please refer to the AGS Guide to Collateral Warranties.

4. Onerous Wordings

If it is not possible or appropriate to exclude the deleterious materials clause, the terms of any such clause in a consultant’s appointment (or collateral warranties) should be amended so that all the obligations therein are made subject to the standard of reasonable skill and care, because absolute obligations (i.e. those which are not qualified in this way) may give rise to liabilities that will not be covered by the consultant’s professional indemnity policy.  Amendment of the deleterious materials clause itself is preferable to reliance upon any separate duty of care clause in the contract specifying the standard of care to be exercised by the consultant as, depending on the specific wording of the clauses, there may be a risk that a separate duty of care clause would not qualify an absolute prohibition on the use of particular materials.

Deleterious materials clauses often include an obligation to ensure that no deleterious materials are used in the project or in the works.  The consultant should not agree to such a provision as it would require him to police materials and parts of the project over which he has no specification or inspection duties.  The obligation on the consultant should instead be to notify the client if, exercising reasonable skill and care in the performance of his duties, he becomes aware of the use of any such materials.

An example of a well-worded deleterious materials clause can be found in the Construction Industry Council (“CIC”) standard form conditions.

This Loss Prevention Alert is, of necessity, generic and is not intended to be a complete or comprehensive statement of the law, nor does it constitute legal or specialist advice.  It is intended only to highlight issues that may be of interest to AGS members.  Neither the writer, nor AGS, assumes any responsibility for any loss which may arise from accessing, or reliance on the material and all liability is disclaimed accordingly.  Professional advice should be taken before applying the content of the Alert to particular circumstances.

This LPA was prepared by Zita Mansi of Berrymans Lace Mawer in February 2010 Information and advice is available through the AGS Legal Helpline.