DELETERIOUS MATERIALS IN CONSTRUCTION CONTRACTS
The inclusion of deleterious or prohibited material clauses in both building contracts and professional appointment documents is widespread within the construction industry. Whilst the form of these clauses will vary from contract to contract, their common purpose is to prohibit the use of unsuitable or dangerous materials in construction projects.
Jonathan Hyndman, Partner at Rosling King LLP, discusses the key legal issues that parties to a construction contract must consider when negotiating provisions as to prohibited materials.
Deleterious materials are those materials which are capable of causing damage or harm to the individual, the environment or to buildings and infrastructure. Whilst some legislative prohibitions are in place to limit or prevent the use of known hazardous materials, it is inevitable that further legislation will need to be enacted as new deleterious materials are discovered. Sometimes, at the point in time when the materials are used, they are not known to be problematic and it is only later that the harmful effects of their use become known, like the fatal use of asbestos in building projects or the use of polyethylene cores in cladding products.
However, a material does not in itself have to be deleterious to warrant its prohibition in a project. Often concerns over a material’s sustainability or reliability may also factor into the decision to exclude its use in a particular project.
It is important therefore, that both developers and consultants and contractors consider the specific circumstances of the individual project when negotiating the scope of the obligation not to specify or use prohibited materials.
There are a number of key legal issues that parties to a construction contract must consider when negotiating provisions as to prohibited materials.
The first important point to consider is the extent of the definition of prohibited materials in the construction contract. There is no standardised industry form and the contracting parties are free to define the scope as broadly or as narrowly as they see fit having due regard to the nature and circumstances of the project.
Options include defining prohibited materials by reference to a detailed list, to specific official standards or by reference to independent publications on the selection and use of materials, the most popular being the “Good Practice in the Selection of Construction Materials”, or a combination of the two. Each of the above will usually be supplemented by an express general obligation to exercise an appropriate standard of care not to specify for use, or use, materials which are generally suspected within the construction industry as being deleterious at either the time the material is specified and/or the time the material is used.
The extent of the obligation is a common point of contention between the parties – the issue here is whether the obligation on the contractor or the consultant not to specify or use deleterious materials should be an absolute obligation or whether the obligation should be caveated by the contractor or consultant exercising reasonable skill and care. Whilst developers will obviously prefer an absolute obligation, this is invariably resisted by contractors and consultants whose professional indemnity insurance may not provide cover in circumstances where the contractor or consultant is found to be in breach of such an absolute obligation.
The second important issue parties must bear in mind, is the point in time as to when a material is deemed to be deleterious. Parties will inevitably differ in opinion on whether the relevant time as to when a material is deemed deleterious extends to both the circumstances at the time the material was specified and the circumstances at the time the material was used in the project. Whilst contractors, who are the party actually using the materials, should be prepared to the relevant time as being the time of use, consultants will be concerned that a significant amount of time can pass between the specification of a material and that material’s actual use in the project.
Again, developers will prefer that the trigger point as to when a material becomes deleterious extends to the point in time when the materials are actually; whilst contractors should be prepared to accept this, consultants particularly those with no ongoing monitoring responsibility, should be very reluctant to agree.
Kindly shared by Rosling King