When the Contractor does not accept Contract Waste,8 the Authority will be forced to take back responsibility for disposal of such Contract Waste. In such a scenario the Authority should have three contractual remedies.
Firstly, the Authority should be relieved of any obligation to pay the Base Payment in respect of Contract Waste that is not accepted.9
Secondly, given that the Authority is exposed to the risk that its haulage and waste disposal costs (potentially including landfill tax and LATS costs) may exceed the withheld Base Payment, a Non Acceptance Deduction should apply. Such a deduction should be sized to cover the costs set out below and to incentivise the Contractor to ensure that it will accept Contract Waste.
Thirdly, given the gravity of the breach, the Contract should provide for a specific default event, which will be triggered if this situation continues for a stipulated period or recurs at regular intervals.
A failure by the Contractor to accept Contract Waste is highly undesirable for both parties. Hence it is in both parties' interests that the Contractor has both short term and long term contingency plans to ensure it is in a position to accept Contract Waste.
___________________________________________________________________
8 The Contract should identify Contingency Delivery Points to be used where the intended delivery point is not capable of receiving the Contract Waste. Therefore, it is anticipated that non acceptance of Contract Waste will be extremely infrequent and that a more likely scenario is that the Contractor accepts the Contract Waste at the Contingency Delivery Point. As long as the Contractor accepts the Contract Waste a Non Acceptance Deduction will not arise.
9 To ensure the Minimum Tonnage provisions do not cut across this principle, the Minimum Tonnage should be reduced by the tonnage of Contract Waste not accepted by the Contractor.