51.1  Amendments to and conditions relating to Third Party Waste and Off-Take Contracts99

51.1.1  No entry into, amendment, waiver or exercise of any right relating to a Third Party Waste Contract or an Off-Take Contract shall have the effect of increasing the Authority's liabilities on termination or on the occurrence of a Relevant Event and/or have a material adverse effect on the Authority's potential share of Third Party Income, unless the Contractor has obtained confirmation from the Authority that the Third Party Waste Contract or Off-Take Contract complies or continues to comply with Clause 51.1.2.

51.1.2  At any time after the date of this Contract, if and whenever the Contractor shall enter into or any Affiliate enters into any Third Party Waste Contracts and/or Off-Take Contracts the Contractor shall ensure or procure as the case may be that any such contract is in writing and:

(a)  is on reasonable arm's length terms including, for the avoidance of doubt, as regards the payment of income to the Contractor or Affiliate of the Contractor;

(b)  contains provisions whereby the breakage costs in circumstances where they could be passed to the Authority are limited to those that a commercially prudent facility operator having regard to standard market practice would accept in an arm's length contract for the relevant contract and further are limited to Direct Losses;100

(c)  (where (the Contractor having used reasonable endeavours to achieve such agreement) agreed by the counter party) includes a right on the part of the Contractor [or the Operating Sub-Contractor as the case may be] to assign, at the request of the Authority, free of charge the Contractor's the rights, title and interest in and to such contract to the Authority (or Authority nominated person) on termination or expiry of this Contact;101 and

(d)  in relation to a Third Party Waste Contract, that the provisions of Clause 51.4 (Third Party Waste Contracts) are complied with.

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99  Authorities ought to consider whether certain significant arrangement (for example SRF) ought to be defined as Sub-Contracts rather than Off-Take so that the more stringent provisions of Clause 81 (Assignment and Sub-Contracting) apply.

100  Authorities must be certain to understand the effect of any margin taken by a subcontractor before Third Party Income is paid to the Contractor (and available for sharing with the Authority). Authorities should consider and explore with Bidders whether some breakage costs could be capped, for example to two years' loss of profit.  

101  Depending on project specific issues, it maybe appropriate to explicitly exclude ad-hoc Third Party Waste Contracts, for example if a contract is for a period less than [x] years or for less than [x tonnes per annum].