This clause decides who pays if the contract causes environmental damage—like pollution or contamination. It matters because environmental cleanup can cost millions of pounds or dollars, and without clear rules, you might be stuck paying for damage you didn't directly cause. In the UK and US, environmental laws often make the "responsible party" liable regardless of fault, meaning you could be legally responsible even if you weren't negligent. This clause lets you shift that risk to the other party or limit your exposure. For example, if you're buying a factory and toxic waste is discovered, this clause determines whether you or the seller pays for cleanup.
Push to exclude environmental liability entirely if you're the buyer, or at minimum require the seller to warrant that the property/assets are currently compliant with all environmental laws. If you must accept some liability, cap it at a specific amount (like £500,000) and require the other party to indemnify you—meaning they reimburse you—for any environmental issues that existed before you took over. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause decides who pays if the contract causes environmental damage—like pollution or contamination.
Why should I care about this clause?
It matters because environmental cleanup can cost millions of pounds or dollars, and without clear rules, you might be stuck paying for damage you didn't directly cause.
What are my options?
In the UK and US, environmental laws often make the "responsible party" liable regardless of fault, meaning you could be legally responsible even if you weren't negligent.
How does this affect small businesses?
This clause lets you shift that risk to the other party or limit your exposure.