Model clause

Circular Economy Product Design Obligation

Alex's Clause

Embeds ‘Repair, Reuse and Recycle’ concepts in procurement / supply agreements for the benefit of the client, end consumer and environment.

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Why use this?

This clause will encourage suppliers to use recyclable/reusable materials in products, and to consider the entire lifecycle of the product (including end of life) from the design stage.

How it promotes a net zero future

This will ultimately help to reduce the amount of waste going to landfill, and reduce the reliance on natural resources thereby reducing the Carbon Footprint of the products.

One of the UN's Sustainable Development Goals is that of ‘responsible consumption and production’. A clause obliging suppliers to consider circular design will help to meet this goal. This clause will also bridge the gap between the aspirations for a circular economy and legislative initiatives by the EU and national governments being introduced.

Disclaimer - please read

The clauses on this website (and published in our Climate Contract Playbook) have been prepared in good faith on a pro bono basis and are free to download and use. The clauses have been drafted and edited by a variety of lawyers and, as such, the approaches to drafting may not conform to any particular drafting norms. We acknowledge this as a consequence of the collaborative drafting process.

The clauses on this website (and published in our Climate Contract Playbook) are provided on an ‘as is’ basis and without any representation or warranty as to accuracy or that the clauses will achieve the relevant climate goal or any other outcome.

This website (and the Climate Contract Playbook) does not comprise, constitute or provide personal, specific or individual recommendations or advice of any kind, and does not contain legal or financial advice. The clauses are precedents for legal professionals to use, amend and negotiate using their professional skill and judgement and at their own risk.

While care has been taken in the drafting of these clauses, neither The Chancery Lane Project nor any of its contributors owe a duty of care to any party in relation to their preparation and do not accept any liability for any errors or omissions, nor for any loss incurred by any person relying on or using these clauses or any other person. Users should use their own professional judgement in the application of these clauses to any particular circumstance or jurisdiction or seek independent legal advice.

At present, all the clauses are based on the laws of England and Wales. We encourage the conversion of these precedent clauses for use in other jurisdictions.

The clause

Additional Recitals

(A) The Parties hereby acknowledge that the primary consideration for the design and manufacture of the Product is to ensure, as far as possible, that the Product can be reused, repaired and/or recycled at the end of its life.

Additional Definitions 

Carbon Dioxide Equivalent (CO2e or CO2eq) means the standard metric measure used by in industry to compare the emissions from various Greenhouse Gases (GHGs) on the basis of their global warming potential over a specified timescale in order to express a Carbon Footprint that consists of different GHGs as a single number;

Carbon Footprint means the amount in tonnes of Carbon Dioxide Equivalent of Greenhouse Gas Emissions that will be released into the atmosphere as a result of the [manufacture/supply/use] of the Product;

Circular Design Requirements means the requirements at clause 1.2; 

Circular Manufacturing Requirements means the requirements at clause 2.3;

Climate Professional means an appropriately qualified [environmental, sustainability consultant/ net zero consultant] who has the fundamental skills and experience to diligently, competently and professionally prepare the Carbon Footprint report as required by clause 2.3.4;

Design IP means the Product, the Final Design, any previous drafts or versions of the Final Design and any other documents, materials or information created by the Manufacturer in connection with its obligations under clause 1;

End of Life Product means a Product which is irreparably faulty and can no longer be used by the end customer, and/or has performed its intended purpose and/or is no longer desired by the end customer;

Final Design means the final design of the Product, as determined by clause 1.4;

Greenhouse Gases (GHGs) means gases that contribute to or accelerate the greenhouse effect by absorbing infrared radiation, including but not limited to: carbon dioxide, methane, nitrous oxide, sulphur hexafluoride, hydrofluorocarbons, perfluorocarbons and chlorofluorocarbons;

Manufacturer is [X], being the person who designs and manufactures the Product in accordance with the Final Design for the Client;

Product means the [insert description of product]; and

Specification means the description and proposed use of the Product, including the intended customer base of the Product and any specific requirements of the Product, as outlined in Schedule [X].

1 Design obligations

1.1 The Manufacturer will prepare a design of the Product to deliver the Specification for the Client by [insert timings]. In creating the design for the Product, the Manufacturer shall use all reasonable endeavours to satisfy the Circular Design Requirements.

1.2 The Circular Design Requirements are:

1.2.1 the Manufacturer shall minimise the volume of [natural and limited] resources that will be needed to manufacture the Product;

1.2.2 the Manufacturer shall maximise the volume of materials derived from recycled sources used to manufacture the Product;

1.2.3 the Product is not coated with, does not contain or is not otherwise treated with chemicals or treatments which prevent the Product from being recycled when it becomes an End of Life Product;

1.2.4 the Product shall not contain any micro-plastics (or plastics which are capable of degrading to form microplastics), glitter, [insert other harmful/banned materials], and/or any other harmful materials made known to the Manufacturer by the Client and specified in Schedule [X];

1.2.5 the Manufacturer must affix any branding of the Client onto the Product in such manner that the Client’s branding can be easily removed, so that the Product can be repaired, refurbished, reused or recycled;

1.2.6 the Product shall contain a minimum [insert number]% constituent components and constituent parts that can be easily, and at economically viable cost, disassembled, removed, refurbished, replaced and/or repaired; and

1.2.7 the Manufacturer shall document any know how and learnings which it creates during the design process of the Product, and the rights in such documents, know how and learnings shall be owned by the Client pursuant to clause 1.5.

1.3 To the extent that the Manufacturer determines that it cannot fulfil the Circular Design Requirements because either the Circular Design Requirements jeopardise the Specification or the Specification prevents the Circular Design Requirements from being fulfilled, the Manufacturer shall promptly make this known to the Client and identify which particular Circular Design Requirements are an issue. The Client shall then decide whether to:

1.3.1 proceed with the Specification, acknowledging that those identified Circular Design Requirements will not be fulfilled; or

1.3.2 amend the Specification, and request that the Designer attempts again to fulfil all of the Circular Design Requirements against the amended specification.

This process shall be repeated until the Final Design is achieved in accordance with clause 1.4.

1.4 The Final Design of the Product shall be that design which either:

1.4.1 satisfies the Circular Design Requirements and the Specification; or

1.4.2 does not satisfy all of the Circular Design Requirements but which the Client has approved pursuant to clause 1.3.1 and satisfies the Specification.

1.5 All rights anywhere in the world (including all intellectual property rights, copyright, design rights and know-how rights) in the Design IP shall immediately vest in the Client and the Manufacturer shall promptly provide to the Client all copies in its possession of the Design IP. To the extent that such rights in the Design IP do not vest in the Client, the Manufacturer hereby assigns such rights to the Client with full title guarantee.

1.6 The Manufacturer shall, and shall use all reasonable endeavours to, procure that any third party shall promptly execute and deliver such documents and perform such acts as may be required to assist the Client in registering any Design IP.

2 Manufacturing obligations

2.1 The Client hereby grants to the Manufacturer a non-exclusive, royalty free, non-transferable, non-assignable [worldwide] licence to the use the intellectual property rights in the Final Design to perform its obligations under this clause 2.

2.2 The Manufacturer shall manufacture the Product in accordance with the Final Design. In manufacturing the Product, the Manufacturer shall satisfy the Circular Manufacturing Requirements.

2.3 The Circular Manufacturing Requirements are:

2.3.1 the Manufacturer keeps accurate records of the origin and volume of raw materials which it uses, and will make these records available to the Client on request;

2.3.2 the Manufacturer can accurately demonstrate and trace the origin and journey of the raw materials which it uses to manufacture the Product through the supply chain of such raw materials, and will provide this demonstration to the Client on request;

2.3.3 the Manufacturer shall take steps to minimise the volume of [natural and limited] resources which it requires to manufacture the Product and the volume of GHGs emitted during its manufacture of the Product;

2.3.4 the Manufacturer shall provide the Client with a report prepared by a Climate Professional to [internationally recognised standards to measure, manage and demonstrate carbon credentials/the GHG Protocol Product Life Cycle/the BSI PAS 2050:2011] detailing the Carbon Footprint of the Product and confirming the impact that adherence to these Circular Manufacturing Requirements have made on the Carbon Footprint of the Product;

2.3.5 the Manufacturer shall take steps to maximise the volume of materials derived from recycled sources which it requires to manufacture the Product;

2.3.6 the Manufacturer shall take steps to minimise the loss through disposal or destruction of raw materials during the manufacturing of the Product;

2.3.7 only after taking the steps required by clause 2.3.5 above, the Manufacturer shall take steps to first recycle or reuse any waste materials created from the manufacturing of the Product and, only having done so, proceed with any other form of disposal;

2.3.8 the Client has the right to inspect the Manufacturer’s premises and records to ensure that the Manufacturer is complying with the Circular Manufacturing Requirements and to verify the amount of any bonus payable to the Manufacturer pursuant to clause 2.6;

2.3.9 the Manufacturer shall issue a declaration to the Client confirming that the Circular Manufacturing Requirements have been fulfilled for the Product; and

2.3.10 the Manufacturer shall document, and explain to the Client, any know how and learnings which it creates during the manufacturing of the Product, and the rights in such documents, know how and learnings shall be owned by the Client.

2.4 Breach by the Manufacturer of clause 2.3 shall be a material breach of this Agreement and permit the Client to terminate the Agreement in accordance with clause [X]. This is without prejudice to any other termination rights of the Client under this Agreement.

2.5 Following the sale of the Product by the Client to its customers, the Manufacturer shall provide the following after sales assistance to the end customers of the Product for [insert term]. The Manufacturer shall: [Drafting note: the costs of the schemes and any fee payable to the Manufacturer for providing them will need to be dealt with in the Agreement]

2.5.1 operate a ‘take back and treatment’ scheme, whereby it will ensure that end customers can easily return to it End of Life Products. As part of the ‘take back and treatment’ scheme, the Manufacturer shall receive the End of Life Products, remove (insofar as is possible) those constituent components and constituent parts from the End of Life Products that can be reused or recycled and reuse or recycle the removed components and parts accordingly; [and/or]

2.5.2 operate a repair scheme, whereby it uses all reasonable endeavours to repair any faulty Product (or component or part thereof) prior to the Product becoming an End of Life Product. Where the Manufacturer reasonably considers that a faulty Product (or component or part thereof) is irreparable, it will replace the faulty Product (or component or part thereof).

2.6 The Client will pay to the Manufacturer a bonus equal to the following amounts for the volume of [materials derived from recycled sources which the Manufacturer uses to manufacture the Product/the GHG reductions made as a result of adopting the Circular Manufacturing Requirements]:

2.6.1 [X] tonnes to [X] tonnes, £[X];

2.6.2 [X] tonnes to [X] tonnes, £[X]; and

2.6.3 more than [X] tonnes, £[X].

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