Legal Definitions - prohibited substitution

A prohibited substitution occurs when an item, person, or service that has been specifically designated or required is replaced by another, and this replacement is expressly forbidden by a contract, law, regulation, or court order. The prohibition exists to ensure that specific standards, qualities, or agreements are upheld and not circumvented.

Here are some examples to illustrate this concept:

• Construction Contract Violation: Imagine a contract for building a new hospital wing that explicitly specifies the use of a particular brand of medical-grade, antimicrobial flooring known for its durability and hygiene properties. The contractor, facing supply chain issues or seeking to reduce costs, decides to install a different, cheaper brand of flooring that does not meet the specified antimicrobial standards, without obtaining prior approval from the hospital or architects.

  This illustrates a prohibited substitution because the contract explicitly required a specific product (the medical-grade flooring), and the contractor replaced it with an unauthorized alternative, violating the terms of the agreement.

• Pharmaceutical Regulation Breach: A pharmaceutical company receives regulatory approval to market a new drug, with its application detailing the precise chemical formulation, including specific inactive ingredients that ensure the stability and bioavailability of the active compound. Later, the company decides to replace one of these inactive ingredients with a less expensive, chemically similar but not identical substance, without notifying the regulatory agency or seeking new approval.

  This is a prohibited substitution because pharmaceutical regulations often forbid any change to an approved drug's formulation, even seemingly minor ones, without re-evaluation and approval. The original approved formulation cannot be substituted without permission, as it could impact the drug's safety or effectiveness.

• Court Order Regarding Asset Management: A court issues an order in a divorce settlement, mandating that a specific investment account, containing a diverse portfolio of blue-chip stocks, be preserved intact for the benefit of the children until they reach adulthood. One parent, who is managing the account, decides to sell all the blue-chip stocks and replace them with highly speculative, high-risk investments, believing they could yield greater returns, without seeking court permission.

  This represents a prohibited substitution because the court order specifically required the preservation of a particular asset (the original investment account with its specific portfolio composition). Replacing those assets with different, higher-risk investments without court approval directly violates the terms of the judicial mandate.