The objective of this research effort has been to produce a thorough discussion on the stability problems underground that are associated with faults and seams, and in particular to suggest a functional classification of gouge material. A literature survey was carried out, revealing that while faults and seams constitute a major cause of instability underground, there is only a limited amount of information on behavior characteristics of gouge material. Several construction sites were visited to study the insitu behavior and to sample for a laboratory testing program. The results obtained are reported, and a functional classification system proposed. The fundamental behavior characteristics of different types of gouge is discussed, as is the appropriate construction methods and procedures through seams and faults.