Model Contract Clauses to Protect Workers in International Supply Chains, Version 2.0

By: The Working Group to Draft Human Rights Protections in International Supply Contracts, ABA Business Law Section, David V. Snyder, Susan A. Maslow, Sarah Dadush

Executive Summary: Model Contract Clauses Version 2.0 and the Responsible Buyer Code
Model Contract Clauses Aligned for Human Rights Due Diligence
The human rights performance of global supply chains is quickly becoming a hot button issue for anyone concerned with corporate governance and corporate accountability. Mandatory human rights due diligence legislation is on the near-term horizon in the E.U. Consumers and investors worldwide are increasingly concerned about buying from and investing in companies whose supply chains are tainted by forced or child labor or other human rights abuses. Government bodies such as U.S. Customs and Border Protection are increasingly taking measures to stop tainted goods from entering the U.S. market. And supply chain litigation, whether led by human rights victims or Western consumers, is on the rise. There can therefore be little doubt that the face of global corporate accountability for human rights abuses within supply chains is changing. The issue is “coming home,” in other words.
Why do contracts matter?
Contracts are an expression of the parties’ expectations. How supply contracts are negotiated, the terms they contain, and their performance—how buyer and supplier play out their contractual relationship—affects how well the human rights of workers and often whole communities are protected. Aggressive contracting, characterized by unfairly one-sided or oppressive terms, tends to promote oppositional rather than cooperative buyer-supplier relationships. This can generate undue commercial pressure on suppliers, exacerbate human rights risks, and undermine the buyer’s ability to meet its own human rights commitments. On the other hand, better contracts and better contractual practices can generate better human rights outcomes.
What does a “good” or human rights due diligence-aligned contract look like?
To align with international business and human rights norms and expectations, set out in the UN Guiding Principles on Business and Human Rights (the UNGPs) and the OECD Due Diligence Guidance for Responsible Business Conduct, contracts must be revised to reflect the parties’ own human rights commitments and standards and provide a clear process for upholding them. Such revised contracts would better protect the parties and other stakeholders, including workers, who, although not party to the contract, are at risk of being adversely impacted by it. Revised contracts would also begin to satisfy the growing body of legislation requiring human rights due diligence and public disclosure relating to human rights abuses.
In 2021, a working group formed under the auspices of the American Bar Association Business Law Section published a set of model contract clauses, the MCCs 2.0, to help buyers and suppliers redesign their contracts to better protect human rights in their suppl

This is premium content for:

ABA Business Law Section Members.

Please log in or join the Business Law Section to read this full article.

For more information about joining the Section, click here.

Connect with a global network of over 30,000 business law professionals


Login or Registration Required

You need to be logged in to complete that action.