The MCCs 2.0
The ABA Working Group Model Contract Clauses 2.0, aka the MCCs 2.0, translate the UN Guiding Principles on Business and Human Rights (UNGPs) and OECD Due Diligence Guidance for Responsible Business Conduct (OECD Guidance) into contractual obligations that can be included in supply contracts for the manufacturing and sale of goods. The MCCs were developed by a Working Group of the American Bar Association’s Business Law Section and published in 2021 in The Business Lawyer Journal.
Because they were prepared by a working group focused on the United States, MCCs 2.0 assume that buyers are located in the United States and that the applicable law is either (a) US state law that implements the Uniform Commercial Code or (b) the United Nations Convention on Contracts for the International Sale of Goods (the “CISG,” a treaty to which the United States is a party and which applies to many international sales of goods under CISG article 1(1)(a)).
To address requests from stakeholders focused on the European Union where major legislative developments are taking place with respect to human rights and environmental due diligence, a European Working Group has been formed to develop (based on MCCs 2.0) European Model Contract Clauses for Responsible and Sustainable Supply Chains. The European Model Clauses (EMCs) are expected to be published in late summer 2023.
For the most part, substantive human rights standards and ethical purchasing practices are not contained in the MCCs 2.0 and are instead assumed to be specified in “Schedule P” and “Schedule Q” respectively. You can find an example of Schedule Q, aka, the Buyer Code, here.
For more detail on the background of the project, including an overview of some of the relevant regulatory developments in the area of supply chains and human rights as well as additional footnotes with drafting guidance, please see the full report:
Overview of the Key Clauses of the MCC's 2.0:
MCC 1.1, Human Rights Due Diligence: contains a joint obligation by the buyer (e.g. brands and retailers) and the supplier (e.g. factories and farms) to carry out ongoing, risk-based human rights due diligence (HRDD).
MCC 1.1, Human Rights Due Diligence: contains a joint obligation by the buyer and the supplier to carry out ongoing, risk-based HRDD.
MCC 1.3 (a)-(f), Buyer Responsibilities: contains obligations for the buyer to engage in responsible purchasing practices; agree to a contract price that covers the costs associated with responsible business conduct; provide reasonable financial and non-financial assistance to the supplier in carrying out HRDD and upholding the buyer’s human rights standards; cooperate with the supplier when making order changes (e.g., quantity, design, delivery dates) to ensure that modifications do not undermine human rights; and exit responsibly.
MCC 2.3 (a)-(f), Remediation: contains a joint obligation by the buyer and the supplier to cooperate in providing human rights remediation to victims in proportion to their contribution to the adverse impact.
Find out more
An overview of the Model Contract Clauses (the MCCs) and the Responsible Purchaser Code of Conduct (the Buyer Code)
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