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Responsible

Contracting

Project

The Project

Many contracts for the manufacturing and supply of goods (e.g., clothing, electronics, agricultural products) do not include human rights-related obligations. When buyers (e.g. brands, retailers) do include such obligations in their agreements with suppliers, they tend to employ traditional contracting techniques that are not fit for purpose when it comes to upholding human rights.

The shortcomings of traditional contracting include:

  • whereby the supplier promises that it is and will remain in compliance with the buyer’s human rights standards, as set out in the buyer’s human rights policies and supplier code of conduct.

     

    Representations and warranties are static promises made by the supplier that there are not and never will be any adverse human rights impacts in their facility or supply chain. In other words, once this passive commitment is made, no further monitoring or measures are required. Given that it is virtually impossible for a supply chain to be entirely free of human rights issues, such promises are fictitious and may even place the supplier in breach of the contract on day one.

  • whereby the supplier alone is responsible for the human rights outcomes in its facility and supply chain.

     

    Supplier-only responsibility clauses do not reflect the reality of the supply chain relationship, whereby the buyer’s own behavior and actions – in particular their purchasing practices – can influence (negatively or positively) the supplier’s ability to meet the buyer’s own human rights standards.

  • whereby remedies only flow from the breaching party (which, in traditional contracts, tends to be the supplier) to the non-breaching party (which, in traditional contracts, tends to be the buyer).

     

    Traditional contract remedies flow between the parties and not to the victims of human rights-related breaches – workers and community members. As such, they fail to account for harms to stakeholders beyond the contracting parties. In some cases, traditional contract remedies could even result in the buyer benefiting commercially from the breach.

While this approach may be logical and effective for managing company risk, it is not effective for managing complex human rights risks in dynamic supply chains.

Traditional Contracting

  • Employs a regime of static and unrealistic representations and warranties by the supplier that there are no - and will never be any - human rights issues anywhere in the supply chain (the so called “tickbox” approach).

Responsible Contracting

  • Employs a regime of static and unrealistic representations and warranties by the supplier that there are no - and will never be any - human rights issues anywhere in the supply chain (the so called “tickbox” approach).

Traditional Contracting

  • Employs a regime of static and unrealistic representations and warranties by the supplier that there are no - and will never be any - human rights issues anywhere in the supply chain (the so called “tickbox” approach).

Responsible Contracting

  • Employs a regime of static and unrealistic representations and warranties by the supplier that there are no - and will never be any - human rights issues anywhere in the supply chain (the so called “tickbox” approach).

Traditional Contracting

  • Employs a regime of static and unrealistic representations and warranties by the supplier that there are no - and will never be any - human rights issues anywhere in the supply chain (the so called “tickbox” approach).

Responsible Contracting

  • Employs a regime of static and unrealistic representations and warranties by the supplier that there are no - and will never be any - human rights issues anywhere in the supply chain (the so called “tickbox” approach).

Do you have questions or want to learn more about RCP?

The three key distinctions between traditional contracting and Responsible Contracting can be summarized as follows:

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