Contracting for Human Rights: Looking to Version 2.0 of the Aba Model Contract Clauses

By Dadush, Sarah | American University Law Review, January 1, 2019 | Go to article overview

Contracting for Human Rights: Looking to Version 2.0 of the Aba Model Contract Clauses


Dadush, Sarah, American University Law Review


Introduction

The American Bar Association's (ABA) 2018 Report on Human Rights Protections for Workers in International Supply Chains ("ABA Report") provides model contract clauses ("MCCs") for U.S. buyer companies ("Buyers") (e.g., The Gap, Hershey's, Wal-Mart) to include in agreements with their suppliers ("Suppliers").1 The objective of the MCCs is to bolster human and worker rights across the supply chain, reduce the incidence of human rights violations within the supply chain, and enhance the legal protections for Buyers in the event that their Suppliers engage in human rights violations. The ABA's Business Law Section identified international supply agreements as promising vehicles for achieving this multi-faceted objective and embarked on the MCC initiative to make these contracts work better and harder for human rights.2 This is a highly innovative and important effort within the business and human rights arena, and, as such, it is deserving of both critical attention and constructive support.

As currently drafted, a central shortcoming of the MCCs is that they place all responsibility for human rights violations on Suppliers and completely shield Buyers from liability, even in situations where the latter contribute to creating the conditions for violations to occur. in other words, the MCCs ignore the possibility, and frequent reality, that Buyers contribute to the occurrence of human rights violations by engaging in irresponsible purchasing practices (e.g., last minute changes to order quantities, delivery schedules, or product specifications) that create pressure on Suppliers to squeeze their workers, sometimes to the point of violating their human rights. This Article argues that the contractual obligation to comply with the Buyer's human rights policies should extend to both parties to the supply agreement, namely, the Supplier and the Buyer. This would serve two purposes. First, sharing contractual responsibility for human rights compliance would encourage Buyers to cultivate more communicative and collaborative relationships with their Suppliers, which would improve the identification of human rights risks, the quality of monitoring, the detection of violations, and the pursuit of better remediation strategies when violations do occur. Second, it would create meaningful incentives for Buyers to better police their supply chains, which could reduce the circulation of rights-violating goods in the U.S. marketplace, and, down the line, protect consumers from making purchases that implicate them in human rights abuses.

In earlier work, I coined the term "identity harm" to refer to the distress experienced by consumers who learn that a company they purchased from has failed to honor the environmental, social, or other "virtuous promises" made about its wares.3 Virtuous promises are increasingly prevalent in today's marketplace4 and, because they are not adequately policed by government regulation, it is relatively easy for companies to say that they are doing good, when in fact they are not. This can expose consumers to "virtuous duperies," a type of deceit that makes consumers act against their values and generates identity harm.5 A major concern with the MCCs is that they operate to deresponsibilize Buyers for human rights violations contractually, shielding even those who engage in irresponsible purchasing practices from liability. such contractual impunity could have the perverse effect of increasing the prevalence of bad purchasing practices; and, by extension, the incidence of human rights abuses; and, by further extension, the occurrence of identity harm. To correct course, and with a keen eye toward future versions of the MCCs, Buyers' contractual obligations should be upgraded along with Suppliers'.

Part I of this Article proceeds by briefly describing the MCCs and the important positive contributions that the ABA initiative is making to the business and human rights field.6 Part II discusses the central shortcoming of the clauses, namely that they do not adequately account for the role of Buyers in creating the conditions for human rights violations to occur. …

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