Contractual safeguarding of due diligence obligations
In addition to the possibility of using supplier codices, companies can also make arrangements with their direct suppliers through general terms and conditions of purchase (GTC).
However, companies should also ensure compliance with due diligence obligations in relation to indirect suppliers. This follows from the LkSG itself, as it stipulates that the direct supplier should comply with human and environmental expectations and address them appropriately along the supply chain – by means of a contractual assurance.
This is achieved by including general terms and conditions clauses in the form of so-called pass-on clauses in the underlying contract. Pass-on clauses regulate – as the name suggests – the obligation of the direct supplier to also pass on the duties of care required by the LkSG to its own contractual partners. In this way, the obligated company can indirectly influence the indirect suppliers and thus ensure compliance with the obligations under the LkSG.
Forms of subcontracting clauses
The subcontracting clauses can in turn be divided into endeavour clauses and subcontracting clauses. The former are generally also effective as pre-formulated standard clauses, as they merely focus on the direct supplier’s ‘endeavours to comply with obligations under the LkSG. Accordingly, they do not require the direct supplier to fulfil any further obligations and therefore do not constitute an unreasonable disadvantage within the meaning of Section 307 BGB. The situation is different for subcontracting clauses. Careful wording is required here, as they may be inadmissible in individual cases if the further obligation and the consequences of liability of the direct supplier are formulated too broadly.
It is therefore a balancing act for a company to harmonise its own liability and sanction risk on the one hand and the risk of invalidity of the GTC clause in the contract on the other. The challenge is to find an appropriate balance between these two weights and to adhere to the narrow limits on both sides through clear and targeted drafting.
In any case, it is highly recommended to include a clause on the LkSG in general terms and conditions of purchase, at least in the form of an endeavour clause.
- The Supply Chain Due Diligence Act obliges companies with 1,000 or more employees to ensure a certain standard of human rights through so-called due diligence obligations along the supply chain, i.e. for direct and indirect suppliers.
- Companies can ensure compliance with these due diligence obligations through supplier codes or so-called pass-on clauses in the form of endeavour or subcontracting clauses in their general terms and conditions.
- The inclusion of an endeavour clause is recommended, as this can generally be effectively included in the GTC due to its content and does not constitute an unreasonable disadvantage within the meaning of Section 307 BGB.
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