Abstract International contracts and, specifically, international sales contracts are increasingly employed by soft law instruments and regulators alike as tools to advance sustainability by addressing adverse impacts on human rights and the environment. Notable examples of this trend are the United Nations Guiding Principles on Business and Human Rights, the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises on Responsible Business Conduct, and the European Union’s Corporate Sustainability Due Diligence Directive. In response, supply chain leaders need to consider incorporating due diligence measures into their contracts to address adverse human rights and environmental impacts. Such sustainability due diligence involves requesting commitments from business partners, monitoring and verifying compliance, cooperating, and employing adequate remedies to breaches of such commitments. Many contracts affected by these developments fall under the United Nations Convention on Contracts for the International Sales of Goods, necessitating an analysis of how mechanisms of sustainability due diligence operate within its framework. Under the CISG, sustainability due diligence commitments create agreements not only on the goods’ quality but also on continuing independent obligations. If a sustainability due diligence commitment is breached, the buyer may invoke non-conformity remedies once the goods have actually been delivered. In addition, irrespective of delivery, the buyer may claim specific performance of the commitment or seek damages to recover losses such as those arising from administrative fines imposed under mandatory sustainability due diligence legislation. Depending on the gravity of the breach, the buyer may also suspend their own contractual obligations or avoid the contract. However, to fully retain these remedies, the buyer may need to comply with certain monitoring and cooperation requirements as failing to do so could lead to a partial exemption of the seller. Overall, the CISG provides a well-balanced basis for integrating mechanisms of sustainability due diligence into the framework of international sales contracts.
Atamer et al. (Tue,) studied this question.