Additional rules in purchasing and cooperation contracts
In order to fulfil the obligations arising from the Act and the Directive, companies will introduce additional rules into their purchasing or cooperation contracts. In particular, they will impose binding rules on their suppliers and sub-suppliers regarding compliance with the due diligence obligation and adherence to the Act or the Directive.
Recourse clauses: who bears the penalty?
Another development expected in this regard is that recourse clauses will be introduced into contracts for situations in which a penalty has to be paid due to breaches by suppliers, or by business partners who are within the business relationship but do not fall directly within the scope of the Act or the Directive.
Model contractual clauses from the Commission
The Directive also provides for the European Commission to draw up guidance on model contractual clauses that companies may use voluntarily.
The first step: a contract inventory
The first step in practice is an inventory rather than a redraft: which contract is in force with which supplier, when each term expires, and — the question that usually produces the longest list — which agreements contain no due diligence provision at all.
The clauses to expect in new contracts
The clauses to expect in new contracts are by now fairly settled: an undertaking by the supplier to meet human rights and environmental standards; the code of conduct annexed to the agreement; duties to provide information and documents; rights of on-site audit; a requirement to remediate first where a breach is found, with termination reserved for serious cases; and provisions on contractual penalties and recourse.
How far to pass obligations down the chain
Passing those commitments down the chain without limit creates a risk of its own. Undertakings a small supplier cannot realistically carry produce the appearance of compliance on paper without reducing any actual risk. A workable supplier contract architecture grades what it asks for against the supplier’s size and risk profile, and reserves the heaviest obligations for the relationships that genuinely warrant them. Because the Act has been in force since 1 January 2023, companies waiting for the contract renewal cycle can speed the work up considerably by keeping standard annex texts ready.
Four questions to ask before signing
Turkish suppliers usually meet these requirements not when drafting their own terms but when a German or European customer sends a ready-made due diligence annex for signature. Four points repay careful reading before it is signed: how far the audit right extends and who bears its cost; what concrete event triggers termination or a contractual penalty; whether the undertakings you are asked to pass on to sub-suppliers can realistically be passed on within your own chain; and how the information and documents you are asked to share are protected under confidentiality and data protection rules. All four are open to negotiation; an annex signed without discussion leaves a burden that is hard to carry in later years.
Sequencing the contract work
Once the inventory is complete, there is no need to open every contract at once. The order that works in practice is to start with the customer contracts that carry the greatest turnover and risk, then take the agreements whose renewal dates are approaching, and update the remainder gradually using a standard annex text. Preparing the same set of texts in the other direction, towards your own suppliers, stops you giving the same undertaking in two different forms. When the model clauses the Commission is to prepare are published, comparing your existing texts against them is far quicker than starting the work from scratch (as of July 2026).
