Regulation and sustainability
Obligations a client passes down to you
What you sign in their contract can turn their obligation into yours, and that cannot be undone later.
A growing share of what is required of you does not come from a rule that applies to you: it comes from a contract. Your client has obligations and passes them downstream, and the moment you sign, those obligations stop being theirs and become contractually enforceable against you.
The clauses most often signed unread
| What it says | What it really implies |
|---|---|
| "Shall comply with applicable law" | Generic and reasonable; the problem is the next ones |
| "Shall flow these obligations down to its suppliers" | You must do to yours what they are doing to you |
| "Shall facilitate audits, including of its chain" | You may have to open up what is not yours |
| "Shall notify any incident within a period" | A contractual clock that runs whether or not anyone remembers |
Important
The second row generates the most work and is the least quantified at signing. Accepting flow-down means building with your suppliers the same control being built on you — same requests, same renewals, same chasing. It is not a clause, it is a process to sustain for the life of the contract.
What to check before signing
- 1
What you are asked to do, not what you are asked to comply with
Complying with a rule is one thing; evidencing it quarterly to someone is another.
- 2
How often and to whom
That is what turns a clause into recurring workload.
- 3
What happens if one of your suppliers will not cooperate
Because you will answer for it, and it helps to know your margin.
- 4
And which clocks start running by themselves
Notifications and incidents: contractual deadlines do not send reminders.
Watch out
The nuance that surprises when it lands: **a contractually flowed-down obligation binds you even if the original rule does not apply to you**. You may fall outside a framework's scope by size or sector and still have to meet it for that client, because you signed. And it works both ways: if you flow it down to your suppliers, they are bound to you the same way.
What to have in place if you accept
The first avoids the costliest mistake: applying your strictest client's criteria to every supplier. It is done for convenience and multiplies the work with nobody asking for it.
Worth knowing
Which frameworks apply to you by activity and which only by contract is a distinction with consequences, and it is not always obvious in the text. **Before signing broad compliance clauses, have your adviser read them**; after signing, it is no longer a question but an obligation.
›Can they be negotiated?
Often yes, especially audit frequency and scope.
›What if the client changes its requirements midway?
It depends what was signed: check whether the contract lets them update unilaterally.
›Must everything be flowed down to small suppliers?
Only what you are required to flow down, and adapted: asking the impossible guarantees nothing arrives.
A real case
The situation
A company signs a framework contract with a flow-down clause.
What you do
- Quantifies what it will have to require from suppliers before signing
- Sets up renewals only for the affected suppliers
What you get
It meets that client's terms without applying them to the other eighty suppliers.
The situation
The contract is signed without reading the documentation annex.
What you do
- Reviews what documentation it commits to before signing
What you get
You know what the company is committing to.
The situation
What was signed depends on a supplier who does not know.
What you do
- Passes it to the supplier in writing
What you get
The chain holds from the outset.
The situation
An impossible requirement is signed.
What you do
- Negotiates it before signing
What you get
The commitment is realistic.
The situation
Nobody knows what was committed to each client.
What you do
- Stores the commitments with the contract
What you get
It can be consulted without rereading the whole contract.
The situation
The requirement changes at renewal and goes unnoticed.
What you do
- Reviews the annexes at every renewal
What you get
No new commitment is inherited unknowingly.
This article answers
- the client contract imposes more on me
- compliance clauses in a supply contract
- they require what is required of them
- accepting supply chain obligations