Cancelling fashion orders: The legal rethink

Bizar Male

The unconscionability argument is one that worker rights attorneys are pursuing next. “The asymmetry of power here is putting all the risk on the suppliers and, by extension, the workers,” says Jeffrey Vogt, the legal director of Solidarity Center and another co-author of Farce Majeure. He is part of a group of lawyers conducting legal research that could lead to a lawsuit on behalf of garment workers, especially in situations where cancelled orders led to unpaid wages and severance.

Lawsuit expenses, lengthy processes and delayed payments often prevent factories from suing, labour rights groups say. Contracts often stipulate that a lawsuit be brought in a brand’s home country, which means suppliers have to seek out attorneys in foreign countries they know little about. Many suppliers also fear being blacklisted and losing business if they take action. “Unless it’s a do-or-die situation, I don’t see manufacturers wanting to take that risk,” says Solidarity Center’s Vogt. Sarachek adds that the perception that cancelling orders was somehow legal set in in part because there weren’t more lawsuits filed. “The retailers still have the power,” he says.

What comes next

The American Bar Association is working on a new Model Contract Clauses project, to solve the power imbalance concern. The clauses could prohibit much of what happened last year with provisions requiring brands to consider the human rights impacts of cancelling and to pay for completed goods made before a force majeure event.

“We’ve drafted contract clauses that deal with exactly this kind of situation, where buyers agree to take the impacts of changes to their contracts on workers into account,” explains Sarah Dadush, a law professor at Rutgers Law School who helped develop it. Reworking contracts to support human rights is voluntary, for now, but Dadush says that the dramatic rise in conscious consumerism and ESG investing, paired with expanding supply chain regulation is incentivising companies to rethink their approach. The project also includes a Buyer Code of Conduct for responsible brand purchasing practices. “We think the MCCs and the Buyer Code are an important part of that rethinking process.”

One significant development is the EU’s forthcoming mandatory human rights due diligence, a historic supply chain law that aims to hold any company that does business in the EU legally liable if it causes human rights violations or environmental harm wherever it sources products, including offering legal support for victims of corporations in developing nations. In the US, Customs and Border Protection is clamping down to stop goods made by forced or indentured labour from being sold in the US. Likewise, California’s Garment Worker Protection Act, which is working its way through the state legislature this year, aims to hold fashion brands jointly liable if there’s wage theft in factories.

Others suggest more supplier action is likely too. “Covid has opened the door for suppliers to band together to start to collaborate with each other to make supply chains more fair,” says law professor Dadush.

Journalist Elizabeth Cline was an organiser of the #PayUp campaign.

Comments, questions or feedback? Email us at [email protected].

More on this topic:

Designers pivot as retailers slash orders

Fashion’s great inventory pullback

Bangladesh factories face smaller, less profitable orders this Christmas

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