How Can Anti-Bribery and Corruption Clauses in Your Contract Protect Your Business?

You should avoid legal pitfalls when entering contracts with suppliers or third parties. Bribery and corruption can be significant risks in business dealings and supply chains. The Bribery Act 2010 imposes strict rules, so including robust anti-bribery and corruption clauses in your contracts is essential to protect yourself. This article explains why these clauses are crucial and how they can protect your business from risk. 

What are Anti-Bribery and Corruption Clauses?

Anti-bribery and anti-corruption clauses uphold ethical standards in contracts with suppliers and third parties and prohibit bribery or corrupt practices. They ensure that your contractual arrangements include comprehensive procedures to avoid bribery and corruption, which is particularly important to avoid potential risks in your supply chains.

Why Do You Need Anti-Bribery and Corruption Clauses?

Anti-bribery and anti-corruption clauses are essential for a range of reasons, including: 

Ensuring Legal Compliance

Anti-bribery laws are strict, and the Bribery Act 2010 criminalises bribery. Failing to manage bribery risks can lead to severe legal and reputational consequences. Your business can be liable if suppliers or third parties engage in corruption, so you must have adequate preventive measures.

Additionally, the Bribery Act 2010 covers private-sector transactions and applies globally. This means you must be vigilant regardless of where your operations are based.

Protecting Your Reputation

A bribery scandal involving your suppliers can damage your company’s image, leading to lost business and diminished trust from clients and partners. By incorporating robust anti-bribery clauses, you can demonstrate your commitment to ethical practices and signal that your business operates with integrity. This can help build and maintain trust with stakeholders, clients, and the public.

Mitigating Risks

Clear anti-bribery and corruption clauses set expectations and outline consequences for bribery, deterring improper conduct in your supply chains. They help ensure suppliers, agents, and partners comply with high ethical standards. It can also provide a basis for appropriate action if they breach their obligations.

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If a supplier breaches these terms, these clauses provide a solid basis for appropriate action – for instance, they can include an explicit right to terminate. A third party’s acceptance of these clauses can also help as part of your due diligence, ensuring that suppliers, agents, and other partners are happy to comply with these provisions and uphold high ethical standards.

Including anti-bribery provisions in contracts forms a crucial part of your defence under the Bribery Act 2010, even though it does not automatically guarantee compliance. Unlike employees or subsidiaries, your business can only effectively manage the actions of third parties through commercial contracts. This contractual control is vital.

Appropriate contractual provisions should complement, not replace, thorough due diligence on your suppliers. You should also undertake due diligence on third parties as part of your contractual risk management.

Key Provisions of Anti-Bribery and Corruption Clauses

Your business should consider the following critical provisions for your contractual clauses with third-party suppliers to protect itself from risk: 

• precise definitions of bribery and corruption are crucial. These definitions should cover direct and indirect actions and specify rules around activities such as gifts, hospitality, and facilitation payments;
• your suppliers must comply with all applicable laws, statutes, regulations, and codes relating to anti-bribery and anti-corruption, including the Bribery Act 2010. This helps ensure that all activities, practices, or conduct within the scope of the contract adhere to the UK’s strict anti-bribery standards;
• your suppliers must comply with your company’s ethics, and anti-bribery, and anti-corruption policies. Compliance will help ensure that suppliers adhere to the ethical standards defined by your company and industry best practices;
• your suppliers must establish, maintain, and enforce their policies and procedures to ensure compliance with the relevant requirements and guidelines. This proactive approach will help to prevent bribery and corruption within the supplier’s operations;
• your suppliers must notify you in writing if they become aware of any breach of the anti-bribery clauses or have reason to believe they have received a request or demand for any undue financial or other advantage. This transparency will help to address and rectify potential bribery issues promptly;
• your suppliers must certify compliance with the anti-bribery clauses annually, providing supporting evidence as requested by your company. This ongoing certification will help ensure continuous adherence to anti-bribery standards; and
• a breach of the anti-bribery clauses should be considered a material breach of the agreement, giving your company the right to terminate the contract. This will show the seriousness of anti-bribery compliance and the potential consequences of non-compliance.

Incorporating robust anti-bribery and corruption provisions into your contracts with suppliers will help demonstrate your compliance with the Bribery Act 2010 and a solid commitment to ethical business practices. If you need support drafting appropriate provisions relative to the risk of your contracts, you can work with a commercial lawyer to help your business draft appropriate anti-corruption and bribery clauses. 

Key Takeaways

Anti-bribery and corruption clauses are crucial under the UK’s Bribery Act 2010. They can help ensure legal compliance, protect your reputation, and mitigate risks. Key provisions should include clear definitions of bribery and corruption, compliance obligations, monitoring and reporting mechanisms, and breach consequences. 

If you need assistance drafting anti-bribery clauses, you can contact LegalVision’s experienced contract lawyers through our LegalVision membership. For a low monthly fee, you can get unlimited access to lawyers for questions, document drafting, and review. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

1. Why Are Anti-Bribery and Corruption Clauses Important in Contracts?

These clauses help to ensure compliance with the Bribery Act 2010, protect your business’s reputation, and mitigate bribery and corruption risks in contractual arrangements.

2. What Should Anti-Bribery and Corruption Clauses Include?

Your anti-bribery and anti-corruption should include definitions of bribery and corruption, compliance obligations, monitoring and reporting mechanisms and the consequences of a breach.