Why should companies have compliance terms and conditions in third-party contracts? It is a specification in the Justice Department Evaluation of Corporate Compliance Programs, stating in Prong 10, What mechanisms have existed to ensure that the contract terms specifically described the services to be performed, that the payment terms are appropriate, that the described contractual work is performed, and that compensation is commensurate with the services rendered?
Companies should make it a practice to incorporate compliance terms and conditions into all third-party contracts and have appropriate compliance terms and conditions in these contracts. These can be used as a starting point for negotiations. The advantages of such a template are several, including: (1) the contract language is tested against real events; (2) the contract language assists the company in managing its compliance risks; (3) the contract language fits into a series of related contracts; (4) the contract language is straightforward to administer, and (5) the contract language helps to manage the expectations of both contracting parties regarding anti-bribery and anti-corruption.
