Caryn Connolly

This Note analyzes the code of corporate social responsibility as an implied-in-fact contract with consumers who rely on the reputations of corporations when making their purchasing decisions. Consumers and customers of corporations may be the public or a subcontractor in a large supply chain as in a multi-national corporation like Maersk[1], which is the world’s largest shipping company. These codes are voluntary,[2] and as such, are not often given the weight they deserve by the corporations who create them; however, society as a whole is giving the codes greater credence.[3]

The requirements of a binding contract can theoretically be met through codes of corporate social responsibility. The main issue is whether the corporation meant its statements to be mere marketing or meant them as a promise to its consumers.[4]  In recent years, corporations have created codes of corporate social responsibility because their customers have demanded it.[5] The codes were in response to the needs and wants of the customers and meant to show that corporations are listening to their demands.[6]

The contract is complete when the consumers rely on the codes to make purchases of goods and services. However, consumers have not been bringing claims against corporations under contract law. Instead, consumers have been utilizing consumer protection laws[7] and bringing forth information about human rights violations overseas.[8]  Other law review articles state that the contract formed by the code of corporate social responsibility is incomplete,[9] but contractarian theories of corporate law can be extended to apply to these codes. Contract law may provide a better basis for handling codes of corporate social responsibility than consumer protection laws because the courts often find that the codes of corporate social responsibility are “aspirational statements.”[10]

Corporations that take their codes of corporate social responsibility seriously have begun to rely on voluntary standards[11] and policing of their own supply chains to ensure that their codes are being followed.[12] A corporation’s reputation is often formed by the actions of its suppliers.[13] As corporations put more effort into making their codes of corporate social responsibility meaningful on all levels of the corporation, the code as a contract may start to receive more respect from the courts.

Questions and inquiries regarding this Note may be forwarded to the author at LawReview@vermontlaw.edu.

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[1] Maersk Line, Facts & Figures, http://www.maerskline.com/en-us/about/facts-figures (last viewed Oct. 23, 2014). Maersk is based in Denmark, and the difference in cultural norms between the U.S. and Denmark changes how the information is presented to the public through websites. Constance Kampf, Corporate Social Responsibility: WalMart, Maersk and the Cultural Bounds of Representation in Corporate Web Sites, 12 Corp. Comm.: An Int’l J. 41, 47 (2007). Maersk was built upon the “reputation and hard work of its founder.” Id.

[2] Piotr Mazurkiewicz, Corporate Environmental Responsibility: Is a Common CSR Framework Possible? 6, available at http://siteresources.worldbank.org/EXTDEVCOMSUSDEVT/Resources/csrframework.pdf  (last viewed Oct. 21, 2014).

[3] Id.  (focusing on CSR on an environmental level).

[4] Lyman Johnson, Law and the History of Corporate Responsibility: Corporate Governance, 10 U. St. Thomans L.J. 974, 976 (2014) (discussing the role of corporate governance in the history of CSR in the United States).

[5] Mazurkiewicz, supra note 2, at 7.

[6] Thomas Leppelt et al., Corporate Social Responsibility in Buyer-Supplier Relationships: Is it Beneficial for Top-Tier Suppliers to Market their Capability to Ensure a Responsible Supply Chain? 6 BuR—Bus. Res. Official Open Access J. VHB 126, 127 (2013) (Ger.).

[7] See Ruiz v. Darigold, Inc., No. 14-CV-02054-WHO, 2014 WL 4063002 (Dist. Ct. N.D. Cal. Aug. 14, 2014) (order granting motion to transfer in a case involving the purchase of a corporation’s products based on their Code).

[8] 2014 Human Res. Compliance Library (CCH) ¶ 50,850.

[9] David G. Yosifon, The Consumer Interest in Corporate Law, 43 U.C. Davis L. Rev. 253, 293 (2009) (citing a lack of accountability and enforcement).

[10] Ruiz v. Darigold, Case No. C14-1283RSL, 2014 WL 5599989, slip op. at *4 (W.D. Wash. filed Nov. 3, 2014) (referring to the basis for the causes of action brought before the court).

[11] AA1000 Accountability Principles Standard  (2008) (explaining the scope and purpose of the standard, which is to create a useful standard to use within the supply chain, and underscoring the importance of including all stakeholders in the creation of the standard which aims to implement sustainable measures).

[12] A.P. Moller-Maersk Group, Third Party Code of Conduct 4 (Aug. 2013), available at http://www.maersk.com/en/the-maersk- group/sustainability/~/media/8F6BF3A65A13482AA20215254B5E024E.ashx.

[13] Leppelt et al., supra note 6, at 127.