The buyer wants to cancel a live PO because of a downstream problem in their market — what recourse do I have?

It depends on what the buyer master-terms and the specific PO say about cancellation. Most large-buyer terms give the buyer substantial cancellation rights but oblige them to pay for work already done and materials already committed (WIP compensation). If the buyer refuses to pay WIP, the supplier's leverage typically comes from (a) refusing to ship other buyer POs, (b) invoking the compliance / audit clauses reciprocally, and (c) trade-association mediation. Litigation across jurisdictions is expensive and slow, so most disputes are settled commercially.

Does a subcontract have to include the buyer’s compliance requirements?

Yes, if the factory does not want to be caught in the middle. Most global buyers hold the factory contractually responsible for the compliance of any subcontractor the factory uses (child labour, wage payment, safety standards). If a subcontractor breaches those rules and it gets discovered, the buyer will charge the factory back for the compliance failure — so mirror the buyer's compliance requirements into every subcontract, together with the factory's right to audit and terminate for breach.

Garments & Textile

Garments and textile agreements — export purchase orders, dyeing / washing / printing service contracts, buyer-supplier agreements, subcontracting, labour-supply, machine-hire — are the paperwork of Bangladesh's largest export sector. RMG contracts are unusual because the buyer's terms (from a global brand) are typically non-negotiable and the supplier's contract is often just a series of purchase orders governed by the brand's master terms. That structure works well for the buyer but leaves the supplier heavily exposed on cancellation, price changes, and quality-claim risk — so the contracts around the main PO (subcontracting, dyeing, packaging) are where the supplier can and should push back for reasonable terms.

Stamp & registrationRMG export contracts intersect with the Foreign Exchange Regulation Act and the Bangladesh Bank export-repatriation rules — a factory that ships without a properly-documented export contract can face repatriation compliance issues later. Buyer master-terms (compliance codes, audit rights, chargeback rules) apply to the factory even if not re-signed for each PO. Subcontract agreements between the factory and a sub-tier should mirror the buyer's compliance requirements to keep the factory safe from a downstream compliance failure.

Contract types in this category

Frequently asked questions

The buyer wants to cancel a live PO because of a downstream problem in their market — what recourse do I have?: It depends on what the buyer master-terms and the specific PO say about cancellation. Most large-buyer terms give the buyer substantial cancellation rights but oblige them to pay for work already done and materials already committed (WIP compensation). If the buyer refuses to pay WIP, the supplier's leverage typically comes from (a) refusing to ship other buyer POs, (b) invoking the compliance / audit clauses reciprocally, and (c) trade-association mediation. Litigation across jurisdictions is expensive and slow, so most disputes are settled commercially.
Does a subcontract have to include the buyer’s compliance requirements?: Yes, if the factory does not want to be caught in the middle. Most global buyers hold the factory contractually responsible for the compliance of any subcontractor the factory uses (child labour, wage payment, safety standards). If a subcontractor breaches those rules and it gets discovered, the buyer will charge the factory back for the compliance failure — so mirror the buyer's compliance requirements into every subcontract, together with the factory's right to audit and terminate for breach.

Garments & Textile

Frequently asked questions

The buyer wants to cancel a live PO because of a downstream problem in their market — what recourse do I have?: It depends on what the buyer master-terms and the specific PO say about cancellation. Most large-buyer terms give the buyer substantial cancellation rights but oblige them to pay for work already done and materials already committed (WIP compensation). If the buyer refuses to pay WIP, the supplier's leverage typically comes from (a) refusing to ship other buyer POs, (b) invoking the compliance / audit clauses reciprocally, and (c) trade-association mediation. Litigation across jurisdictions is expensive and slow, so most disputes are settled commercially.
Does a subcontract have to include the buyer’s compliance requirements?: Yes, if the factory does not want to be caught in the middle. Most global buyers hold the factory contractually responsible for the compliance of any subcontractor the factory uses (child labour, wage payment, safety standards). If a subcontractor breaches those rules and it gets discovered, the buyer will charge the factory back for the compliance failure — so mirror the buyer's compliance requirements into every subcontract, together with the factory's right to audit and terminate for breach.