3 Legal Risks Companies Overlook When Buying Chemicals

In the procurement and use of industrial chemicals, many companies assume that legal risks are limited to licenses or periodic inspections. In reality, numerous serious legal incidents originate from purchasing decisions that appear fully compliant on paper—complete with COA, MSDS, invoices, and contracts. 3 Legal Risks Companies Overlook When Buying Chemicals

The real danger lies in the fact that legal risks in the chemical industry rarely present themselves through missing documents, but rather through how companies understand—or misunderstand—their legal obligations. This article analyzes three legal risks that companies frequently overlook when purchasing chemicals, from the perspectives of technical operations, QA/QC, and supply chain governance.

1. Confusing “Having Documents” with “Fulfilling Legal Obligations”

1.1 A Common Procurement Fallacy

Many organizations operate under a simplified logic:

• COA is available

• MSDS is provided

• Invoice and contract are complete
  → The chemical is legal, and legal risk is zero

This assumption is dangerously flawed.

Under chemical regulations, compliance is not determined by possession of documents, but by whether the company understands, evaluates, and properly implements the information contained within those documents.

1.2 COA and MSDS Do Not Transfer Legal Responsibility

• A COA only reflects analytical results for a specific batch at a given time.

• An MSDS provides hazard information under reasonably foreseeable conditions of use.

Neither document transfers legal responsibility from the user to the supplier.

In the event of an incident, the company using the chemical remains the primary responsible party. Regulatory authorities will ask:

• Has the company reviewed the MSDS?

• Has a risk assessment been conducted?

• Have appropriate control measures been implemented?

Having documentation without proper implementation still constitutes non-compliance.

1.3 Overlooking Mandatory Chemical Import Declarations

This is a particularly common issue for companies importing chemicals without sufficient experience in specialized customs procedures.

Many chemicals fall under mandatory declaration lists according to local regulations. Companies may import and clear customs but fail to declare—or declare late—via national chemical management portals.

Consequences include:

• Administrative fines

• Increased inspection frequency

• Classification into high-risk import channels, disrupting future supply chains

Mitigation: Establish a comprehensive CAS-based inventory system and automatically cross-check imported chemicals against regulatory declaration lists.

Legal Risk #1: Assuming documentation alone ensures compliance, while legal obligations lie in actual execution.

2. Failing to Cross-Check Chemicals Against Regulatory Control Lists

2.1 “Common” Chemicals Can Still Be Legally Controlled

Many widely used chemicals fall under categories such as:

• Restricted chemicals

• Conditionally permitted chemicals

• Chemicals requiring incident prevention plans

• Precursors or dual-use substances

Commercial names often mask legal classifications.

A familiar solvent, inorganic salt, or reaction intermediate may still be subject to special controls under chemical law.

2.2 Buying Correctly but Using Illegally

Even licensed companies may violate regulations due to internal disconnects.

For example, a company may hold a permit to import a fixed annual quantity of sulfuric acid. If procurement exceeds that quantity without adjusting permits or notifying authorities, the act is legally considered unauthorized use, regardless of intent.

Consequences can include:

• Significant fines

• Temporary suspension of operations

• Increased regulatory scrutiny

Mitigation: Integrate legal purchase limits directly into ERP or procurement systems.

Legal Risk #2:
Purchasing chemicals without fully aligning quantities, purposes, and permits with regulatory obligations.

3. Failing to Define Legal Responsibility Between Supplier and User

3.1 “Once Sold, Responsibility Ends”?

Many chemical supply contracts limit the supplier’s responsibility to:

• Delivering products that meet COA specifications

They often exclude liability for:

• Application suitability

• Operational risks

• Local regulatory obligations

Meanwhile, users may incorrectly assume that suppliers have “handled the legal aspects.”

This creates a significant compliance gap.

3.2 Legal Responsibility Cannot Be Outsourced

Industry best practices clearly distinguish responsibilities:

• Suppliers are responsible for accurate information disclosure.

• Users are responsible for operating conditions, storage, training, and risk control.

Without internal risk assessments, training records, and MSDS-based SOPs, companies have limited legal defense in the event of an incident.

Legal Risk #3:
Failing to clearly define and document the boundary of responsibility between supplier and user.

4. Why Legal Risks Often Follow “Low-Price” Purchasing Decisions

A recurring pattern emerges: legal risks frequently coincide with decisions to purchase low-cost chemicals.

Low-cost suppliers often provide:

• Minimal legal documentation

• Outdated or copied MSDS

• No regulatory guidance for specific applications

Meanwhile, cost-driven buyers often:

• Reduce due diligence

• Skip risk assessments

• Underinvest in compliance systems

Short-term savings are often offset by long-term costs:

• Legal penalties

• Production shutdowns

• Reputational damage

• Potential criminal liability

This reflects the EUV principle in chemical procurement:

• Economic: Purchase price is only a small fraction of total cost

• Usage: Improper use generates real risk

• Value: True value lies in safe, legal, and stable operations

5. How Companies Can Reduce Legal Risk When Purchasing Chemicals

Step 1: Separate Three Layers of Control

• Legal: Is the chemical permitted?

• Safety: Is it hazardous under our conditions?

• Technical: Will it perform consistently?

Step 2: Read MSDS as a Legal Obligation, Not a Formality

• MSDS → SOP

• SOP → Training

• Training → Compliance evidence

Step 3: Select Suppliers as Technical–Legal Partners

A qualified supplier:

• Understands regulations

• Understands applications

• Proactively warns about risks

• Sells assurance, not just chemicals

Conclusion

Legal risk in the chemical industry does not arise from missing paperwork, but from misunderstanding the role of that paperwork. The more casually companies approach procurement, the more legal risk accumulates during operations.

Chemical purchasing is not a simple commercial transaction—it is a long-term technical and legal decision. Professional organizations identify risks before regulators do, not after.

For expert consultation and accurate information on the chemical industry, KDCCHEMICAL provides fast and reliable support. Visit kdcchemical.vn or contact our hotline at +84 867 883 818.