Before You Sign With a Chinese Supplier: A Free Contract Check

Use the registered Chinese name and credit code. An English trading name is not a legal name. Claims and enforcement are brought against the registered company. See how to find the Chinese company behind an English name.

Make sure one company signs, invoices and gets paid. If they are different companies, get the reason in writing and put it in the contract. See what to check before paying a Chinese supplier.

Check who signs and which chop is used. The name on the chop should match the registered name of the party in the contract, character for character. Ask for a signature as well as the chop.

Make the two versions match. If both versions have equal force but say different things, a court has to work out what they mean (Civil Code art. 466). Say which version takes priority. Have someone on your side check the Chinese text line by line.

Choose where disputes go. Name one court or one arbitration institution, by its exact name, in both languages. The choice affects how fast you can freeze the supplier's assets. See how court and arbitration cases work in China.

Write down the standard and the inspection period. Name the approved sample or specification. Say how the goods are inspected and how long you have to report a defect. If the period is short or missing, you can lose the claim.

Keep part of the price until inspection. If you pay everything before you see the goods and they turn out wrong, you have little left to press the supplier with. See deposit or prepayment.

Plan for late delivery. Set the delivery date, a right to cancel after a stated delay, and an agreed sum for each week late. See whether Chinese courts enforce liquidated damages.

Say who owns the molds. State that they belong to you once paid. Say that the factory holds them for you, marks them and hands them over on request. Exclude any right to keep them over unpaid sums. See who owns the mold when the factory designed the product.

Sign a non-use agreement before you share designs. An NNN agreement covers non-disclosure, non-use and non-circumvention. The last one stops the supplier going around you to your customers. Sign it with the company that will hold your files. See China NNN agreements.

Control subcontracting. For goods made to your order, the Civil Code says the maker must do the main work itself, unless the parties agree otherwise (art. 772). Say who may make the goods. Require your consent for any change.

Add a costs clause. In a Chinese court, you generally get lawyer's fees back only if the contract says so and you can prove you paid them. In the clause, list lawyer's fees, court and arbitration fees, the guarantee premium for a freeze, and notarisation and translation costs.