A well-drafted sourcing contract is your best protection when working with Chinese suppliers. Here are essential terms and strategies to include.
Why Written Contracts Matter
- Verbal agreements are hard to enforce in China
- Chinese courts require written evidence
- Clarifies expectations for both parties
- Provides legal recourse if problems arise
Essential Contract Terms
Product Specifications
- Detailed technical specifications
- Materials and components
- Reference samples and photos
- Packaging requirements
- Labeling and marking
Quality Standards
- Acceptable Quality Level (AQL)
- Testing requirements
- Inspection rights
- Third-party inspection provisions
- Rejection procedures
Key Tip: Be as specific as possible. "Good quality" means nothing legally. Define exact standards, tolerances, and testing methods.
Pricing and Payment
- Unit price and currency
- Payment terms (T/T, L/C, etc.)
- Deposit and balance schedule
- Price adjustment mechanisms
Delivery Terms
- Incoterms (FOB, CIF, etc.)
- Delivery schedule
- Late delivery penalties
- Force majeure provisions
IP Protection
- Ownership of designs and molds
- Confidentiality obligations
- Non-compete clauses
- Trademark usage rights
Dispute Resolution
Choose carefully:
- Arbitration: Often preferred for international disputes
- Chinese courts: If supplier has assets only in China
- Governing law: Chinese law often necessary
Language Considerations
- Bilingual contracts recommended
- Specify which version controls
- Ensure accurate translation
Common Mistakes
- Using supplier's template contract
- Vague quality specifications
- No inspection rights
- Weak IP protection
- Inappropriate dispute resolution
Need a Sourcing Contract?
I draft and review supplier contracts to protect foreign buyers sourcing from China.
Contact MeDisclaimer: This article is for informational purposes only and does not constitute legal advice. For advice on your specific situation, please contact me directly.
Contact for Personalized Advice →