How to negotiate a purchase contract with Chinese supplier properly? Part 1

Filed Under:Contract & Dispute   |   Viewed by: 32142 Persons

I was approached frequently by buyers ripped off by Chinese suppliers. Oftentimes when I ask them to send me the purchase contract they signed with the suppliers, some of them will send me proforma invoice(PI), and some will say, no I don't have a contract or PI, I keep the receipt that I sending them money or do you want to see the emails and/or instant messenger conversation record?

Practically, PI is deemed as a contract, but PI is too simple to protect your rights, you need to write down the following terms and conditions on a paperwork – Contract. As per Contract law of People's Republic of China, a contract shall contain the following clauses:
(1) title or name and domicile of the parties;
(2) contract object;
(3) quantity;
(4) quality;
(5) price or remuneration;
(6) time limit, place and method of performance;
(7) liability for breach of contract; and
(8) methods to settle disputes.

The following are bonus tips to sign a sales contract with Chinese supplier(tips will be given in the order of contract clauses):
(1) title or name and domicile of the parties;
Make sure the company name, domicile, contact information mentioned on contract are correct. It will be safe if you use the company name, domicile disclosed on their business license and registration form of foreign trade dealers(对外贸易经营者登记表)。Only Chinese name and address are listed on the business license, but both English and Chinese name and address will be listed on the registration form of foreign trade dealers.

(2) contract object, quantity and quality clauses
This clause is the definition of what you bought from the suppliers. A certain quantity of product with the quality specification as blah blah. My advices are: a) use full product description so the supplier won't be confused and could not make any excuses in case of wrong delivery; b) It is important to add a Quality Clause, use the detailed specification to define the product clearly. I was surprised many fellow companies only put a brief products description and no quality clause or standard on the contract, especially those who use PI as a contract.

 

Related articles:

How to negotiate a purchase contract with China suppliers Part 2

How to negotiate a purchase contract with China suppliers Part 3

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Comments

5 Responses to " How to negotiate a purchase contract with Chinese supplier properly? Part 1 "

  1. Richard Tong on  MAR   23th , 2013 6:12 AM

    I am working on a eBook related with the topic of How to Import from China?

    I am quite interested in these articles in your web site. Can I use some of your articles to be added into my book?

    Admin on  APR   13th , 2013 17:59 PM

    Dear Richard,

    Please let me know which article you will use? Please email to support@chinawhy.net for further discussion.

    Regards,
    Steven

  2. haroun on  FEB   7th , 2013 18:23 PM

    hi !!i'm algerian wholsallers of men's suitting fadric,i 'm looking for good transit office ho has a contact with good factory's,and differents item's;can you helping me!!

    kind regards..

  3. ying juan Rogers on  AUG   16th , 2012 17:34 PM

    Thank you for very useful information.
    In regard to dispute settlement methods, what if the Chinese wants to use China arbitration committee such CCPIT, CITEC, and American wants to us US arbitration committee. What is the normal practices? Thank you

  4. Benneth Iwu on  DEC   26th , 2011 15:48 PM

    Hi,
    Will a purchase contract be necessary even if a buyer is using Alibaba Escrow service as their payment method?

  5. Ken Hornbuckle on  NOV   21th , 2009 11:16 AM

    I wanted to thank you for posting such detailed information in regards to doing business in China, it has been very helpful!

    Thank You,

    Ken

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