Why Don’t You Sign a Purchase Contract with China Manufacturers? If not, A Big Risk!

I recently took over a dispute involving a German purchaser and a Chinese manufacturer. This dispute demonstrates how important to sign a purchase contract before making a payment to a Chinese manufacturer, especially amount of purchase is large.

Case Details:

My client was looking for a manufacturer to help manufacture an electronic product mold. He was recommended finally to a Chinese manufacturer in Guangzhou. As agreed, my client paid in full. However, when the mold was finished, the samples did not meet the agreed standard. Then the dispute occurs. The factory said there was no agreed quality standard, so the products could meet the requirements.

The case is being dealt with and we are taking some legal actions against the factory. I will update the results in the comment when it comes out.

A Strong Legal Suggestion:

Not a trade buyer wants to have a dispute with sellers, which will waste time and lead to loss. How to avoid this situation? A direct approach is to make a purchase contract and sign it before making any payment. In the contract, you should put any agreements or commitments into the contract instead of any oral agreement. Sometimes I just do not understand why many purchasers do not want to sign a contract with factories. On this occasion, the deal is full of legal risks. Thus, I strongly suggest that all purchasers have to sign a contract with suppliers when the deal amount is large.

How to Draft a Perfect Purchase Contract?

I cannot say short to tell you how to draft a perfect purchase contract, which needs to have a professional finish it. First, the contract you signed has to be enforceable in practice. In other words, if the contract can not be enforceable, then it is useless. Second, the contract articles have to be made based on China laws. You cannot draft it according to US laws or other laws of countries as finally in most cases the disputes will be solved in Chinese courts or arbitration authorities. Third, the contract has to be drafted in both Chinese and English instead of only English versions.

Note: all of the dispute cases are real in the articles and come from my legal practice.

Contact us:

Jack Meng, is a Chinese lawyer practicing in Shanghai.

finlandlove@outlook.com