Contract with China:
from commercial terms to product release

01

First, they design the flow of goods, money and documents

Before the first draft of the contract, it is necessary to determine the parties to the transaction, the manufacturer, exporter and importer of record, product and technology, route, currency, bank, licenses, tax consequences and end use. The legal language must describe the actual operating model, otherwise the documents will diverge from the customs declaration and bank check.

Counterparty

Registration, legal representative, beneficiaries, licenses and legal risks

Product

Specification, HS code, origin, marking and approvals

Delivery

Route, Incoterms, insurance, risk and title

Calculations

Currency, bank, documents, taxes and payment admissibility

Execution

Quality control, acceptance, guarantees and dispute resolution method

02

The choice of law must be explicit and consistent with the method of resolving the dispute

For a foreign contract, the parties generally can expressly choose the applicable law. If there is no choice, Chinese conflict analysis turns to the closest connection and characteristic performance; mandatory rules of the People's Republic of China may be applied regardless of the reservation. The formula “international law applies” usually does not provide the necessary certainty.

03

Signature, authority and seal are checked separately

For a Chinese company, the data from the register, the powers of the signatory, legal representative and control of the corporate seal are important. One business card or a scan of a signature is not enough. Electronic documents and signatures can be legally binding, but the method of signing, identification of the person, immutability of the document and preservation of evidence must be agreed upon in advance.

Title

Chinese registered name has priority for identification

Signatory

Position, power of attorney and internal approval

Print

Type of chop, company affiliation and readable imprint

Versions

One final bilingual file and dominant language rule

Evidence

Originals, electronic journal, correspondence and delivery confirmation

04

CISG cannot be left behind the scenes

China is a party to the UN Convention on Contracts for the International Sale of Goods. In eligible international sales, CISG may apply as part of the contractual regime unless the parties have expressly excluded it. The treaty should explicitly state whether the Convention applies or is excluded, and the gaps should be consistent with the chosen national law. China's current statements, including the issue of writing, are verified as of the date of the transaction under UNCITRAL status.

05

Incoterms distribute tasks, but do not replace a contract

The selected term is indicated along with the exact place or port and the edition of the rules: for example, FCA Shanghai, Incoterms® 2020. The transfer of ownership, documents, loading, insurance, export and import clearance, demurrage, sanctions for delay and actions in case of re-routing are recorded separately.

FCA

Often better reflects container delivery and carrier handover

FOB/CIF

Requires precise port and understanding of maritime risk crossing point

DAP/DPU

The importer usually retains a role in import clearance and taxes

DDP

Cannot be used without verifying the seller's ability to legally act as an importer and pay taxes

06

The payment clause must pass not only the accounting department, but also the bank

The Chinese bank compares the parties, the contract, the invoice, customs and transport documents, the purpose and amount of payment. Advance, deferment, letter of credit, guarantee, retention and settlements through a third party create various documentary and currency risks. Changes in details are confirmed via an independent channel.

07

Quality is translated into measurable criteria

The specification includes materials, tolerances, standards, sample, packaging, labeling and mandatory certificates. The agreement covers factory inspection, pre-shipment inspection, quantity acceptance, hidden defects and warranty cases. Silence or payment should not automatically imply acceptance of an unknown defect.

Before production

Golden sample, specification, tooling and change control

In progress

Right of inspection, sampling, reporting and corrective action

Before shipment

Release criteria and consequences of failed inspection

After delivery

Notice period, examination, repair, replacement, refund and expenses

08

Import begins with the admission of the goods, not with the arrival of the container

The importer checks the right to foreign trade operations and customs registration, mandatory inspection, certification, labeling, sanitary, technical and industry requirements. The declaration must coincide with the actual goods, contract, invoice, packing list, transport and permitting documents.

1. 01
   Product screening

   Description, composition, function, brand, origin and end use.

2. 02
   Market access

   Licenses, CCC, inspection, quarantine, labels and special registers.

3. 03
   Customs setup

   Importer, broker, HS code, cost, origin and documents.

4. 04
   Post-entry file

   Storing evidence, reconciling payments and being ready for audit.

09

Code, origin and value form a single customs position

The HS code determines the duty rate, control measures and statistics; origin affects preferences and trade remedies; The customs value is usually based on the transaction price with adjustments provided by law. Royalties, assists, related-party pricing, freight and insurance require separate analysis. For a recurring flow, an advance ruling from customs may be considered.

10

Trade control is checked by product, technology, party and purpose

PRC export controls cover controlled goods, technologies, services and related technical data, including dual-use. In addition to the control lists, there is a risk-based license requirement for individual undeclared items if the exporter knows, should know or has been made aware of the risk involved. The verification is not limited to the sanctions list of the counterparty.

Item

Code, technical specifications, software, technology and data

Parties

Buyer, intermediary, carrier, bank and end user

Destination

Destination country, transit, re-export and controlled territory

End-use

Stated and actual use, red flags and end-use certificate

License

Permit, conditions, entries and changes after issue

11

The defense is designed before the violation

The agreement specifies significant violations, a cure period, suspension, termination, damages, penalties, limitation of liability, return of tooling and confidential materials. The amount and formula of the penalty must be justified, and evidence of losses must be collected during the execution process. Separately, interim measures and assets that can actually be foreclosed on are checked.

12

Checklist before signing

1. 01

   Registration, powers, licenses, beneficiaries and details of the counterparty have been verified.

2. 02

   The product is classified; clearance, export controls, origin and labeling confirmed.

3. 03

   The law, CISG, court or arbitration, language and procedure for notices are clearly formulated.

4. 04

   Specification, inspection, acceptance, warranty and change control are measurable.

5. 05

   Incoterms contains place and edition; title, risk, insurance and customs roles are agreed upon.

6. 06

   The payment undergoes bank and currency verification; substitution of details is controlled.

7. 07

   Violation, provision, evidence and execution of the future decision have been verified practically.