To sign a contract properly is one of the good ways to protect yourself. But how to do it properly keeps a big issue, because of the difference in language, legal system and culture, etc.
The first suggestion I want to offer is: try to find a English-speaking PRC lawyer to help you.
Why? Because what you need is someone who has local knowledge and knows how things work here. Since most of the reader of my blog is overseas SMEs, we will not recommend them to approach international law firm which is located in the landmark building in first tier city given the limited budget of SMEs, especially start-ups. I believe some local law firm maybe is a better choice. I understand it’s not easy to find an affordable, trustable and English-speaking lawyer in China, compared to finding a lawyer in your home country, but it’s worth the trouble, believe me.
The benefit of local lawyers is that they know what happens in practice and they are aware of the newest change in court in case any dispute rise. Based on their experience in courtroom in PRC, they will give more practical suggestions that any overseas lawyer can’t offer. In one word, their job ensure the contract’s enforceability.
Once the lawyer is chosen, there are still some issues to consider while preparing the contract:
- Which jurisdiction should I choose？
- Which language should I use?
- Which country’s law should be applied to?
- What can I do if the other party choose not to honor the contract？
- Arbitration or court, which way is better for potential dispute solution?
- How to make sure the contract is enforceable?
- How can I be sure that the agreement is signed by the right person?
- What should I do before or after signing the contract?
- Anything else?
To better explain what I am trying to say here, let’s use OEM (short for Original Entrusted Manufacture) agreement as an example, and the two party to this agreement will be overseas buyer and Chinese factory.
（to be continued）
Useful link:
MINISTRY OF COMMERCE OF THE PEOPLE’S REPUBLIC OF CHINA
