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How can I protect the quality of my product with a contract?

by Mike Bellamy in 'China Sourcing Information Center'

"I'd like to know if there's any kind of agreement that I can sign with a factory that enforces them to manufacture the products according to a golden sample that was pre-approved by the buyer and who should I look for to draft this kind of agreement? My objective is that I can contact a 3rd party inspection company (AQF) to test the sample, issue a test report and after that provide some sort of agreement that states that the mass production should have the same specifications as the approved sample, otherwise the order can be rejected and compensations have to be made."


Yes, you can state in a contract/PO that the agreed spec is based on the pre-approved golden sample. If you need help drafting such a document I can put you in touch with the lawyer that helps me with these items. But, even if you have a contract stating that the spec is per golden sample, you still have two big problems:

1. A physical sample can be interpreted in many ways. You may look at production and say it is "not per sample", factory may look at same production pieces and feel that it is per sample.

2. Even if you have a good contract, going to court is not very fun and wastes time and money. Plus it is hard to get money from the factory even if they lose a court case. So the contract doesn't really provide you much protection.

However, there are ways to protect yourself and solve the two problems above.

1. It can't hurt to have the contract in place and have an agreed sample as the standard. But it is even better to have a well written QC check list that details every important aspect of what is important to you as the buyer. Your inbound QC should be the same as factory's outbound QC. Share as much information as possible so they know exactly what you want. Since a QC check list is a written standard, you can make his check list part of the actual contract or PO. Even better than saying "production much match the golden sample" is saying "production must match the golden sample and confirm to the agreed QC check list". You are also wise to use a 3rd party like AQF [1] to check the QC to confirm factory actual made what you asked for.

2. The other way to protect yourself better than a contract is to structure your payment terms so that payment and QC is linked. You may need to give a deposit to start production, but don't make the remaining payments until you or a 3rd party has done the inspection of the goods. This gives you more protection than relying solely on a contract.

Best wishes on your sourcing program!

Best Regards,

Mike Bellamy

This is a question answered by Mike Bellamy on Ask the Experts Q&A in China Sourcing Information Center.
Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center. He is also the author of “The Essential Reference Guide to China Sourcing”

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