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Be smart when drawing up contracts

by Sophie Mao

This morning, I spoke with a client. He said he needed a simple supply contract to use for his sourcing business in China.

I sent him a checklist, so that he could let me know what he expected. He replied that he needed quick advices, he could not sit and write all this. He repeated saying that he needed a “quick” and “simple” agreement that he can use for sourcing different products from different factories.

I began telling him that if he wanted to use the contract that way, it could not be simple. Some businessmen tend to think lawyers complicate things, even though he needs just a simple agreement.

I want to clarify here: if you hope your contract will be binding to your suppliers, and may be used as the basis to solve any potential dispute you may have with your suppliers, the agreement cannot be simple!

For example, you can not just say that “the supplier must provide good quality products.” You have to specify your idea about “good quality,” and indicate that the supplier must acquire quality authentication for certain types of products. If necessary, you should assign an inspection company to do inspection during the production or before delivery. If the supplier fails the inspection they should reproduce the product; if they can not deliver the goods to you by the deadline, they will have to pay a fee for late delivery, etc.

How can a supply agreement be simple?  In fact, a simple agreement is akin to having no agreement.

My advice to all buyers:

1. If you need a supply agreement, give yourself and your lawyer some time. You have to decide what your expectations of the agreement are, and let your lawyer know about these.

2. During the process, speak with your lawyer thoroughly, make sure you understand each other. China is probably a totally different jurisdiction than the one you are familiar with, so a thorough discussion will make sure the contract satisfies your requirements.

3. Do not expect a quick and simple agreement, a responsible lawyer will not give you such an agreement. Lawyers do not want to complicate things, they just want to make sure you are protected by your agreement.

Sophie Mao is the founder & Directing Partner of Chibridge Law Firm, which offers advice on foreign direct investment and sourcing in China. She writes for overseas investors and buyers at Chibridge Law Blog, and lives full time in Guangzhou. You can contact her at This email address is being protected from spambots. You need JavaScript enabled to view it..

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