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Suing a Chinese company for breach of contract

by Dan Harris

Got the following email the other day (which email I have modified so as to strip it of any identifiers):

I need some help with a problem I have with a Chinese company I have made an order with. The order is around the $35,000 mark, I have paid for a product and for the shipping.

I have a signed contract from the company that goods will be delivered by a certain time, they have failed to do this and keep coming up with excuses to as why the product is not ready.

How much notice do you have to give a Chinese company before you can sue them?

And how would I go about it? I am from Canada and paid the company directly. The Chinese company is owned by a Canadian citizen but it operates out in China.

Could you please help?

We probably get some variation of this email pretty much every week and my response is virtually always rapid and pretty much the same:

I am sorry but we can not help because I have no idea what the contract says about where to sue nor do I have any idea where this Chinese company has its assets. I will tell you though, that unless your contract is in Chinese AND was sealed by the Chinese company AND calls for disputes to be resolved in a Chinese court AND was incredibly specific about delivery deadlines AND has a liquidated damages provision for being late, you probably will be wasting your time pursuing this.  If your contract does include most of these things, than I suggest you contact a Chinese licensed lawyer based in China to see about pursuing this.  I will note again though that suing a Chinese company is seldom easy and if your ducks are not well lined up before you do so, there usually is not point.

So to reiterate, if you want to maximize your chances of being able to pursue a Chinese company for breach of contract, your contract should be in Chinese (in most cases), should be sealed by the Chinese company, should call for disputes to be resolved in a China court (in most cases), should be incredibly specific regarding what the Chinese party is required to do to comply with the contract, and should include a liquidated damages provision setting forth the exact amount of damages to which you are entitled for the Chinese company’s failure to comply.

For more on what should go into your China contract, check out the following:

Got it?

Dan Harris is founder of the Harris & Moure law firm, a boutique international law firm focusing on small and medium sized businesses that operate internationally. China is the fastest growing area for the firm. Dan writes as a source of China legal and business information.

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