International Contract

🌍 International Contracts with Chinese Suppliers: Key Protections for Global Buyers

When dealing directly with Chinese suppliers, international contracts bridge legal systems and cultural gaps. Here’s what you need to know:

📜 Critical Clauses for Cross-Border Contracts

1. Jurisdiction & Law

• Recommended:

  “This agreement shall be governed by United Nations Convention on Contracts for the International Sale of Goods (CISG) and disputes resolved via CIETAC arbitration in Beijing.”

  Avoid: Letting suppliers dictate local Chinese courts

2. Payment Security Structure:

30% deposit via SWIFT/TT

70% balance after passed inspection

Never Include: “Final payment upon production completion” (loses leverage)

3. Quality Standards Must Specify: ✅ AQL 2.5 (defect allowance) ✅ Third-party inspection rights ✅ Sample approval process

4. IP Protection Essential Addendum: “All molds/tooling remain buyer’s property regardless of payment status.”

5. Force Majeure Redline: Remove vague terms like “government policies” - specify exact scenarios (e.g., WHO-declared pandemics).

🚩 Red Flags in International Contracts Risk Solution “Chinese law only” clause Demand CISG + CIETAC RMB-denominated payments Insist on USD/EUR Vague delivery terms Specify Incoterms 2020 No mold ownership clause Add tooling appendix Case Study: German buyer recovered $120k in mold costs using IP clauses after supplier bankruptcy.

🔑 Why SHOPTIMA Recommends… Penalties: 1.5% daily late fees (CIETAC enforces up to 2%)

Liquidated Damages: 300% for counterfeit materials

Language: Bilingual contract with “English prevails” clause

Download CISG-Compliant Template