How to negotiate a purchase contract with China suppliers properly? Part 2

Filed Under:Contract & Dispute   |   Viewed by: 19451 Persons

(3) price or remuneration
Factor in the rapid appreciation of RMB(Chinese Yuan) against USD and other main foreign currencies when you are negotiating the price and contract. The currency exchange rate should be based on the currency exchange rate chart provided by Bank of China(BOC).  I am going to write an article on how to negotiate a better price with suppliers recently, please keep checking out.

(4) time limit, place and method of performance
Give a specific time limit, loading port(bad example: China port, the shipping price from Dalian in the north and Guangzhou in the south to a Japanese port are significantly different), destination of delivery on the contract.  Indicate whether partial shipment is allowed or permitted.

Carefully jazz up the clauses so that it could not be interpreted differently.

(5) liability for breach of contract
Set a clear liability for breach of contract. Have a close look at the chapter of Liability for Breach of Contracts in contract law of People's Republic of China, don't make your clauses null and void by ignoring the provisions on the contract law.

Especially, make sure you have understand and make full use of article 113, 114, 115, 116. For those who haven't signed a purchase contract but the suppliers have violate the contract materially after you send the deposit and those who have sign a contract but haven't set up any clause on liability on breach of contract. Look at article 115:

Article 115 The parties may agree that a party pay a deposit to the other party as a guaranty for the obligation in accordance with the Security Law of the People's Republic of China. Upon the obligor has performed its obligation, the deposit shall be offset against the price or refunded to the obligor. If the party paying the deposit fails to perform its obligations under the contract, such party has no right to demand for the return of the deposit; where the party accepting the deposit fails to perform its obligations under the contract, such party shall refund twice the value of the deposit.

Yes, you are entitled to be compensated for twice the amount of the deposit even though you haven't sign a contract. Of course, I mean when Chinese law is applied in your case.

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