Contracts in China are more formal than contracts here. This is particularly true with how they should be signed.

When we draft a contract between an American client and a Chinese company, we instruct our client on what it should do to ensure a proper signing by its Chinese counterpart. This instruction is usually along the lines set forth below.  China Contracts

You must ensure that your contract is properly executed by the Chinese company with which you are contracting. It should be with a duly formed Chinese company and signed by the legal representative of that Chinese company. The name and address of the Chinese company should accord with the information registered for this company and the Chinese company’s chop should be used to seal the contract.

To verify the Chinese company’s information, you or someone you trust should do the following:

  • Personally visit the Chinese company.
  • Obtain the business card of the person who will be signing on behalf of the Chinese company and have that person give you a specimen of their company’s chop.
  • Obtain a copy of a previously executed company document to verify the authenticity of the chop you have been given.
  • Obtain a copy of the Chinese company’s business license. This will provide the Chinese company’s registered address and the name of its legal representative.

If anything about the contract is inconsistent with the information you receive, do not execute the contract. Even a simple mistake in the address can render the contract invalid.

When the contract is for a relatively small amount, the signing requirements become somewhat less stringent — not because the risk declines, but because the amount at stake is less. When the amount at stake is relatively low, our China lawyer tell our clients it is “less necessary” to make sure that the Chinese company’s legal representative signs their contract. Though it is always preferable (and safer) to have the Chinese company’s legal representative sign your contract, if the contract is sealed with the company chop, it will likely be enforceable even if signed by some other company representative.

But no matter how small the contract, we always like to see the business license of the Chinese company with which our clients are contracting. The business license provides an easy method to verify the name and registered address of the Chinese company and the identity of its legal representative. Most importantly, it is extremely easy for the Chinese party to provide its business license and any unwillingness to do so is a major warning sign.

Print:
EmailTweetLikeLinkedIn
Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.