Many months ago, I was in on an email exchange between a couple of our China lawyers regarding a liquidated damages provision in a product development agreement where our client was paying a Chinese manufacturer a lot of money to develop a new product that could be taken into production. Our biggest concern with the

Got the following message on linkedin a few weeks ago:

Been following [China Law Blog] for about 8 or 9 months — it’s been helpful as I’ve been setting up a foreign branch here (sourcing appliances for overseas), preparing employment contracts, renegotiating OEM deals, etc. The site is by far the most useful, practical, concise

I am constantly asked whether it makes sense to bother having a written contract with a Chinese company.  This question is usually followed by the statement that Chinese companies “never follow their contracts” or that “it is impossible to enforce a contract in a Chinese court, anyway.”

I always give the following answer:

It absolutely

I am often asked (usually right after I quote our fee) whether a China contract I am proposing to write “is even enforceable in China.” I always give the same answer, which is more or less the following.

There are three reasons why it makes sense to have a contract with your Chinese counter-party, and

Every other month or so, we get a harried call from someone wanting our help in “getting their molds” back from their Chinese supplier. Though I know this cannot be the case, it does seem that nearly every time a foreign company decides to terminate its Chinese manufacturer, the Chinese manufacturer refuses to return the

Every few months we get a frantic call from someone wanting our “immediate” help in getting them their molds back. These situations usually present themselves as follows:

Small to mid-sized company (“SME”) has spent $25,000 to $250,000 building a mold(s) for manufacturing their product in China. SME provided this mold to its one Chinese supplier

One of the hallmarks of a good China OEM Contract is that it provides for very specific penalties if the Chinese manufacturer fails to abide by its crucial terms. These penalties will typically be in the form of a liquidated damages provision, which Wikipedia defines as follows:

Liquidated damages (also referred to as liquidated and