Most supply contracts fail long before a dispute erupts. Common traps include the wrong signing entity, an NNN copied from US templates, custom tooling with no named owner, and a forum clause that quietly makes enforcement impossible. The review must happen before you sign, because after is too late.
China-licensed lawyer · Bilingual practice · Shenzhen
An English-language contract, signed by a trading company that owns nothing, with a clause pointing to a court that will never hear the case, is not protection. It is documentation of a loss. Contract work for China is less about drafting language than about picking the counterparty, the security, and the forum that make the language mean something.
The factory you visited and the company on the contract are often different legal persons. Only one of them has assets.
An NDA copied from a US template usually cannot stop a Chinese factory from competing with you. NNN is built differently for a reason.
Tooling, molds, designs, and drawings need an owner explicitly named in the contract. Otherwise, possession decides ownership.
A clause naming one definite institution, seat and language is the difference between a claim and a piece of paper.
Once the factory has your files, an NNN signed afterwards has little leverage. This is the single highest-value moment for contract work.
A proforma invoice is not a contract. Paying against a PI leaves you with no delivery terms, no inspection right and no remedy.
Some refusals are negotiable positions; others tell you the supplier has no intention of being bound. Knowing which is which is the work.
Orders that outgrew the original terms are the most common source of large disputes, yet they are the easiest to fix while the relationship is still good.
The order matters. Verifying who you are contracting with comes first, because every later clause depends on it.
Pull the business license, check the unified social credit code, registered capital, legal representative and whether the entity is the manufacturer, a trading arm, or a shell.
Designs, molds, customer lists, process know-how, and pricing each require a different legal mechanism. Blanket confidentiality language protects none of them well.
Non-disclosure, non-use and non-circumvention, written to Chinese legal standards, alongside delivery, inspection, defect and payment terms that cross-reference each other.
One institution, one seat, one language, plus liquidated damages set at a level a Chinese tribunal will actually uphold rather than reduce.
Correct company chop, correct entity name matching the license character for character, controlling language stated, and a signed copy you can produce in evidence.
Most buyers accept the supplier's template because it arrives first and looks reasonable. The template you start from sets the defaults for everything that follows.
Written to cap their liability, keep tooling ambiguous, put the forum near their home court, and leave quality standards undefined. Workable only after the defaults are rewritten.
Starts from your risk position, names the tooling owner, defines defect and inspection standards, and points the dispute somewhere you can enforce. It is harder to get signed, but well worth the negotiation.
These are the specific differences that decide whether a contract works when the relationship breaks down.
Send what you have. A free assessment tells you where it holds and where it breaks, before anything goes wrong.
Pushback on contract terms is normal. Reading it correctly tells you whether you are negotiating or being warned.
Common opening position, usually negotiable. Start with non-use and tooling; those matter more than the label.
Test with two small amendments. Refusal on both is a signal about the whole relationship.
Check which entity holds the plant and equipment. Contracting with an offshore shell removes your enforcement target.
Reasonable for smaller suppliers on cost grounds. CIETAC with a favorable seat is often the workable compromise.
Address it in the contract with stated ownership terms and a buy-out formula. Left unwritten, whoever holds it wins.
The highest-risk answer on this list. Production without terms is where most large claims begin.
I’m Kelly Zhang, a China-licensed lawyer at JT&N in Shenzhen. I spent seven years at CIETAC administering commercial arbitration cases.
That experience informs my contract reviews: identifying unclear obligations, gaps in the evidence your team will need, and dispute terms that fit the supplier relationship.
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