Many think like INDIA legal system is still under developed in china, therefore whats the point in doing paperwork and signing a piece of contract. However, this is not very true, China’s legal system does give you some rights.
And if you had breach in contract and you wanted them to face the court, the act of having a proper contract makes this event extremely likely.
At-least it would help you have a stronger bargaining position when the outcome is unexpected. If problem occurs it would give you upper hand pressurizing and blaming the supplier for the breach.
We usually come across buyer who have been ripped off by Chinese suppliers. We usually ask them to send us the
Purchase/sales Contract that they might have signed with the supplier, most of them will sent us Proforma invoice (PI), and some also mail us email confirmation or instant messenger conversation.
Practically speaking, PI is too simple to protect your rights, you need to write a Sales Contract As per Contract law of People's Republic of China, a contract shall contain the following clauses:
Just few emails, Instant messenger commitments or discussed about the product, or requirements are absolutely NOT enough. You need to get a written, stamped document from a factory manager/owner that says exactly what you both agree to. Don't just get the Sales person to sign off on the contract.
All/Any payment to the factory must only be made once the quality control (QC) standards you have set.
These QC standards must be detailed in the contract and have been signed, stamped and agreed upon by a decision maker. The contract is of no value, unless the right person signs off on the contract.
Never change your contract once it has been made. This says to the supplier – I’m willing to accept lower quality. It’s a slippery slope to follow.
A well written contract is an absolute necessity. It offers you a strong bargaining position and holds the factory accountable to the standards you have set.