Our China contract lawyers constantly get calls/emails from companies that have contracted with a Chinese company and then get cold feet regarding the validity of their contracts. After we explain to them how it is better to contact us before they sign the contract, we answer their questions. Here are three that epitomize the questions we get, along with our answers:
Q. “We recently entered into an agreement to buy product from a Chinese company. I just noticed that the Sales Manager of the Chinese company signed the agreement. Do you see any immediate issues with a Sales Manager lacking authority to bind the Manufacturer?”
A. The issue is not so much who signed on behalf of the Chinese company, but rather, whether the document was stamped with the Chinese company’s seal. If the document was signed by a Sales Manager and stamped with the correct seal, it is binding on the company. If the Chinese company’s seal is not on the contract, then you could face issues down the road.
Q. We entered into an English language agreement with a Chinese company and I just read that the Chinese courts do not enforce agreements in any language other than Chinese. What should we do?
A. The courts in China will often enforce agreements that are in languages other than Chinese. If you are going to need to resolve your contractual disputes in a Chinese courts, you are better off having your contract in Chinese, because some Chinese courts will not move forward with English language contracts and even those that do usually have them badly translated. Short of requesting a new contract, there is nothing you can do about this now.
Q. The Chinese company had their attorneys review our agreement. Their attorneys used footnotes in Chinese to provide feedback. I asked that the footnotes be removed, which they were, but the footnote numbers remained and one of the footnotes does as well. Does this pose any issues that you can think of (specifically having footnote numbers without corresponding text)?
A. I doubt the footnotes without corresponding text will have any impact, but the footnote with the Chinese text may now be part of your contract. We would have to review the contract to better assess this.