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China Contract Templates: More Cons and Cons


I wrote the remaining week on China agreement templates in China Contract Templates: the Cons and the Cons. That submit said that China settlement templates range from worthless to risky. I positioned that put up on Linkedin in which it has obtained the subsequent remarks:


I couldn’t agree greater with your article. I suppose you should have additionally thrown in the frequently bragged approximately claim from commercial enterprise parents, that “howdy, they signed our trendy contract with no troubles!” Great news! Maybe it’s far unenforceable against the Chinese party, so of a path they signed it!
Templates are easy to return through. They can cost you huge, though, in the end. I have seen some such instances. Professional guidance is worth the funding!

Highlight: Going in-residence as a ‘cost-saving’ approach because a group with any actual China expertise can cost firms colossal time. Surprisingly, many Western corporations recognize China as a big step. However, then parents they’ll study as they pass along with no principal screw-ups.

You have been doing enterprise in China for a very long-time. You are one of the few people I follow. This is due to the fact you constantly provide fine practical advice. Everything you say about Liquidated Damages is a hundred% correct. I can’t emphasize this enough. However, it’s miles challenging to get the Chinese side to sign, and you need to not capitulate in this term. This is coming from enjoying. I have been talked out of it multiple times for various motives and had been burned. Also, agree about diligence. If you are doing any long-time period transaction requiring a significant amount of funding, you’d higher ensure you recognize your Chinese associate. Figuring out a Chinese entity’s proper ownership, power shape, and financial circumstance can be very tough. Thanks for the Great Read.

I also received an email from a lawyer friend who chastised me for failing to provide unique actual global examples of templates used to an employer’s detriment. Great point. In Forum Selection Clauses. Do NOT Try These At Home, I mentioned how my law firm had “made nicely over $100,000 a final couple of years combating over badly written discussion board selection clauses in international contracts.” In all of these cases, the clients had drafted their contracts using template provisions on discussion board selection. And as I said in that publish, “our clients (who consulted us for the first time only once they had signed these agreements and proper before they have been prepared to sue on them) ought to without difficulty have prevented the complete cost had they handiest performed matters right with their discussion board choice clauses in the first place.” The beneath are some of their errors dealing just with arbitration:

One had a provision calling for arbitration earlier than the Geneva Chamber of Commerce. The problem becomes that the Geneva Chamber of Commerce did no longer do worldwide arbitration. In this situation, our client took a contract my regulation firm had written for them, made a few adjustments, and certainly re-used it on every other deal. The agreement my firm had written had known as for disputes to be resolved earlier than the Arbitration Institute of the Stockholm Chamber of Commerce (at least I suppose that became what it said), which at that point (and these days) turned into a prevalent discussion board for resolving disputes between Russian and American agencies. So while my consumer went off and did a settlement with a Spanish organization and the Spanish employer refused to have the disputes treated in Stockholm, my purchase just switched “Geneva” for “Stockholm” and called it an afternoon. Back then, the Geneva Chamber of Commerce did no arbitration. Zero. So when it came time for my customer to pursue arbitration, my company’s arbitration legal professionals had to behavior extensive studies to decide how even to commence arbitration before an arbitral body that did not exist. We ended up determining to file with the Swiss Arbitration Association in Geneva, figuring we may want to argue that’s what the events meant and that arbitral frame might need to hold the case. The opposing face vigorously contested our desire for forum The simplest many briefs and plenty of greenbacks later did we be triumphant.

As soon as got here to us, an agency with its “general shape settlement” calling for all disputes springing up out of the settlement to be resolved by arbitration within the United States. This provision makes properly experience now and again and makes terrible feel other instances, and inside the case they delivered us,


it made horrible feel and experienced global counsel could have instantly identified why. Our client’s most significant hazard could be non-price by using the organization that changed into buying our client’s merchandise. Korea is one of the good international locations around the world to seize a defendant’s property straight away upon submitting your lawsuit. Still, we had been worried that we might not be able to do so in this instance, due to the fact the contract said all disputes had to be resolved in the United States. When we attempted to seize assets in Korea belonging to the opposing birthday celebration, it made this argument to a Korean courtroom.