A contract with a Chinese company is only as good as your ability to enforce it in China. Before signing, make sure you have the counterparty's exact registered Chinese name and credit code, a proper company chop or clearly authorised signatory, a dispute clause that leads to a decision Chinese courts will enforce, inspection and claim periods that fit how you actually receive goods, and liquidated damages a court will not cut down. Commercial terms get most of the attention in negotiation. These clauses decide what happens if the deal goes wrong.
Many foreign buyers work from a template drafted for their home market, sometimes a long one. The trouble is rarely that it is too short. It is that it assumes a court, a signature practice and a way of proving delivery that do not exist in China, and it names a party that, legally, is not quite the company you are dealing with.
Who exactly are you contracting with?
A Chinese company's legal identity is its registered Chinese name and its 18-digit unified social credit code. English names on websites and invoices are informal and often inconsistent. A contract that names "Shenzhen ABC Technology Co., Ltd." with no Chinese name or code invites an argument later about who the party is, and makes it harder to sue, freeze assets or enforce. Check the name, code, registered address, legal representative and registered capital on the National Enterprise Credit Information Publicity System, and put the Chinese name and code in the contract.
Check too that the company you are contracting with is the one that makes the product or holds the assets. Trading companies, related companies with similar names, and a factory that invoices through a separate entity are all common. If the valuable entity is not the one that signs, consider a guarantee from it.
Chops and signatures
A contract is formed when both parties sign, stamp with a seal or fingerprint it (Civil Code, Article 490). In practice, Chinese courts treat the official company chop or a contract chop as strong evidence that the company agreed. A signature alone by someone whose authority is unclear is weaker. Ask for the chop, and the signature of the legal representative or an authorised person, on the signature page and across the pages. For larger contracts, ask for a copy of the business licence stamped with the chop, and compare the chop with previous documents.
Governing law and dispute resolution
A contract with a foreign element can choose a foreign governing law (Article 41 of the conflicts statute), but if a Chinese court or tribunal hears the case, the party relying on foreign law must prove its content, which adds cost. Where the counterparty and its assets are in China, Chinese law is usually the practical choice. The dispute clause matters more. A foreign court judgment is still harder to enforce in China than an arbitral award. Arbitration at a recognised institution, such as CIETAC, the Shanghai International Arbitration Center, HKIAC or SIAC, produces an award enforceable in mainland China. Suing in a Chinese court is also workable, and allows early asset freezes. What we would avoid is a clause giving exclusive jurisdiction to a foreign court when the counterparty has no assets outside China. See also our guide to which language version prevails.
Inspection, acceptance and claim periods
Under the Civil Code, a buyer must inspect goods within the agreed period and notify the seller of quantity or quality defects within it. If no period is agreed, notice must be given within a reasonable time, and at the latest two years after receipt unless there is a longer quality guarantee period (Articles 620–622). A buyer who stays silent is treated as having accepted the goods. Foreign buyers who receive goods weeks later at a warehouse abroad, and test them later still, should agree an inspection period that reflects that reality, name the inspection body, and state what happens if goods fail.
Liquidated damages and deposits
Chinese law allows agreed liquidated damages, but a court can reduce them on request if they are excessively higher than the actual loss (Article 585); under the Supreme People's Court's 2023 interpretation, an amount exceeding the loss by more than 30% is generally regarded as excessive (Article 65). A very large penalty therefore does less than it appears. It is usually better to agree a reasonable figure and state how the loss is calculated: price difference on substitute purchases, lost orders, customer penalties you had to pay. A deposit (dingjin) works differently: if the party that received it breaches, it must return double. Deposits above 20% of the contract price are not treated as dingjin for the excess, so keep within that limit if you want the doubling effect.
Frequently asked questions
- What should I check before signing a contract with a Chinese company? Its registered Chinese name and unified social credit code, legal representative, registered capital and litigation and enforcement record. Put the Chinese name and code in the contract.
- Is a contract with a Chinese company valid without a company chop? It can be valid if signed by an authorised person, but a chop is the strongest evidence that the company agreed. Ask for the official or contract chop in addition to a signature.
- Should a contract with a Chinese supplier use arbitration or a foreign court? If the supplier's assets are in China, arbitration at a recognised institution or a Chinese court is usually more enforceable than a foreign court judgment.
- Will a Chinese court enforce a large penalty clause? Not necessarily. Courts can reduce liquidated damages that are excessively higher than the actual loss, generally where they exceed the loss by more than 30%.
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Related Reading
- English or Chinese: Which Version of Your China Contract Prevails?
- Chinese Supplier Breached the Contract: What Can a Foreign Buyer Do?
- Chinese Factory Won't Return Your Molds? Tooling Ownership and How to Get It Back
This article is general information about contracting with companies in mainland China as of 28 September 2026 and does not constitute legal advice. The right terms depend on the transaction, the counterparty and where assets are located.