Most quality issues are the result of misunderstandings. A Sales contract, can prevent those misunderstandings from occurring in the first place.
In my opinion, the sales contract is the most important mechanism of the entire importing and product development process.
But do Chinese suppliers really care about sales contracts – and how do you make them follow the terms?
And, can you draft a contract on your own?
These, and many other, questions, will be answered in this comprehensive guide on sales contracts for startups and other small businesses importing products from China.
1. Make sure to include these terms in your sales contract
|Manufacturer||The manufacturer name, business license number and address must be defined. This entity is ultimately responsible.|
|Seller||Many suppliers use companies in Hong Kong to receive the payment. This company shall be defined as the seller.|
|Product Specifications||List all product specifications and attachments. Don’t leave any product information out of the sales contract. If it’s not in the contract, you cannot demand a remake from the supplier.|
|Defect list||Write a definition of defective product (i.e., mold or scratches), and an accepted defect rate.|
|Compliance Requirements||List all applicable product safety standards and regulations, to which the product must be compliant.|
|Penalties||Define penalties that apply if the supplier fail to pass the quality inspection and/or compliance testing.|
|Product Packaging||Specify the product packaging design, dimensions and materials|
|Export Packaging||Specify the export packaging type, dimensions and materials (i.e., freight pallets).|
|Quality Control / Testing Terms||Write the quality inspection and lab testing terms|
|Payment Terms||Normally, the buyer pay a 30% deposit, and ties the remaining 70% to the quality control and lab test result.|
|Shipping Terms||Define mode of transportation, incoterms and more|
|Bank Account Details||List all account details of the seller|
|Late Delivery Clause||Penalties for delayed production|