What to put in a contract with a plant in China

A contract with a plant is the only place where promises become obligations. It records nine things: what is supplied (an exact specification and marking), how many, on what delivery terms, how and when payment is made, how the goods are inspected before shipment, how you accept them, what happens with defects, what warranty applies, and under which law and where a dispute is settled. Plus the language of the contract. If a clause is missing, in a dispute you will have to prove it from correspondence, and that is weak support. Below is what to write in each clause and what happens without it. This is not a model contract and not legal advice: show the final text to a lawyer.

Which law applies if you say nothing

Both Uzbekistan and China are parties to the UN Convention on Contracts for the International Sale of Goods (CISG). It has been in force for Uzbekistan since 1997 and for China since 1988. If the parties are from these two countries and the contract is a sale of goods, the Convention applies on its own, even if it is not mentioned. The parties may exclude it or change its rules (Art. 6). So if you want a different law, you must write it down expressly.

Under the Civil Code of Uzbekistan, a contract between legal entities is concluded in simple written form (Art. 108). Failing to do so does not by itself make the transaction invalid, but in a dispute it deprives the party of the right to rely on witness evidence (Art. 109). The parties' choice of law and the law applicable in the absence of a choice are covered by Art. 1189 and 1190 of the Code. How they apply to your contract is a question for a lawyer.

Nine clauses and the contract language

Five places where mistakes are most common

A specification in words. "A 15 kW electric motor" is not a specification. You need the speed, the voltage, the mounting version, the shaft and flange dimensions. Better still, the full marking and a photo of the nameplate of the old unit.

Payment not tied to an event. "70% before shipment" leaves open before which shipment and what confirms readiness. More reliable: the balance after the inspection report or against documents.

The claim period. Under the CISG, the buyer loses the right to rely on a lack of conformity if it does not notify the seller within a reasonable time after it discovered or ought to have discovered it (Art. 39). Better to write a specific period and procedure: how to notify, with which photos and which report.

A warranty from shipment. For equipment that is shipped, installed and started up, a warranty from the shipment date may end before start-up. Write which event it runs from and what happens if start-up is delayed through no fault of yours.

Two languages, two contracts. The contract is often bilingual. State which text prevails in case of a discrepancy. If the prevailing text is Chinese and you do not read it, that is a risk.

What else to check before signing

• The plant's name in the contract matches its business license and the payee.
• The legal representative signs, or a person with a power of attorney.
• All annexes (specification, drawings, sample) are named in the contract and signed.
• The bank you pay through checks the contract under the currency control rules. Ask it for its requirements for the contract before signing, not after.

How we do it

• We sign the contract with the manufacturing plant, not with a trader: the plant, part number and version, quantity and terms are all on paper.
• We agree the price, tolerances, warranty and terms in writing, before production.
• A defect recorded in the acceptance report gets replaced: the contract obliges the manufacturing plant to supply a replacement. We chase it.