Contracts & Payments: How to Protect Yourself

Payment Methods by Risk Level

See the full comparison table in our China Sourcing 101 guide.

The Ideal Payment Timeline

For the visual diagram, see the full China Sourcing 101 guide.

Must-Have Contract Clauses

Your purchase agreement should cover:

1. Product specifications — Detailed parameters referencing the approved sample number
2. Quantity and unit price — Including tolerance (typically ±5%)
3. Payment terms — Amounts, timing, and method
4. Delivery date — With delay penalties (commonly 0.5–1% per week, capped at 5–10%)
5. Quality standards — AQL levels, inspection rights, golden sample reference
6. Inspection clause — Your right to inspect pre-shipment using your chosen inspector
7. Packaging specifications — Materials, labeling, carton requirements
8. IP protection — NDA, non-compete, ownership of molds and designs
9. Dispute resolution — Arbitration in an internationally recognized venue (Hong Kong or Singapore ICC is standard)
10. Warranty and returns — What happens when defective goods are discovered post-delivery

Critical note: Chinese courts will not enforce a contract written solely in English. Always prepare a bilingual version (Chinese and English) and stipulate that the Chinese text prevails in the event of any discrepancy.

This is Part 8 of 8 in the Rich Bee China Sourcing 101 series. Previous: Shipping from China: A Survival Guide · All chapters: Sourcing 101 full guide