Trade Contracts in China
Trade Contracts in China

Risk Management Before Contracting with Chinese Companies in Bulk Commodity Trade

The first step in risk management for bulk commodity trade is to proactively address potential risks before entering into contracts. To minimize risks, businesses must adopt proactive measures to lower, avoid, share, and control risks based on different situations.

Who Should Sign on behalf of the Foreign Company the Contract with Chinese Companies?

Directors of foreign companies can sign contracts with Chinese counterparts, and the absence of the foreign company’s stamp won’t invalidate the contract, except in cases where specific agreements or the foreign company’s articles of association impose restrictions on the directors’ signing authority.

Is CISG Automatically Applicable in China?

The answer is YES, as long as the international sales of goods contracts are concluded between parties whose places of business are in different Contracting States of the United Nations Convention on Contracts for the International Sale of Goods (the “CISG”). In such cases, the Chinese courts shall apply the Convention automatically.