Dan HarrisHarris & Moure, PLLCUSA | China| Mongolia

www.harrismoure.com www.chinalawblog.com

Asia Product Outsourcing Done

Right

The Keys

Good manufacturer

Good contract

Good IP protection

Good Manufacturer

• Due Diligence

• Due Diligence

• Due Diligence

The company's legal representative signed it. Chinese law provides that a company's legal representative has apparent authority to bind the company. This means that even if that representative lacks the actual authority to bind the company (maybe because the board of directors or the shareholders never gave the representative the authority to contract with you), the legal representative's signature will bind the company. There is, however an exception to this and that is when you know that the legal representative lacks the authority to bind the company.The contract is appropriately sealed.  An appropriate seal (oftentimes called a chop) is applied to the contract. It does not matter who applies the seal, so long as it is the right seal. This means it must be sealed either with a contract seal that sets forth the name of the company or, as is more commonly done, with the Company Seal. Each Chinese company has only one company seal (no copies).Chinese companies are notorious for trying to get out of contracts by claiming they never actually signed them or that they were signed without the proper authority and so if your contract is big enough and important enough, you should consider doing all of the following to minimize even further the likelihood of the Chinese company seeking to get out of your contract: A signature from the company's legal representative. Of course, you must first confirm from the company's business license who exactly is the company's legal representative.A resolution from the company's board explicitly approving the contract and authorizing the legal representative to sign it. The affixation to the contract of the company seal or the company's contract seal.

Good Contract

Why bother?

What about corruption?

The Right Contract

NDA vs. NNN

OEM Agreement

The Good Contract• In writing• One language• Excruciating detail• Liquidated damage• Attorneys’ fees?• Dispute resolution• Sealed

Where to Sue?

Most countries do not enforce U.S. judgments.

Most countries do enforce

international arbitral awards.

Suing In China

• Document-based• Cheap and fast (unless…) • Nobody settles• Low damages

Arbitration Clause • Where?• What law? • Institutional or ad hoc? • Fees? • Language?• Arbitrators’nationality?

Where to Arbitrate

• United States as no-go

• Hong Kong/Singapore/London Vancouver, New York

• CIETAC: Not so bad

CIETAC: Contract Clause

•Specify English language•Specify non-Chinese arbitrator(s)•Discovery•Injunctive relief•Third parties•Notice

Protect your IP

• Trademark

• Patent

• Copyright

Dan Harris

Harris & Moure, pllcUSA | China | Mongolia

www.harrismoure.com www.chinalawblog.com