Lawyer Li has encountered many clients in recent years who claim to have been deceived by Chinese suppliers in their contracts. These clients are buyers from different countries, while the sellers are concentrated in places like Jinan, Shandong Province, and Wuxi, Jiangsu Province, China.
Through statistical research, we have identified the following characteristics in these international trade contract disputes:
1. Most of the international trade contracts signed by both parties involve procurement of goods such as steel and iron ore.
2. The prices quoted by the sellers to the buyers are significantly lower than market prices.
3. Sellers are concentrated in places like Jinan, Shandong Province, and Wuxi, Jiangsu Province, China.
4. The companies of the sellers have very short business registration times, mostly after 2019.
5. Sellers primarily operate transactions through Google's self-operated websites, with very few transactions through formal third-party e-commerce platforms.
6. The contracts signed by both parties are irregular, lacking risk control clauses and clear breach responsibility clauses.
In several such contract disputes we've handled, we've found that the defaulting party often employs the following fraudulent methods:
1. During the inquiry process, the prices quoted by the seller to the buyer are significantly lower than market prices.
2. After the contract is signed, buyers usually pay the seller 10% or 20% of the advance payment as stipulated in the contract, and the seller defaults after receiving the advance payment.
3. After receiving the advance payment, the seller avoids shipment for various reasons and does not refund the advance payment.
4. After receiving the advance payment, the seller delivers fewer quantities than specified in the contract, or the quality of the goods does not meet the contract specifications.
5. After receiving the advance payment, for example in steel purchases, the seller delivers goods with only a small amount of qualified steel, mixed with materials such as gravel, bricks, etc.
In conclusion, Chinese sellers take advantage of the difficulty of enforcing rights when disputes arise with international buyers who are not within China's jurisdiction, putting buyers at a disadvantage during the transaction process. Therefore, we advise buyers to consult Chinese lawyers for professional legal advice throughout the entire transaction process to protect the normal progress of your transactions.
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