Contract damages can be a great thing in a China contract, but only if done right, according to Dan Harris, writing in the Harris Bricken China Law Blog.

He explains that the term “contract damages” refers to a contract provision setting out the damages for breach. In the standard commercial contracts his firm writes for clients, the agreements usually include a specific damage amount for certain (but not all) violations of the contract terms.

“The only constant is that we try to make the amount as high as we can, while at the same time erring on the side of keeping it low enough so that it will actually work to scare the Chinese company into not breaching the contract,” Harris writes.

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The end of the year brings an onslaught of China Employer Audits, and with those audits comes an onslaught of China employment law questions, writes Grace Yang in the Harris Bricken China Law Blog.

She discusses some of the most commonly asked questions on China employment contracts and provides short answers to each of them.

The issues include using an English version of contracts, contract templates provided by Chinese labor authorities, termination of signed China employment contracts, open-term contracts, offer letters, and the need to review contract templates.

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Dan Harris of China Law Blog has published a sample email that addresses many of the key points a company should be thinking about if it is contemplating selling into China.

The sample is an email (with identifiers removed) from a China attorney to a client, written to gather sufficient information to create a first draft of a product sales agreement for the sale of a product from an American company to a host of Chinese automobile companies.

The email covers such issues as the product, price terms, payments terms, shipping terms, scheduling and timing, facility, subcontractors and component suppliers, packaging and labeling, molds and tooling, quality contrl, warranty, general service, intellectual property, dispute resolution, and other special matters.

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Western business people have been falling for a classic Chinese scam for a long time, writes Dan Harris in Harris Moure, LLP’s China Law blog, and it seems to be rapidly accelerating of late.

“The scam consists of the Chinese company (actually, in every instance when our firm has done any investigation at all we immediately learned that there is actually no real company there) luring in the Western company with promises of big money for services (or sometimes products) to be supplied by the Western company. There is just one small hitch: the Western company must go to China,” he explains.

Once the Westerner gets to China, the local representative profits by splitting inflated costs incurred at hotels and restaurants and from fake notary charges.

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Every word matters in a contract and this is as true in Chinese as it is in any language, writes Dan Harris on Harris & Moure‘s China Law Blog.

“Words have very particularized meanings in contracts and those meanings are sometimes different in a contract than in real life. Contracts also have terms that have become recognized and defined over time,” he writes in the article. “The only people who can truly know how to use these specialized and particular words and terms are lawyers who know both China’s contract laws and who are completely fluent in written and spoken Chinese. On top of this, it is critical that the Chinese version explicitly reflect our client’s goals. To put it another way, we pretty much never see a ‘translated’ contract that works as intended.”

He explains the importance of having a judge or arbitrator being able to understand the Chinese language contract in the context of Chinese law.

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Dan Harris writes in the Above the Law blog about how U.S. companies relying on a Letter of Intent (LOI) or a Memorandum of Understanding (MOU) detailing the terms of their proposed China deal may be exposing themselves to substantial liability.

“Most U.S. (and many European companies) assume that no party is exposed to any liability during the negotiation period as liability arises only after the parties have executed a formal, written contract. If their written document states that it is non-binding, no liability can arise,” he writes. But the rule in China is the opposite.

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