Three Keys to Drafting a China Contract that Works

In deleting emails I came across this one from one of our China lawyers to a Latin American client for whom we very successfully drafted a China licensing agreement. I love the email because it so nicely encapsulates exactly what we try to do with pretty much every China contract we draft: balance out everything and give our clients a contract that will both protect them and get the deal done.

The email is an introduction to the contract drafting process and it describes as follows what this lawyer will seek to accomplish with the first draft of the licensing agreement:

1. The contract has to make good business sense for you, our client. This requires I first speak with you to get a good feel for your business and what you are seeking to accomplish and avoid by licensing your technology to China.
2. The contract has to work for China. In other words, I need to draft something that works within the confines of Chinese law and will lead the Chinese side to take it seriously and view breaching it as likely to cause it a raft of harm.
3. The contract has to be drafted  such that your potential Chinese licensee will actually sign it. It would be easy for me to draft the “perfect” contract for you, but the other side will never sign that. What we have to do is work together so that we present your potential licensee with the best contract possible for you, but not so one-sided in your favor that the other side will not sign it.

Your thoughts?

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.