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Third Party Contracts and China

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English to Chinese Translation of Third Party Contracts

We’ve blogged about legal translation of employment contracts, pre-invention contracts and the right to title and prenuptial agreements. A third party contract is a common occurrence when doing business in China. According to Chinese law, this term covers any contact in which a third party is added to perform an obligation or a part of a contact. Although in the West this is often termed ‘subcontracting’, in China it is a very unique concept with very unique obligations attached – specifically the responsibility to uphold all of your obligations.

So what happens when your supplier doesn’t perform? What action can you take?

First, one must be aware that in the Chinese system (but not in Hong Kong), a contractual promise does not require consideration or compensation before becoming legally binding. In fact, in the Chinese legal system, even an oral promise can become binding so long as:

  • The person is in capacity
  • The person has intention
  • The promise is legal.

So what does this mean for third-party contracts? If it is the intention of the two parties to place a legal, contractual obligation on a third party and this intention is accepted by all parties, then the wronged party has a legal claim against the third party. This means it is essential that all parties are clear about their intentions – specifying exactly who has what responsibilities and what each of the contracting parties’ obligations to each other are. Just as important is to have this intention conveyed via a foreign language translation that a judge will be able to clearly understand.

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