A Letter to Traders Seeking Legal Assistance: Let Us Safeguard Your PPE Deals with Chinese Companies
Dear Sir/ Madam,
As a law office who mainly represents foreign clients to deal with Chinese legal issues, this year Landing Law Offices China received a large number of messages for help from overseas purchasers.
A German company made payment to amount of EUR 4,000,000 to purchase face masks, and appointed a flight to China. However, the delivery of face masks was delayed and the flight could only fly back empty, which caused a loss of millions of US dollars.
A Netherland company, who paid EUR 280,000 in importing face masks, was temporarily asked by the seller to increase the expense, and was left no choice but paid USD 50,000 extra.
A Singaporean company spent RMB 1,000,000 in purchasing face masks, which were all detected to be non-conforming to the agreed quality standard when delivered, and the seller refused to replace the goods or reimburse the expense.
A company from the United Arab Emirates entered into a contract of sale for face masks that were worth of USD 70,000, with a Chinese company. After the letter of credit was paid, the seller found another purchaser offering higher price, the Chinese company thus broke the contract and resold the goods.
An US company spent USD 250,000 in purchasing a small batch of face masks, however, the seller never shipped the goods at all.
The main reason for so many above-mentioned problems is:
Fail to investigate into the credit of sellers.
The seller uses a shell company to make the deal and prepares for fraud.
The seller uses an offshore account as recipient makes it easier to transfer the property and evade liability
A lack of relevant contract terms for protection.