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Attorney Lyu Qiang from Quanzhou Explains: Under What Circumstances Can an Illegal Contract Still Be Valid?

When sourcing from Quanzhou, overseas companies should consider not only the contract itself but also the type of local supplier, the surrounding supply chain and the nature of the goods or services involved. Quanzhou has a large export-oriented manufacturing base covering footwear, textiles, consumer goods and industrial products. Understanding this background can help a buyer identify potential problems at an earlier stage.

Article 153 of China’s Civil Code stipulates that contracts violating laws or mandatory administrative regulations are invalid, except where such laws or regulations do not invalidate the contract. So, what are the exceptional circumstances? Typically, there are three types. The first is operating beyond the business scope. For example, if a company engages in a business not included in its registered scope, this does not invalidate the contract. The second is when mandatory administrative approval was not obtained initially but is later fulfilled. The third involves regulatory behavioral rules. What are regulatory behavioral rules? For instance, if a shop lease contract stipulates that the shop can operate 24 hours a day, but local administrative regulations restrict operating hours to 16 hours, the contract remains valid. I am Attorney Lyu Qiang from China. If you have any Chinese legal issues, feel free to contact me. If you like my video, please subscribe to my channel.

What Foreign Buyers Should Know About Quanzhou Suppliers

The Quanzhou market includes businesses involved in footwear, textiles, consumer goods, machinery and export manufacturing. Common commercial problems can include quality disputes, production delays, OEM disputes, non-conforming goods and payment disputes. In a dispute, contracts, purchase orders, technical specifications, inspection records, invoices, payment records and correspondence may become important evidence. For footwear, textile, consumer-goods and machinery transactions, buyers should pay particular attention to exact product specifications, approved samples, production tolerances, inspection arrangements and the identity of the contracting entity.

The city’s position within Fujian and its connection with a dense network of export-oriented manufacturers and trading companies can provide useful commercial context when evaluating a supplier relationship. Local characteristics do not determine the outcome of a dispute.

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Before Taking Action Against a Supplier in Quanzhou

For an overseas buyer, a practical first step is usually to identify the correct Chinese contracting party and preserve evidence showing what was ordered, what was paid and what was delivered. Depending on the contract and dispute, the next step may involve a demand, settlement negotiations, arbitration, litigation or enforcement.

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