Supplier verification is particularly important for overseas buyers dealing with companies in Wuhan. Wuhan is a major industrial center with substantial automotive, machinery, electronics and equipment manufacturing activity. The buyer should distinguish the commercial location of a supplier from the legal identity of the entity that actually signed the contract and received the payment.
In China, if a court determines that a shareholder’s personal assets have been commingled with the company’s assets, the shareholder may be held personally liable for the company’s debts using their own personal assets. According to relevant precedents from China’s Supreme People’s Court, courts consider the following four factors when assessing whether such commingling exists:
Whether the shareholder used company assets or funds to repay personal debts or for the benefit of affiliated companies, without proper accounting records.
Whether there is commingling between the shareholder’s personal bank accounts and the company’s bank accounts.
Whether the shareholder’s personal income is indistinguishable from the company’s profits.
Whetherthe company assets have been registered under the shareholder’s personal name.
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Checking a Wuhan Supplier Before a Dispute
The local market includes businesses active in automotive, machinery, electronics and industrial equipment. Depending on the transaction, relevant issues may include equipment quality disputes, delivery disputes, OEM disputes, warranty claims and payment disputes. For machinery, automotive, electronics and equipment transactions, buyers should pay particular attention to technical specifications, acceptance criteria, warranty terms, delivery milestones and the entity responsible for performance.
For a cross-border transaction, the buyer should keep the supplier’s Chinese legal name, registration information, contract, invoices, bank-payment records and communications together. Wuhan forms part of Hubei and its commercial network includes a diversified industrial base and extensive supply chains serving central China.
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Evidence and Contract Review for Wuhan Transactions
If a dispute develops, evidence should be preserved before important communications or negotiations change the factual record. The relevant documents may include the contract, purchase orders, specifications, inspection records, invoices, payment records, shipping documents and correspondence.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Laws and legal procedures may vary depending on the specific facts and applicable jurisdiction. No lawyer-client relationship is created by reading this article or contacting us through this website. For advice regarding a specific matter, please consult a qualified lawyer after a formal engagement has been established.
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Qiang Lyu
His practice also includes China company law, intellectual property matters, and commercial contract disputes involving foreign-invested businesses and cross-border commercial activities.