- Invoices Cannot Replace Contracts
In most of the small-value international trade disputes we handle, only an invoice exists, without a contract. People often assume that an invoice is the same as a contract. However, there is a difference. An invoice typically only contains core terms such as product, quantity, price, payment method, and delivery date. Compared to a contract, it lacks important clauses such as breach of contract clauses and dispute resolution clauses. If a dispute arises, the lawsuit can only be filed in the court where the defendant is located, and only damages can be claimed. Penalties for breach of contract and attorney fees must be borne by the plaintiff. This is very disadvantageous for small-value disputes. Sometimes, attorney fees even exceed the amount claimed. If both parties can sign a contract stipulating that the breaching party bears the attorney fees, this can reduce losses in the sale. In many cases, considering the high cost of attorney fees, sellers will quickly choose to settle.
- A Written Contract/Invoice is Essential
In the event of a dispute, a written contract is the most direct and important evidence. Without a written contract, parties need to prove the existence of the transaction and the content of relevant terms through other means, such as emails, chat logs, witness testimonies, shipping documents, and invoices. However, the probative value of this evidence may be relatively weak, and it is difficult to form a complete chain of evidence. For example, the authenticity, completeness, and relevance of electronic evidence may be questioned, and witness testimonies may be subjective and uncertain.
- Inconsistent Receiving and Signing Companies
Clearly defining the contracting party, a seemingly simple issue, can sometimes become a troublesome problem in international trade. Many foreign clients sign contracts in English due to language barriers. However, it is important to note that companies registered in China only have Chinese names and no official English names. The English names are often arbitrarily translated by suppliers. It is even possible for multiple companies to have the same English name.
Every company in China has a registration number. If the contract is in English, the registration number must be included to avoid confusion.
- Invoices or Contracts Without Seals
There are significant differences between China and foreign countries in the use of seals and signatures, mainly reflected in legal traditions, business practices, and legal regulations. In China, official seals carry significant authority and legal validity, while signatures are typically used as a supplementary method of confirmation. However, in foreign countries, especially Western countries, signatures are the primary method of confirmation, with seals adding formality in specific circumstances.
In China, seals (official seals, contract seals, etc.) hold extremely high authority and legal validity in commercial and legal documents. Especially in contracts between companies, affixing an official seal is generally considered a formal expression of the company’s will and carries strong evidentiary weight.
While signatures are also widely used in China, their legal validity usually needs to be confirmed in conjunction with other elements (such as seals). Personal signatures can be valid independently in certain situations, but when involving company matters, they are usually used in conjunction with an official seal or the seal of the legal representative.
- Mistaking suppliers for factories when they are actually trading companies.
Many foreign buyers, when screening suppliers, contact sellers claiming to be “factory direct” through Alibaba International Station, trade shows, or B2B platforms. However, the actual trading partner may be a “trading company” (middleman)—these companies do not produce products themselves but purchase from other factories and resell them, profiting from the price difference. Buyers who fail to verify the supplier’s true identity (e.g., factory qualifications, production capacity) may face the following risks: uncontrolled product quality, delayed delivery dates, insufficient production capacity, and difficulty in tracing responsibility.
- Blindly trusting product videos, packing lists, and customs declarations.
To save costs or expedite transactions, some buyers rely solely on videos, packing lists, and customs declarations provided by suppliers to confirm the goods’ condition, believing these documents are sufficient to prove the goods conform to the agreement (e.g., quantity, model, no damage). However, these materials are easily tampered with or forged, and blind reliance may result in goods not matching the description without the ability to claim compensation.
For example, suppliers may pre-record videos of other batches of qualified goods or use editing and staged photos to conceal problems in the current batch. Packing lists are prepared by the supplier; if not verified on-site by a third party (e.g., an inspection agency) or a buyer’s representative, they may contain errors such as incorrect model numbers, inflated quantities, and missing accessories. Customs declarations are submitted by the supplier and only prove that the goods have been declared for export, but do not guarantee the quality of the goods or their conformity with the contract.