What are the main terms of FTC's?
A FTC generally consists of three parts: the preamble, which deals with title, date and place of signing, the body of the contract, which contains the operative terms and the attestation clause.
The Chinese Foreign Economic Contract Law classifies the above noted clauses into compulsory and optional clauses. The compulsory clauses that must be in the FTC are as follows:
[a]. The names of the contracting parties and their nationalities, principal place of business or habitual residence. Chinese law does not recognize contractual capacity on the part of Chinese citizens to enter a FTC. Therefore the name of an individual may only involve that of a foreign citizen.
[b]. The date and place of the contract. These provisions will generally establish the effective date and the jurisdiction of the FTC.
[c]. The type of contract and the scope of the subject matter of the contract. Categorizing the contract is important, as there may be other Chinese laws that will be applicable to the contract.
[d]. The technical conditions, quality, standards, specifications and quantities of the subject matter of the contract.
[e]. The time, place and method of performance of the FTC.
[f]. The trade terms, amount and method of payment and various expenses. The price clause should consist of two parts: unit price and total price.
[g]. Assignment of the FTC or the conditions for assignment. It should be noted that if a party intends to assign an FTC, it must obtain the consent of the other party to the assignment.
[h]. Damages and other liabilities for breach of contract must be set out in the FTC.
[i]. How settlement of disputes arising out of the FTC are to be resolved. A dispute arising from a FTC may be settled by one of four methods: compromise, conciliation by a third party, arbitration or court judgment.
[j]. The language that is to be used in the contract and their effectiveness in case of a discrepancy between the Chinese and the English version.
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