Friday, September 21, 2018

Neither our regulation company nor any desirable law company of which I am conscious ever sells China settlement templates. There are many reasons for this however predominant is common that templates really in no way paintings for China and they frequently may be the greater danger than having no contract at all.

And yet, our China lawyers are continuously getting requested for “templates” for even incredibly complicated China deals. We had been requested for joint assignment template agreements and our response to that is how can we even provide you with this kind of template except and until you realize what the terms of that agreement may be? I imply, we’ve got achieved joint mission agreements wherein our customer has contributed twenty million bucks to the joint venture and all they truly wanted out of it is guaranteed product pricing for the following 15 years and we have accomplished joint assignment offers where our client has supplied no cash — simply generation and system and in go back receives 60 percentage possession of the joint venture and manipulate over pretty much the whole lot it does. Do you surely think we’ve got a template that covers every contingency?

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Your attorney’s value is in many instances more in figuring out what a settlement ought to say that in absolutely drafting it and the previous normally takes as a good deal or extra time than the latter. Our China Manufacturing Agreements and our China Licensing Agreements are the first-rate instances of this and we get the “template question” lots on each of these. We are also frequently asked through capacity and actual clients whether it’d keep the cash to have their in-house legal professional or their much less-highly-priced neighborhood home lawyer draft such an agreement first after which have my company’s China attorneys use that draft settlement as our template. My answer to that query is typically something like the following:

We have drafted masses of China licensing agreements and production agreements and we don’t use any of them as a “template.” What we do is to first acquire up the data from our customers and discern out which of our many contracts — if any — we have to use as a version in developing what will essentially be a brand new settlement for you. Most of the time we come to be pulling sections from more than one contracts for a new, particularly customized agreement. Our agreements have been specially drafted to be used in China and meaning they may be dual-language agreements with Chinese because of the reliable language. We usually (however NOT constantly) draft them beneath Chinese law and we ensure to draft every provision to advantage you as an overseas enterprise that is licensing its products or services in China or having its merchandise manufactured in China. Our present contracts are as near ready as you can discover and it, therefore, does not make feel with the intention to pay any other legal professional who is aware of not anything about Chinese regulation to create a contemporary English language contract that allows you to now not make sense for China. Not only could the money you pay that lawyer go to waste, but my regulation company’s expenses could increase due to the fact in place of our beginning with our very own Chinese and English contracts as models, we might be starting with an English language settlement so that it will now not be near what makes experience for what you are seeking to do in China. We would revise nearly every provision inside the agreement you supply us to make it China-suitable and it might likely take us twice as a good deal time to try this than for us to simply use our very own formerly drafted contracts as the foundation for yours. It is not helpful to us to have a common regulation settlement [China is a civil law system] primarily based on a distinctly idealized and impractical American/European practice that has no applicability or use in China.

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China employment documents offer another properly instance of in which templates fall brief. We are often asked to draft China employment contracts for China WFOEs and China Joint Ventures. Our first reaction is to invite the ability patron whether their Chinese entity already has a set of Rules and Regulations (every so often referred to as company guide or employee manual). If the solution to that question is sure, our legal professionals will use those Rules to decide what have to go into the employment contracts.

If the purchaser does now not have any Rules and Regulations our response is to say that we cannot draft the employment contracts standing alone; we need to draft both the employment contracts and a set of Rules and Regulations (and every now and then extra). Our reasoning on this is three-fold. One, nearly all locales in China now require employers to have Rules and Regulations, in particular, the one’s locales with extra than a handful of foreign companies. Two, having an employment settlement with none Rules and Regulations is like having a vehicle without an engine; it simply doesn’t paintings. Without such Rules and Regulations you can not discipline or terminate your employees and you are at notable chance of your employment policies and choices being fodder for worker-employer disputes. The 0.33 purpose is each extra non-public and selfish: we do now not need our regulation firm’s name related to an approaching catastrophe. This third motive is likewise why properly regulation corporations do now not sell templates.

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After we provide an explanation for the need for Employer Rules and Regulations, the consumer will now and again request that we just use our “model Rules and Regulations to keep charges down.” Again, we have to explain to them why we haven’t any such model and why the sort of model can by no means work. Our typical response is something like the following:

Your Employer Rules and Regulations need to suit what you’re doing in China and where you are doing it. This approach that for us to provide you with Rules and Regulations with the intention to work we should acquire up to all sorts of information before we are able to even start. If you are a manufacturing facility in Qingdao, we can’t even use the Rules and Regulations we did for an accounting firm in Qingdao months ago? Nor can we use the Rules and Regulations we did for a manufacturing facility in Suzhou three months before. We cannot even use the Rules and Regulations we did for a factory in Yantai six days ago due to the fact despite the fact that Yantai and Qingdao are within the identical province, their employment legal guidelines and practices do now not align. And that factory in Yantai was truly difficult for its employees and I remember the fact that it’s miles crucial to you to be considered as a super company.