A set of paragraphs used at the start of the agreement to identify the parties and summarise the background to the transaction that the agreement records.

A set of defined terms and rules of interpretation used to reduce repetition within the body of an agreement, making it shorter and easier to read, to reduce ambiguity and to clarify the scope of contractual provisions.

A commencement clause sets out when an agreement comes into effect. A duration (or term) clause sets out how long an agreement continues for. The commencement clause and the commencement and duration clause are mutually exclusive. These clauses address Chinese law provisions regarding when an agreement which requires government approval takes effect.

An indemnity clause is used when one or more parties agree to indemnify the other(s) against damage in certain pre-agreed circumstances. A guarantee is used when a party is guaranteeing the performance or debt obligations of a third party.

See Standard clauses:

Use this clause to specify the rate at which interest accrues on amounts of money owed under the agreement which are due but remain unpaid.

Where two parties have financial claims against each other, a right of set-off allows them to deduct one liability from the other, so that only the balance is due.

A clause providing for payment of a pre-agreed sum in the event of a breach of the agreement, or late or defective performance. Liquidated damages clauses are common in China-related transactions, in particular in agreements relating to construction, engineering and supply or sale of goods.

A clause which provides the parties with the right to obtain remedies that are at the discretion of the courts of a jurisdiction in addition to contractual damages. Also known as an "inadequacy of damages" clause. Important remedies such as the right to specifically perform an agreement or obtain an injunction are available at the court's discretion in some jurisdictions, including in China.

A clause to give the parties the right to suspend or terminate their contractual obligations in certain circumstances which render the obligations impossible to perform, such as the occurrence of natural disasters or armed hostilities. The boilerplate clause contains a long-form and short-form version.

Assignment clauses are included in all kinds of commercial agreements to clarify, exclude or qualify the parties' ability to assign rights under the agreement. It is common practice for this clause to deal also with the parties' ability to subcontract and otherwise confer rights or obligations under the agreement to third parties. The boilerplate clause assumes a foreign governing law. An alternative clause is provided for agreements between domestic Chinese parties or which are otherwise governed by Chinese law. See Standard clauses:

Confidentiality clauses set out the scope of information that will be deemed confidential, restrictions on its disclosure by the parties and any exceptions. The boilerplate clause contains a long- and short-form version.

A termination clause lists events triggering a party's right to serve notice on the other party to terminate the agreement. This can be particularly important when dealing with Chinese counterparties, whose expectations may be coloured by the fact that Chinese law only makes termination available as a remedy for breach in very limited circumstances if the parties have not expressly stated that breaches of the agreement can give rise to its termination.

A survival clause (also sometimes called a consequences of termination clause) sets out what happens on termination or expiry of an agreement. It commonly deals with the effect of termination or expiry (such as survival of terms or the effect of termination on the accrued rights and liabilities of the parties). Depending on the agreement, it may also expressly set out additional obligations on one or more parties, such as delivery up of materials, in the event of termination or expiry.

Parties to a transaction will often be concerned to control the dissemination of information about the transaction. This is particularly the case for listed companies, who are subject to additional requirements when it comes to announcing acquisitions or disposals. An announcements clause ensures that a transaction is publicised in an appropriate form, and in an agreed manner, by preventing each party from making a public announcement about it without the prior written consent of the other party or parties. Long- and short-form versions are provided.

An entire agreement clause (also known as a whole agreement clause) is intended to prevent the parties to a written agreement from raising claims that pre-contractual statements (that is, oral or written statements or representations which were made during the agreement negotiations but were not included in the final version of the agreement) constitute additional terms of the agreement, or a collateral warranty or some other side agreement. It is one of the most regularly litigated clauses in commercial agreements. Long- and short-form versions are provided.

A costs clause is used to specify who will bear the costs that the parties incur in negotiating the agreement and the transaction to which it relates.

A conflicts clause is useful when an agreement amends another agreement, incorporates another agreement or document by reference, co-exists with other agreements or contains provisions that overlap with other provisions of the agreement. In these and other situations, a conflicts clause allows the parties to indicate which agreement, or part of an agreement, takes precedence over the other.

A variation clause (also known as an amendments clause or no variation clause) sets out a prescribed procedure for the parties to follow in order to vary the agreement. It is intended to exclude the possibility of informal, and perhaps inadvertent, oral variations being made to an agreement.

A waiver (also known as a "no waiver") clause, seeks to ensure that a party's failure to enforce its contractual rights (whether deliberately or by oversight) in respect of the other party's breach of agreement does not result in their losing those rights or remedies. Long and short form versions are provided.

The purpose of a "rights and remedies" clause (also known as a "cumulative remedies" clause) is to record the parties' intention that the rights and remedies provided under agreement are in addition to their other rights and remedies under the applicable law, and not in substitution for them. agreement

Parties who have entered into an agreement may subsequently find that it contains provisions which are illegal, with the result that all or part of the agreement could be void or unenforceable. The purpose of a severance clause is to make clear that, in such a case, the parties intend the agreement to survive by severing the offending provisions from the rest of the agreement.

These clauses are for use where more than one party promises to do the same thing. In that case, it is a question of interpretation as to what exactly each of them must do and the scope of their respective liability for performance. These clauses can be used to specify how the obligation should operate and includes options for joint and several liability and for several liability, with the option to specify that each co-obligor is liable for a separate part of the obligation.

A language clause should be used when an agreement is prepared in more than one language, as is very often the case in China, or is likely to be translated into several languages. This helps to clarify which version will prevail if the agreement is the subject of dispute resolution proceedings. The clause includes the option of specifying which language governs, and discusses the implications of the option commonly seen in Chinese agreements of providing that both language versions will be of equal validity, which arises out of the fact that a foreign language cannot be given precedence over Chinese law in some circumstances.

The principal object of a no partnership or agency clause is to exclude the risk of an agreement creating an unwanted partnership or agency relationship among the parties. While it can be included in agreements between domestic Chinese parties or those otherwise governed by Chinese law for the purpose of clarification, it is not strictly necessary in such cases.

A further assurance clause seeks to cover any omissions in the agreement that have not been noticed before signing and which, if unremedied, would change the way the agreement was intended to work, and deals with a situation where completion of the entire transaction does not take place when the main agreement is signed.

This clause is used in agreements governed by English or Hong Kong law to specify the consequences of even minor delay. It is not used in agreements among domestic Chinese parties or those otherwise governed by Chinese law as Chinese agreement law gives a similar result without requiring specific language.

Notice clauses specify the procedure to be followed for delivering notices under the agreement and the deemed time of delivery. A long-form and three short-form alternatives are included.

Counterparts clauses are useful where the parties are executing separate copies of an agreement. They are very common in China-based transactions, where market practice is often for parties not to be physically present at a signing or closing meeting (that is, virtual signings are common).

Use this clause to specify whether to exclude any applicable law permitting third parties (that is, persons who are not parties to an agreement but on whom rights appear to have been conferred under the agreement) to make claims under the agreement.

The choice of governing law and dispute resolution venue for an agreement can be critical to obtaining a favourable result if a dispute arises. Note that Chinese law requires certain categories of agreement to be governed by Chinese law. For details on these, see Practice Note, Choice of Governing Law in China-Related Contracts.

Foreign court judgments are often not enforceable in China and, except where disputes under an agreement are likely to be routine and uncontroversial in nature, foreign parties may be unwilling to seek redress through the Chinese courts. As a result, many commercial agreements between Chinese and foreign parties provide for arbitration either in China or in one the two major Asian dispute resolution centres outside of China; that is, the Hong Kong International Arbitration Centre and the Singapore International Arbitration Centre, both of which can call on a large pool of Chinese-speaking arbitrators and administrative staff. The following dispute resolution options are alternatives to each other.

See Standard clauses:

Mediation and other alternative dispute resolution options are extremely popular in China and are often incorporated into dispute resolution provisions as a stage to be undergone before binding proceedings are commenced. Three options are provided: a mediation clause using the CEDR Asia-Pacific rules, a clause using domestic Chinese mediation rules and incorporating Chinese mediation-arbitration provisions, for use in agreements between domestic Chinese entities or that are otherwise required to be governed by Chinese law, and a clause providing for multiple, escalating tiers of dispute resolution proceeding. See Standard clauses:

Where one or more parties to the contract is Chinese, make sure that you have checked their authority and that their execution conforms to all applicable requirements. Chinese companies in particular have an array of corporate seals and you should ensure that the correct one is used to bind the party. For further details, see Practice Note, Execution of Contracts and Documents: China.