China’s rapid economic growth, development and also its significant internal market are some of the reasons why foreign investors are attracted to this country. While the Chinese Civil Law is the basic legislation which regulates commercial transactions in China, the commercial subjects (the legal entities or individuals involved in commercial transactions) must be organized in a way that is permitted by law, given the fact that only one type of company in China may be chosen to be set up (for example, sole proprietorships, companies or partnership).
If you are interested in opening a business in the commercial sector, our Chinese lawyers can offer legal assistance for commercial transactions in China.
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Legal aspects regarding commercial transactions in China
As said before, commercial transactions in China are governed by the legislation applicable under the Civil Law, but specific legislation in the matter is provided by the Chinese Commercial Law, which is organized under the following principles:
• organization of commercial subjects – addressing to the incorporation of a legal entity, which allows it to operate specific activities;
• profit protection – one of the main aims of Commercial Law, since making profit is the scope of all commercial activities;
• enabling transactions – the Chinese legal system also aims to hasten commercial transactions, thus even though the rules governing commercial transactions are frequently seen as not open to interpretation and inflexible;
• fairness – meaning equality and honesty in the commercial transactions between companies;
• safety of the commercial activities – relevant in situations such as reporting or disclosure.
If you are in need of legal assistance for commercial transactions in China, our Chinese attorneys can offer you their services and expertise.
Chinese commercial transactions
When a financial interaction is established between two parties, valuable goods, assets or services are being traded in exchange for financial compensation.
Consequently, a Chinese commercial transaction consists of the following elements:
• sale of goods, which is one of the most frequent commercial transactions, being defined by exchange in money for a certain service, provided by the buyer to the seller;
• standardized contract that establishes contractual relations – both buyer and seller are provided with rights and obligations;
• seller’s obligations – he/she must deliver the products or services provided, offer a warranty for them (as stipulated in the contract) and must also transfer the ownership of the goods to the buyer when he/she pays his financial obligations;
• buyer’s obligation is to provide the remuneration for the purchase made;
• sales legislation – each contract is established in terms of the commercial legislation applicable in the country where the transaction is dealt.
Feel free to contact our law firm in China for legal assistance on commercial transactions in China if you are interested in the matter.