Unpaid Commissions in China: Contract Tips for Foreign Trade Agents
- Siyuan Xu
- 3月16日
- 讀畢需時 4 分鐘
已更新：4月19日
Understanding Commission Agreements in China
Foreign trade agents rely on commission agreements to ensure they receive fair compensation for their services in facilitating deals with Chinese companies. However, not all agreements offer the same level of legal protection. Without a well-drafted contract, agents may find themselves struggling to claim their rightful earnings.
To prevent disputes, it is crucial to understand the key elements of a solid commission agreement, the common causes of conflicts, and the legal standing of verbal arrangements in China.
Importance of a Written Contract: Key Clauses to Include
A written contract is the single most effective way to protect your commission rights. In China, courts and arbitration tribunals generally require clear, documented agreements to enforce commission claims. Without one, proving entitlement to payment becomes significantly more challenging.
When drafting a commission contract, foreign agents should ensure the following key clauses are included:
• Commission Rate & Payment Terms – Clearly define the commission percentage or fixed fee, along with the exact conditions for payment (e.g., upon contract signing, delivery, or full payment by the buyer).
• Scope of Services – Specify the agent’s role in the transaction, such as introductions, negotiations, and ongoing facilitation. This prevents companies from arguing that the agent did not contribute to the deal.
• Exclusivity & Protection Against Bypassing – A clause preventing the supplier from circumventing the agent and dealing directly with the buyer.
• Dispute Resolution Mechanism – State whether disputes will be resolved through Chinese courts or arbitration, and specify the governing law.
• Written Confirmation of Deal Completion – Requiring written confirmation from the supplier that the agent’s work contributed to the final agreement can strengthen commission claims.
A well-drafted contract significantly reduces the risk of disputes and increases the chances of successful enforcement.
Common Causes of Disputes
Even with a written contract, commission disputes still arise due to:
1. Unclear Terms – Contracts that vaguely define payment triggers allow companies to exploit loopholes and delay or refuse commission payments.
2. Lack of Documentation – Some agents rely on informal agreements or fail to retain proof of their involvement, making it difficult to substantiate their claims in court.
3. Bad Faith Refusals to Pay – Some Chinese companies intentionally delay or deny payments, hoping that the agent lacks the resources or legal knowledge to pursue a claim.
4. Direct Negotiations Between Buyer and Supplier – In some cases, after an introduction, the supplier and buyer exclude the agent to avoid paying commissions. Without contractual protections, recovering compensation can be difficult.
Understanding these risks helps foreign trade agents take proactive measures to prevent disputes.
Legal Status of Verbal Agreements and Industry Practices
In some industries, commission arrangements are made informally through verbal agreements, emails, or WeChat conversations. While these may be acceptable in business practice, they present legal challenges when disputes arise.
Are Verbal Agreements Enforceable in China?
Under Chinese contract law, verbal agreements are legally recognized in theory, but they are difficult to enforce in practice. Without written proof of the agreement’s terms, the agent bears a heavy burden of proving:
• The existence of the agreement.
• The commission amount and payment conditions.
• The agent’s role in securing the transaction.
Without written confirmation from the supplier acknowledging the agent’s role, courts may dismiss verbal claims due to insufficient evidence.
Industry Practices vs. Legal Reality
Some foreign agents assume that standard industry practices, such as handshake deals or telephone confirmations, will hold up in Chinese courts. However, while industry norms may influence negotiations, they do not override the requirement for strong legal documentation.
To increase enforceability, foreign trade agents should:
• Retain all written communications, such as emails, chat records, and invoices.
• Request confirmation from the supplier when a deal is completed.
• Push for at least a basic written contract, even if initial negotiations are informal.
Conclusion
Having a written commission contract with clear terms is essential for foreign trade agents doing business in China. Common disputes often stem from vague agreements, lack of documentation, or intentional non-payment. While verbal agreements may be common in the industry, they are difficult to enforce in Chinese courts.
To protect your commissions, always insist on a written contract and maintain thorough records of your role in the transaction. If you are facing a dispute, seeking legal guidance early can improve your chances of recovering your rightful earnings. We specialize in handling commission disputes and can help you secure the payments you are owed.
Catalogue of articles in the series
2.Unpaid Commissions in China: Contract Tips for Foreign Trade Agents
Siyuan Xu
License No.: 13201202311672894
About the Author:
With a rich background in international trade, Siyuan brings a unique perspective to the legal field. Her extensive experience in trade has equipped her with the ability to provide practical and down-to-earth advice to her clients. Since transitioning to law, she has successfully assisted numerous clients, earning a reputation for her exceptional courtroom skills. Her dedication and expertise make her a trusted advisor and a formidable advocate in court. Her commitment to her clients and her ability to navigate complex legal landscapes ensure that she delivers the best possible outcomes.
Contact: zlxlawyer@bjcelue.com or WhatsApp +86 18362959702
