Doing Business in China For Dummies®

Reps and Warranties

Reps (representatives) and warranties are statements that a party makes about itself or its property in a contract. For example, a party may represent that a certain asset isn’t subject to any liens. Reps and warranties are standard in many more-complex types of agreements. Having at least a few basic reps and warranties in most (if not all) of your China-related agreements is a good idea.

Somewhere, the agreement should contain (in reps and warranties, termination, or elsewhere) a provision that allows you to terminate without penalty if the other party breaches a rep or warranty. Sometimes, you can specify that you’re entitled to compensation for the breach of a rep or warranty.

The reps and warranties you need depend on your circumstances. You should discuss this idea with your lawyer. At a minimum, the counterparty should represent that

✓	It’s duly authorized to enter into the agreement.
✓	It’s duly organized under the laws of China (or some other jurisdiction).
✓	It isn’t violating any law, regulation, rule, or policy by entering or performing the agreement.