The supplier’s quotation in invoice form: product, unit price, quantity, payment terms and delivery date, usually signed or sealed by the supplier.
Many buyers treat a PI as paperwork that comes before the real contract. Under Chinese law it is very often the contract. Once you accept it, by signing it back or by paying the deposit against it, the terms on it are what a court will look at first. The Civil Code treats a contract as formed when a party has performed its main obligation and the other side accepts that performance, even before anyone signs (art. 490).
Our view: read a PI the way you would read a contract. Check the company name against the business licence, the quality standard it refers to, the delivery date and what the up-front payment is called. Then decide whether you need a contract on top of it.
How it usually goes wrong
A common situation: the buyer receives a PI by email, pays 30% against it, and only later sends its own purchase terms. By then production has started, and in a dispute the factory will say the deal was made on the PI, with its quality wording and its delivery date. A reply that changes the price, quantity, quality, delivery or dispute terms is a new offer, not an acceptance (Civil Code art. 488), so the last document both sides acted on tends to decide the terms.
Two lines on a PI deserve most of your attention. One is the payment line: if it says deposit in English and 订金 in Chinese, you have an advance on the price, not earnest money. The other is the quality line. “As per sample” means little if no sample was sealed.
The line to add before you pay
Send the PI back with this sentence added and ask the supplier to seal it:
“This PI is issued under the Purchase Agreement dated [date]. Where this PI and the Purchase Agreement differ, the Purchase Agreement prevails.”
If there is no agreement yet, at least add the product specification number, the sealed sample date and the inspection step to the PI itself.
Related terms
Read next
- Is a Proforma Invoice a Contract in China? Yes, and It Probably Won't Cover Your Legal Fees
- Buying at the Canton Fair: What to Put in Writing Before You Pay a Chinese Supplier
- China NNN Agreement Lawyer: NNN and Manufacturing Contracts Your Factory Signs
Sources
- Civil Code of the PRC (effective 1 January 2021), articles 488 and 490, full text on the Ministry of Justice site ↗
- Translations are mine and unofficial.
Holding a PI and about to pay?
Send us the PI and a line about your product. We reply in writing with the contract you need, the fixed fee and the delivery time.