ATI Service Sourcing

Legal Security in International Trade

Long-term sourcing partnerships depend on clear commercial agreements. Sourcing contracts between Australian buyers and Chinese manufacturers must protect both parties by outlining clear rules for pricing, quality standards, and delivery schedules.

Essential Sourcing Contract Clauses

Professional manufacturing agreements should include these core legal clauses:

• Raw Material Indexing: For metal or paper products, unit pricing should be linked to global raw material indices to manage material price swings.
• AQL Defect Tolerances: Setting clear defect limits and detailing the process for replacement shipments or credit notes.
• Intellectual Property NDAs: Ensuring strict NDAs are signed to protect custom CAD drawings, molds, and tooling designs.

Implementing Payment Protections

To reduce financial risks in overseas procurement, we recommend using these transaction structures:

1. Deposit Escrow: Hold production deposits securely, releasing funds only after first-batch quality checks are passed.

2. Letter of Credit: For high-value custom tooling and OEM production, use Letters of Credit to secure payments.

3. Document Release: Link the final 70% balance payment to the presentation of the original Bill of Lading scan.

---