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While both types of agreements can be legally valid under Chinese contract law, oral agreements are much harder to prove and enforce due to strict evidentiary requirements. In contrast, written contracts provide clarity, security, and a stronger legal foundation in case of disputes. 

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Cultural factors such as “guanxi” (relationships) may influence how deals are made, but do not replace the need for clear documentation. 

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This article explains the key differences between written vs. oral agreements in China, highlights their enforceability under Chinese law, and offers practical advice to help foreign entities reduce risks and protect their interests when doing business in China.

The Legal Landscape for Oral Agreements in China

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Foreign businesses often wonder whether a handshake or spoken promise holds weight in China. The answer is both yes and no: while Chinese law recognizes oral agreements, the risks and challenges of enforcing them are significant.

The Civil Code and Contract Forms in China

According to Article 469 of the Civil Code of the People’s Republic of China, contracts may be concluded in written, oral, or other forms, unless otherwise specified by law. This means that, in principle, both written and oral agreements are valid under Chinese contract law, provided they meet basic requirements such as mutual consent, lawful purpose, and clear terms.

When Written Agreements Are Required by Law or Contract

Despite this flexibility, certain contracts must be in writing to be enforceable. Examples include:

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• Real estate sales and leases
• Employment contracts (as stipulated by the Labor Contract Law)
• Technology licensing and transfer agreements
• Guarantee contracts

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If the law or the parties themselves require a written form, failing to comply can render the agreement invalid or unenforceable.

Understanding the Principle of Contractual Freedom and Its Limits

Chinese law generally allows parties to decide the form of their contract. However, this freedom is not absolute. Statutory requirements, public policy, or specific agreements between the parties can limit it. Always verify whether your transaction falls under exceptions requiring written documentation.

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Also read: Differences Between Western and Chinese Contracts

The Core Challenge of Proving Oral Agreements in Chinese Courts

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While oral agreements may be legally valid, enforcing them is a different story. The main challenge is not the law, but the evidence.

The Burden of Proof for Enforcing Oral Contracts

In Chinese civil proceedings, the party seeking to enforce an oral agreement must prove its existence and terms. This burden can be difficult to meet, especially for foreign businesses unfamiliar with local evidentiary standards.

What Qualifies as Evidence for Oral Agreements

The Role of Witness Testimony in Chinese Contract Disputes

Witnesses may help establish what was agreed. However, Chinese courts are cautious, especially if witnesses are employees or have a vested interest in the outcome.

Admissibility of Audio Recordings in Chinese Courts

Legally obtained audio or video recordings can support your case. However, secret recordings may be excluded if they violate privacy or other legal provisions.

Using Digital Communications as Written Evidence in China

WeChat, QQ, email, and SMS are widely used for business in China. According to Article 469 of the Civil Code, electronic data messages are recognized as written contracts. Complete chat logs, emails, and message records ideally notarized can be persuasive evidence.

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Proving Contract Performance and Acceptance

Article 490 of the Civil Code allows courts to recognize a contract if both parties have performed principal obligations, even if there is no written or oral agreement available. For example, if both parties deliver goods and make payments as discussed, this can help prove a contract existed.

Supporting Documentation and Indirect Evidence in Contract Cases

Invoices, receipts, delivery notes, and third-party confirmations can all help substantiate your claim. The more comprehensive and consistent your evidence, the stronger your position.

The High Standard for Proving Intent and Mutual Consent

Chinese courts require clear evidence that both parties intended to form a contract and agreed on the specific terms. Vague or incomplete oral understandings rarely withstand legal scrutiny.

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Entering the Chinese market presents unique opportunities and significant legal complexities for foreign businesses and individuals. One area that often causes confusion is the enforceability of written vs. oral agreements in China. 

A foreign company verbally agrees to buy machinery from a Chinese supplier. Later, the supplier delivers a different model and disputes arise over price. Without written confirmation or clear digital records, the foreign buyer struggles to prove what was agreed, leading to an unfavorable outcome.

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Also read: China Arbitration Law: Procedures & Best Practices

The Cultural Context of Guanxi and Verbal Commitments in China

Balancing Trust and Legal Precaution in Chinese Business

Personal relationships, or “guanxi,” are fundamental in Chinese business. Verbal commitments can carry significant social weight. However, relying solely on trust without proper documentation exposes foreign businesses to unnecessary risk.

The Risk of Misunderstanding Flexibility as Non-Binding Agreements

Foreigners may misinterpret the informal negotiation style in China as a lack of legal seriousness. In reality, Chinese parties may expect even informal agreements to have legal consequences.

How Cultural Expectations Can Create Legal Risks for Foreigners

While building trust is important, foreign entities should not forgo written contracts. Failing to document agreements can lead to misunderstandings and lost legal protection.

Why Written Agreements Offer Stronger Protection in China

The Advantages of Written Contracts for Enforceability

Written contracts are widely regarded as the gold standard for conducting business in China. Unlike oral agreements, a written contract provides clear, objective, and tangible evidence of the parties’ intentions and the specific terms agreed upon.

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This clarity is especially important in the event of a dispute, as Chinese courts and arbitration panels overwhelmingly favor written documentation over verbal testimony or recollection. 

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With a written contract, parties can avoid misunderstandings, minimize the risk of conflicting interpretations, and demonstrate compliance with legal requirements. 

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Additionally, written contracts can help prevent disputes from arising in the first place by setting out each party’s rights and obligations in detail.

Essential Elements of a Valid Written Contract in China

For a written agreement to be enforceable under Chinese law, it should include all the essential elements outlined in Article 470 of the Civil Code:

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• Names and details of the parties involved
• Subject matter of the contract
• Quantity and quality specifications
• Price or remuneration terms
• Time, place, and method of performance
• Liability for breach of contract
• Dispute resolution mechanism

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Clearly stating these elements not only strengthens the enforceability of the contract but also provides a roadmap for resolving potential disagreements.

The Importance of the Chinese Language and Governing Law in Contracts

It is highly advisable for contracts to be drafted in Chinese or to have an official Chinese version. In the event of a dispute, Chinese courts will generally rely on the Chinese-language text as the authoritative version. 

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Discrepancies between different language versions are typically resolved in favor of the Chinese text. Furthermore, it is crucial to specify the governing law and the venue for dispute resolution within the contract to avoid jurisdictional confusion and ensure smoother enforcement.

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Also read: Contract Disputes in China: Common Issues and Resolutions

Company Seals and Legal Representative Signatures in Chinese Contracts

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A contract in China is not considered fully effective unless it bears the official company seal (also known as the “chop”) and/or the signature of the company’s legal representative. 

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The use of the company seal is a deeply rooted legal and business practice in China, signifying the company’s formal approval of the contract. Without these formalities, even a well-drafted written contract may not be recognized or enforced by Chinese courts. 

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Always ensure that the appropriate seal and signatures are affixed to your agreements to secure their legal standing.

Best Practices for Foreign Businesses to Reduce Contract Risks in China

The Importance of Always Having Written Agreements

No matter the size or perceived informality of a transaction, always require a written contract. Written agreements serve as your primary line of defense in the event of misunderstandings or disputes, providing clear evidence of the parties’ intentions and commitments. 

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Even for small deals or long-standing business relationships, written documentation helps prevent ambiguity and protects your interests.

Documenting Verbal Agreements with Written Confirmations

If any terms are discussed verbally whether in person, over the phone, or during a meeting promptly summarize the conversation in writing. Send a follow-up email or WeChat message to confirm the agreed points. 

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This habit creates a dated record that can be invaluable as supporting evidence if disagreements arise later, and it demonstrates professionalism and attention to detail.

The Need for Specific and Clear Contract Terms

Ambiguity is the enemy of enforceability. Ensure all key terms such as product specifications, quantities, prices, payment schedules, deadlines, and responsibilities are explicitly defined in the contract. Clear language reduces the risk of conflicting interpretations and makes it easier to enforce your rights if necessary.

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Local Business Norms and Practices

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China’s business culture can be very different from what foreign parties are used to. Take time to learn about local customs, negotiation styles, and expectations. Consulting with local advisors or experts can help you avoid missteps, bridge cultural gaps, and foster stronger, more respectful business relationships.

Why Legal Counsel Is Crucial for Chinese Contracts

Chinese contract law has unique requirements and formalities. Engage a qualified Chinese legal professional to draft, review, and finalize your contracts. 

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Legal counsel can help ensure your agreement complies with Chinese law, contains all necessary provisions, and is properly executed to maximize enforceability.

Conducting Due Diligence on Chinese Counterparties

Before entering into any agreement, thoroughly investigate your Chinese partner’s legal status, reputation, financial health, and track record. 

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This due diligence can uncover potential red flags and help you avoid entering into contracts with unreliable or fraudulent parties.

Defining Dispute Resolution Methods in Contracts

Specify in your contract how disputes will be resolved whether through mediation, arbitration, or litigation and the jurisdiction or arbitration body to be used. Clear dispute resolution clauses can save time, reduce costs, and provide greater certainty if disagreements occur, especially when operating in a foreign legal environment.

When Oral Agreements Are Especially Risky in China

The Dangers of Oral Agreements in High Value Transactions

When significant sums of money, assets, or business opportunities are at stake, the risks of relying on an oral agreement increase dramatically. Without a written contract, it becomes extremely difficult to prove the specifics of the deal if a dispute arises.

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High-value transactions often attract greater scrutiny and may involve more complex terms, making clear, legally enforceable documentation essential for protecting your interests and ensuring both parties are fully accountable.

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Risks in Long Term Business Relationships

Long-term business partnerships or supply arrangements may begin with trust and goodwill, but over time, memories fade and personnel may change. 

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Without a detailed written agreement, misunderstandings about each party’s obligations, pricing, renewal terms, or exit strategies can easily occur. Written contracts provide a stable foundation for enduring relationships and help prevent disputes as circumstances evolve.

Challenges with Complex Services or Product Specifications

Deals involving technical services, customized products, or detailed specifications are particularly vulnerable to disputes if not clearly documented. 

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Oral agreements can lead to differing interpretations of what was promised, how performance will be measured, or what constitutes acceptable delivery. 

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Written contracts allow all parties to reference precise requirements, timelines, and standards, reducing the risk of costly errors or disagreements.

Special Rules for Employment Contracts in China

Chinese law strictly requires employment contracts to be in writing. Employers who fail to provide written contracts not only risk disputes over terms and conditions but may also face legal penalties, including compensation to the employee. 

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Verbal employment agreements are not recognized by Chinese authorities, making proper written documentation an absolute necessity for compliance and risk management.

Written Requirements for Real Estate Transactions

Real estate transactions, including sales, leases, and property transfers, must be formalized in writing under Chinese law. Oral agreements in this context are not enforceable and can result in significant financial losses or legal complications.

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Always insist on a comprehensive written contract that clearly outlines all terms, conditions, and obligations when dealing with real estate in China.

Conclusion

Understanding written vs. oral agreements in China requires both legal knowledge and cultural awareness. While oral agreements can sometimes be valid, the practical risks and challenges of proving and enforcing them are significant. 

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Written contracts, with clear terms and proper formalities, remain the safest and most effective way to protect your interests under Chinese contract law.

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If you need legal consultation or assistance with contracts in China, feel free to reach out to Choi & Partners. Their experienced team can help you navigate the complexities of Chinese law and safeguard your business interests.

Frequently Asked Questions About Agreements in China

Can a verbal agreement be legally binding in China?

Yes, verbal agreements can be legally binding if they meet requirements of mutual consent, clear terms, and a lawful purpose. However, they are much harder to prove and enforce than written contracts.

What evidence is needed to prove an oral contract in China?

Courts may accept witness testimony, audio recordings, digital communications (WeChat, email, SMS), evidence of performance, and supporting documents. The evidence must be clear, consistent, and credible.

Is it always necessary to have a written contract in China?  

Not always, but it is strongly recommended. Some contracts, such as employment and real estate, must be in writing. For all others, written contracts provide far greater legal protection.

How does Chinese contract law view different forms of agreements?

Chinese law recognizes written, oral, and other forms of agreements. However, written contracts are preferred for their evidentiary value and enforceability. Some transactions require written form by law.

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