And the fact is that neither party has malicious intent. The Chinese side simply puts a lot more shares in the agreement than the U.S. side. The U.S. side will sign the agreement and think it`s nothing, and plans to come back and hand it over to its lawyers to design the final agreement. Thus, a party`s statements that there is no liability are ignored. Worse still, such statements could be seen as part of the plan to mislead the Chinese party about the foreign company`s bad faith intent to harm. References to U.S. law are also ignored because liability arises from the law and not from the amicable agreement of the parties. These arguments do not work.

The submission of section 42 is not a principle that the parties must establish by written contract; it is a legal requirement that applies to all parties negotiating contracts in China. This is an obligation totally independent of the agreement of the parties. More importantly, the good faith imperative applies to the behaviour of the parties and not to what they say in a written document. For this reason, a court will consider the underlying conduct of the parties to determine whether liability is incurred. (i) negotiations in bad faith under the pretext of the conclusion of the contract; The only time a law or agreement should be used is when the parties must define specific measures that will be taken to complete the diligence of a given transaction. In this case, such a document should not be treated as a law or a slacker, but as a contract of due diligence, and the foreign party should understand that it can be held liable if it is not strictly considered as stipulated in the treaty. And then the problem begins when we tell the American company that the agreement it has just signed is almost certainly a legally binding contract, and that it is almost certain that the Chinese side sees it as a treaty, and that the treaty is terrible and that “we need the following ten things”. The American company then goes back to the Chinese company with the ten things that need to be changed or added, and the Chinese company is then insulted because it thought that it had an agreement and that only super small things had to be solved and that these would be solved over time.