When Montreal toy maker Mega Brands Inc. was awarded $1.3 million by Quebec Superior Court following a legal tussle with a Chinese supplier, it highlighted the perils of doing business abroad but also underscored the value of putting pen to paper a comprehensive, detailed and binding contract that clearly spells out the obligations of each party.
Keen to strengthen ties with the world’s fastest-growing economic juggernaut, Canadian business all too often gloss over the risks and exposure of doing business with Chinese suppliers. Risk management is frequently eschewed, due diligence shirked, and contracts inadequately drafted.
“What is so surprising is that in Canada even small business would not conceive of entering into a relationship without having a contract, yet when we go into China we lose our minds and don’t undertake the due diligence because we are so eager to have the business relationship,” observed Cyndee Todgham Cherniak, a leading lawyer in international trade.