Contract · FAQ
Payment Terms and Contract FAQ for Equipment Orders
The payment schedule and the contract are where a machinery order is won or lost, before any steel is cut. The terms are negotiable — what matters is that every payment is tied to a verifiable event and every promise has a clause behind it.
71+
Countries exported
444+
Lines delivered
T/T & L/C
Payment structures
12
Months typical warranty
20,000
m² workshop
Short answer: The normal structure for machinery from China is T/T in stages — a deposit with order, a payment at FAT or before shipment, and the balance after installation or acceptance — with L/C used for larger projects. The contract should name the machine by spec, tie payments to documents, define acceptance as output on the agreed bottle, and carry a penalty for late delivery. Nothing in that list is unusual; everything on it is negotiable.
🎯 Key takeaways
- Tie every payment to a verifiable event: order, FAT, loading, arrival, acceptance.
- A 30/70 or similar staged split is common; the exact numbers are negotiable.
- Define acceptance as rated output on the agreed bottle — not 'the line works'.
- Put a late-delivery penalty and a warranty clause in the contract.
- The technical agreement (spec, drawings, spares) is part of the contract, not a supplement.
On this page
1. Payment structures that work
Two structures dominate machinery orders: T/T in stages and L/C. T/T is simpler and cheaper to administer; L/C adds bank involvement and suits larger or less-established relationships. Both work well when the triggers are events you can verify — the structure is secondary, the triggers are primary.
A common T/T split is a deposit with the order, a payment at FAT or before shipment, and the balance after installation or acceptance. The exact percentages are a negotiation; what should not move is that the final payment stays with you until the line runs.
2. T/T stages and triggers
| Stage | Typical trigger | What you get |
|---|---|---|
| Deposit | Signed contract | Order confirmation, production slot |
| Mid payment | FAT passed / loading | FAT report, loading photos, documents |
| Balance | Installation / acceptance | Running line at agreed output |
Each payment buys a deliverable you can verify. If a supplier wants payment before an event with no document attached, question it — the schedule should read like a project plan, not a trust exercise.
3. L/C and bank instruments
An irrevocable letter of credit pays the supplier against documents: invoice, packing list, bill of lading, certificate and any inspection certificate the contract requires. It protects both sides — the supplier is paid on conforming documents, and you pay only when those documents are produced.
L/C costs bank fees and needs exact document wording. Get the L/C text agreed with the supplier before the contract is signed, or the 'discrepancies' at negotiation stage will cost time and money.
4. The technical agreement
The technical agreement is the part of the contract that prevents most disputes. It names the machine by specification: output on the agreed bottle, valve type, drive type, stainless grade, control system, utilities demand, and the included spare-parts list. If it is not in the technical agreement, it is not part of the order.
Attach the bottle drawing and the site layout to the agreement. Disputes about 'the line does not reach rated output' are almost always disputes about which bottle and which conditions were specified.
5. Acceptance and milestones
Acceptance should be defined as a test, not a feeling: the line runs at the agreed output on the agreed bottle for an agreed period, with the agreed product quality. Put the acceptance procedure in the contract — who attends, what is measured, how many hours, and what happens if it fails (remedy period, retest).
Installation milestones (delivery on site, mechanical completion, utilities connected, product run) keep the project visible. The schedule and its milestones are the heartbeat of the contract.
6. Penalties, warranty, force majeure
A late-delivery penalty — typically a percentage of the contract value per week, capped — turns a promised date into a committed date. Warranty is normally twelve months from commissioning or eighteen from shipment, with exclusions named (wear parts, operator damage, consumables). Force majeure should be narrow: natural events, not 'supplier delays'.
Keep the penalty clause and the acceptance clause in the same contract. A penalty for late delivery means nothing if acceptance itself has no definition.
Dispute resolution and governing law matter for cross-border orders: name the forum (arbitration is common for machinery) and the law, so a disagreement ends in a defined process, not a deadlock.
7. What to check before signing
Before signing: the machine spec matches the quote; every payment has a trigger; acceptance is defined; the delivery date has a penalty; warranty and exclusions are written; the spare-parts list is attached; certification (CE, EAC) is itemised; and the supplier can name the engineer and the support channel. Check those ten items and the contract is a project plan; skip them and it is a wish.
The same checklist applies to a combiblock order, a filling machine order or a complete line — the machine changes, the contract logic does not.
Frequently asked questions
What payment terms are normal for machinery from China?
T/T in stages — deposit with order, payment at FAT or before shipment, balance after installation — or L/C for larger projects. The percentages are negotiable; the event triggers should not be.
Should I pay before the line is built?
Only the deposit. Every other payment should be tied to a verifiable event: FAT, loading, arrival, acceptance.
What is the difference between T/T and L/C?
T/T is a direct bank transfer, cheaper and simpler. L/C pays the supplier against documents through banks, protecting both sides, at the cost of fees and document precision.
How do I define acceptance?
As a test: rated output on the agreed bottle for an agreed period with the agreed quality, with a remedy and retest procedure if it fails.
Is a late-delivery penalty normal?
Yes, typically a percentage of contract value per week, capped. It converts a promised date into a committed date.
Can Sunswell provide contract terms in my language?
Sunswell exports to 71+ countries and structures contracts around the buyer's jurisdiction and language needs; the technical agreement is in English and can be annexed with translations.
About the author
Written by the Sunswell engineering team — led by Howie SUN, Founder & CEO, with 14 years in filling and blow-moulding equipment R&D and turnkey project delivery across 71+ countries.
Last reviewed: 2026-08-28 · Reviewed by Sunswell engineering team
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