B2B Cashmere Contract: 7 Clauses We Always Include (Payment, Defect, Lead Time, Force Majeure)

B2B Cashmere Contract: 7 Clauses We Always Include (Payment, Defect, Lead Time, Force Majeure)

When sourcing cashmere from a factory in Ordos, Inner Mongolia—the world’s premier cashmere region—a well-drafted B2B contract is your first line of defense. At DONGXIAO Cashmere, with 23 years of experience, we’ve refined our contracts to protect both our buyers and our operations. Here are the seven clauses we include in every agreement, with practical details on payment terms, defect limits, lead times, and force majeure.

1. Payment Terms Clause

Payment terms in a cashmere B2B contract must balance cash flow security for both parties. We typically structure payments in three stages:

• 30% deposit upon contract signing
• 40% progress payment after raw material inspection (or after yarn/fabric production confirmation)
• 30% final payment before shipment, upon approval of pre-shipment samples and inspection report

For new buyers, we offer T/T (telegraphic transfer) or L/C at sight. For established partners, we may accept L/C at 30–60 days with a confirmed credit line. All payments are made to our Ordos headquarters account.

Why this works: The deposit covers raw material procurement (cashmere is a high-value commodity, often $50–$100 per kg), while the progress payment ensures production continuity. The final payment secures shipment only after quality checks.

Example: For a 500kg cashmere yarn order (MOQ 200kg), the payment schedule is clearly stated: $15,000 deposit, $20,000 on inspection, $15,000 before loading.

2. Defect Clause (Quality & Tolerance Limits)

Cashmere is a natural fiber, and minor variations are expected. Our defect clause sets clear, enforceable limits:

• Fiber diameter tolerance: ±0.5 micron from specified grade (e.g., 15.5 micron yarn must average 15.0–16.0 microns)
• Fiber length: Minimum 28mm for combed yarn, with ±10% tolerance for short fibers
• Color fastness: Minimum Grade 4 (ISO 105-B02) for lightfastness; Grade 3–4 for washing
• Pilling resistance: Grade 3–4 (ICI pilling box, 2 hours)
• Shrinkage: Maximum 5% after gentle wash (per ISO 6330)
• Defect rate: Less than 2% of pieces in a garment lot may have visual defects (e.g., holes, stains, broken yarn). For yarn, less than 3% of cones may have knots or slubs beyond acceptable standard

Inspection procedure: We use AQL (Acceptable Quality Limit) 2.5 for normal inspection, with random sampling per ISO 2859. If defect rate exceeds 3%, the buyer may reject the lot and request rework or a discount.

Important: We include a remedy timeline—buyer must report defects within 15 days of receipt. We then have 30 days to repair, replace, or issue a credit note.

3. Lead Time Clause

Cashmere production involves multiple steps: dehairing, dyeing, spinning, weaving/knitting, and finishing. Our standard lead times:

Product Type	Lead Time (after deposit)	Rush Order (50% surcharge)
Raw cashmere (dehaired)	2–3 weeks	1 week
Cashmere yarn	4–6 weeks	2–3 weeks
Cashmere fabric	6–8 weeks	4 weeks
Cashmere garments (OEM)	8–12 weeks	6 weeks (if fabric in stock)

Force majeure exclusion: Lead time is calculated from the date of deposit receipt. Delays due to customs, shipping, or force majeure events (see Clause 7) are not counted.

Late delivery penalty: If we exceed lead time by more than 7 days, we offer a 1% discount per week of delay, capped at 5% of order value. This aligns with our ISO 9001-certified production planning.

4. Force Majeure Clause

Given the global nature of cashmere supply chains, force majeure events are inevitable. Our clause covers:

• Natural disasters: Earthquake, flood, fire, extreme weather affecting Ordos or transport routes
• Pandemics/epidemics: Government lockdowns, travel bans (as seen with COVID-19)
• Political events: War, civil unrest, trade embargoes
• Supply chain disruptions: Raw material shortages due to goat disease or climate extremes in Inner Mongolia

Notification requirement: The affected party must notify the other within 7 days, providing evidence (e.g., government order, weather report). If the event lasts more than 60 days, either party may terminate the contract without penalty.

Mitigation: We commit to using reasonable efforts to find alternative sources (e.g., stock from our warehouse) or reschedule production. Our factory in Ordos maintains a 15% raw material buffer for such cases.

5. Inspection & Sample Approval Clause

Before full production, we require buyer approval of:

• Pre-production sample: 1 meter of fabric or 1 garment, made from actual raw material
• Lab dip approval: For dyed yarn, we send 5×5 cm swatches for color match (within 4–5 shade bands)
• Bulk sample: If requested, we send a 10% random sample from production for approval

Third-party inspection: Buyers may send an inspector to our Ordos factory at their cost. We provide access to production lines, QC records, and testing lab (OEKO-TEX certified).

6. Intellectual Property & Confidentiality Clause

For OEM/ODM orders, we include:

• Designs, patterns, and specifications remain the buyer’s property
• We will not produce or sell identical designs to third parties for 2 years
• Confidentiality of pricing, MOQ, and buyer data is mutual
• We provide a sample retention policy: samples are kept for 6 months, then destroyed

7. Dispute Resolution & Governing Law Clause

All disputes are first handled through friendly negotiation within 30 days. If unresolved:

• Jurisdiction: China International Economic and Trade Arbitration Commission (CIETAC) in Beijing
• Governing law: Chinese law, with reference to CISG (UN Convention on Contracts for the International Sale of Goods)
• Language: English version prevails if both Chinese and English versions exist

Practical tip: We recommend buyers include a liquidated damages clause (e.g., 5% of order value for breach) to avoid costly litigation.

Why These Clauses Matter for Cashmere Importers

Cashmere contracts are different from commodity textile contracts. The fiber’s high value, seasonal demand (autumn/winter), and regional specificity (Ordos cashmere is prized for its 14–16 micron fineness) require tailored terms. At DONGXIAO, we’ve seen contracts fail due to vague defect definitions or unrealistic lead times. Our clause structure has been tested across 200+ B2B partners in Europe, Japan, Korea, and North America.

Certifications backing our quality: ISO 9001:2015, OEKO-TEX Standard 100, GOTS (for organic cashmere), and SGS testing reports available on request.

Call to Action

Ready to secure your cashmere supply chain with a robust B2B contract? Contact our team at DONGXIAO Cashmere for a sample agreement tailored to your order. We can discuss payment terms, defect limits, and lead times specific to your product line.

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