What a PI is, and is not
A proforma invoice sits in an odd legal position: it looks like an invoice, functions as a quotation, and in Chinese export practice operates as the de facto order confirmation — the document both sides point at when something goes wrong. It is usually not a full contract, and for meaningful order values a real sales contract is worth insisting on. But since the PI is frequently the only document a first order runs on, it deserves a full clause-by-clause read before any money moves.
The organizing principle: a PI fails through omissions more than errors. Wrong numbers get caught; missing clauses get discovered during the dispute they would have prevented.
The parties
Seller. The full registered legal name — checkable against the business license and registry — not just an English trading name. A PI from "Sunshine Industrial" identifies nobody; a PI from a registered entity with a unified social credit code identifies a company you can verify and, if necessary, pursue.
Buyer. Your correct legal entity, exactly. If the goods will be imported under your company's name, the PI naming a misspelt or informal version creates friction at customs and in any dispute.
Beneficiary. The bank account name should match the seller. This is the most important single comparison on the document — a mismatch is either an explainable group structure (get the explanation in writing) or the precise mechanism by which deposits disappear.
The goods
Description and specification. Enough detail that "not as agreed" is provable: model numbers, materials, dimensions with tolerances, colours by standard code, grade or purity where relevant, compliance markings required in your market. For anything complex, a referenced specification sheet ("as per spec v1.2 dated…") beats prose on the PI.
Quantity and unit. Pieces, sets, cartons, kilograms — unit confusion is a classic and expensive ambiguity, especially where inner/outer packing quantities differ.
Packaging. Export carton grade, inner packing, units per carton, carton markings, pallet or floor-loaded. Packaging failures are a leading cause of transit damage, and the PI is where the packaging standard becomes enforceable.
The money
Unit price, total, and currency. Check the arithmetic — genuinely; errors are common and always awkward to raise later. Confirm the currency explicitly (USD and RMB confusion does happen) and that the quotation and PI agree; where the same supplier's documents contradict each other, that inconsistency is itself a finding.
Incoterm, with a named place. "FOB" alone is incomplete; "FOB Ningbo, Incoterms 2020" allocates cost and risk at a defined point. Understand what your term actually leaves you responsible for — EXW in particular pushes export clearance onto the buyer, which first-time importers rarely want.
Payment terms. Deposit percentage, balance percentage, and — critically — the balance trigger. "Balance before shipment" without an inspection stage means paying in full for goods nobody on your side has examined. The strongest cheap improvement to any first-order PI: balance payable after a pre-shipment inspection.
Bank details. Full beneficiary name, account, bank, SWIFT. Fixed at PI stage, verified once, and any later change verified through an independent channel — changed-account fraud rides on exactly this clause.
The timeline and the safeguards
Lead time, anchored. "30 days from receipt of deposit" or "from sample approval" — a defined start event, not a bare number. If timing is commercially critical, say what happens when it slips.
Inspection. Who may inspect, at what stage (during production, pre-shipment), against what standard (the spec, an AQL sampling level). A supplier's resistance to a standard third-party inspection clause on a first order is a meaningful signal.
Warranty and remedies. Defect definition, claim window, and remedy (rework, replacement, refund). One plain sentence beats silence by a wide margin.
Validity. How long the PI's prices hold. Prevents both surprise re-quotes and stale-document confusion.
A worked reading order
When a PI lands, read it in this sequence — it front-loads the checks that kill deals:
- Beneficiary vs seller vs registry. The identity chain first, always.
- Payment terms. Deposit share and the balance trigger.
- Incoterm and named place. Know what you are actually buying.
- Spec and packaging completeness. Could a stranger adjudicate a dispute from this document alone?
- Anchors and safeguards. Lead-time start event, inspection stage, warranty line, validity.
- Arithmetic and internal consistency, including against the earlier quotation.
Anything that fails becomes a written question to the supplier. The pattern of answers — specific and documented versus vague and hurried — tells you nearly as much as the document itself.
Where the PI's limits are
A perfect PI binds an honest counterparty and evidences terms against a dishonest one — it does not by itself make recovery practical across jurisdictions, and it says nothing about whether the company behind it is real, solvent or capable. Document review and identity verification are complements, not substitutes: the PI check confirms the terms lead somewhere sensible; verification confirms the entity does. For orders where the stakes justify it, do both before the deposit, in that order of cost: registry first, documents second, site last.