1, contracting capacity risk of the other party

Risk 1: the risk that the effectiveness of the contract is to be determined.

A contract concluded by an unauthorized agent or a person with limited capacity is a contract with undetermined validity. Whether the contract is valid or not depends on the subsequent ratification by the authorized person and the principal. However, ratification is a unilateral act of the other party, and the initiative lies with the other party. Only when it is favorable can it be ratified, and if it is unfavorable, it will not be ratified.

Precautions: Before signing a contract, check whether the other party has full capacity, can fulfill its contractual obligations, is established as a natural person, has the qualification of an enterprise legal person and is registered. Where the disposal or transfer of the subject matter is involved, whether the parties have the right to dispose of the subject matter (including whether they are the owners or have the right to dispose of it) shall be examined, and if necessary, the other party shall be required to guarantee its right to dispose of it.

Risk 2: The risk of contract fraud

The other party embezzles other units to sign contracts or signs contracts with false units. From the perspective of contract law, the counterfeited unit has no intention of trading, is not a party to the contract, and will not bear any legal responsibility on the contract. However, the counterfeit unit or individual does not sign the contract in its own name, and the contract does not exist at all, so it is impossible to pursue its contractual responsibility. If it causes its own losses, the counterfeiter may not be able to bear any legal responsibility at all, and its purpose is to use the contract to cheat and defraud its own property.

Matters needing attention: implement the customer credit management system, investigate and understand the customer's credit information, credit files, credit status and credit rating before signing the contract, and control the customer's credit and default risk to the maximum extent. When signing a contract, it is necessary to review the reputation and performance ability of the other party, including the qualification of the contractor. When necessary, it is necessary to check the other party's business license and annual inspection data to determine whether the other party is a legally registered and effectively existing legal entity, and to understand the other party's business scope, funds, credit and operation, and whether it is legally qualified to carry out the business under the contract. At the same time, review the contract manager, especially the signatory, and check the power of attorney issued by the other party, including whether the signature and seal of the power of attorney are true, whether the scope of authorization is clear and whether it has been altered, so as to determine the legal identity and scope of authority of the signatory of the other party and ensure the legality and validity of the contract. For transactions with a large amount of subject matter or contracts that need to be performed for a long time, you should also go to industry and commerce, taxation, banks and other units to investigate the credit status of the other party.

Risk 3: The risk prohibited by contracting capacity.

Risk: A contract concluded by a functional department that does not have the qualification to conclude a contract within the unit, or a specific contract is prohibited by law from being concluded by some subjects, is null and void. The legal consequence of this invalidity is that if one party is at fault, it should be liable for damages to the innocent party. Therefore, if we enter into a contract with a subject who is not qualified for contracting, and the contract is invalid and losses occur, if we are at fault, we will not be able to obtain compensation from the other party for our own fault. On the other hand, if one's own internal functional department enters into a contract with the outside world, the contract is deemed invalid, and if one is at fault, he shall be liable for compensation to the other party.

Risk prevention in the stage of contract signing

The contract must be stamped with the company's contract seal or official seal, in which the official seal is more effective than the signature. Even if the signature of the legal representative or authorized representative is forged, the contract is still valid. When a branch or functional department of a legal person signs a contract with foreign countries, it should have a power of attorney from the legal person. When the person in charge of the branch or functional department changes, a new power of attorney should be issued by the legal person. When signing the contract, the other party must provide the identity certificate and business license of the legal representative and verify it through certain channels (for example, check the registration information on the website of the local industrial and commercial bureau). If the contract is signed by an agent, the other party is required to provide the power of attorney of the legal representative and the identity certificate of the agent.

For us, it is necessary to implement the internal credit management system, strictly control the scope of authority and access procedures for internal employees to sign contracts with foreign countries, and avoid the damage caused by employees' signing contracts at will. When a contract is signed by its own functional department in the name of the company, if the contract is valid and beneficial to itself, the signing behavior of the functional department can be considered as unauthorized agency, and its own party can ratify the contract afterwards.

2, the other party's performance ability risk

Possible risks: If the other party is completely incapable of performing the contract, or unable to perform the debt due to economic difficulties, or has entered the bankruptcy liquidation procedure, the price cannot be recovered after performing the contract, or only partial compensation can be obtained from the liquidation property of the other party.

Precautionary measures: before signing the contract, investigate the credit status of the other party through various ways and channels to master and understand the performance ability of the other party, such as investigating the company's industry status, business reputation, sales channels and market share of products, the company's performance record, the profitability reflected in the company's financial statements, whether any administrative punishment or punishment has affected the company's goodwill or performance ability, etc. For large contracts, it is best to ask the other party to provide a guarantee. If the other party's performance ability is not high, and can't provide any guarantee, in the case of not signing the contract, we should pay attention to the way of installment delivery and monthly settlement to minimize the risk of bad debts.

3. Try to use your own formatted text.

Generally speaking, the contract drafters have the initiative, and they can carefully consider each clause written in the contract according to the contents negotiated by both parties, and choose the wording that is beneficial to them as appropriate, so as to better consider and protect their own interests. Therefore, in order to take the initiative in the performance of the contract or in the event of a dispute, the company should formulate its own standard format procurement contract and supply contract, and ask the other party to accept its own format text. When formulating the standard text, we should fully consider the legal problems and risks that the company may face in similar transactions, and the best way to protect its own interests when such problems or risks occur. Adopting its own format text can not only save transaction costs, but also reduce transaction risks and avoid possible disputes in the future. In addition, if we strive for the right to draft a contract, we can also fully consider our own interests in the contract, so as to avoid the losses we may suffer and how to get full and effective relief in case of losses.

4. Pay attention to the participation of legal professionals.

The terms of the contract are the determination of the rights and obligations of both parties, which is directly related to the interests of both parties. This is a highly technical and risky business activity. Improper drafting of the contract is likely to fall into the legal trap set by the other party, and it needs to bear more obligations and responsibilities, and the interests and obligations are obviously unequal. If there is a dispute, the other party will argue that the agreement in the contract is the result of voluntary agreement between the two parties, which is a huge economic loss for themselves. Therefore, no matter how to embody the negotiation contents in the text of the contract, or how to evaluate and deal with the possible risks in the text of the contract from a legal point of view, legal professionals are needed to better avoid the risks in the performance of the contract and prevent contract disputes.

5. The review of the final signed text shall not be ignored.

Company A will sign and seal two agreed contract texts (including the riding seal) and send them to Company B. Company B will manually modify one of the clauses favorable to Party B, then affix the official seal of Company B at the modified place, then sign and seal the two contract texts and send one of them back to Company A.. Company A didn't notice that the terms were modified and didn't raise an objection in time. After Party B claims the rights according to the revised terms, Party A shall not perform them only according to the terms of the contract. This is a typical case of unilaterally modifying the final text of the contract. However, it was not until the contract was completed that Party A discovered the revised terms in time. Party B requests to settle the payment according to the revised terms. Because Party A can't prove that the modification was unilaterally made by Party B, it has caused losses to Party A. ..

The above content is Bian Xiao's answer to the question of "risks and preventive measures in signing contracts", readers.

Tips:

The Civil Code came into force on 202 1 1, and the Marriage Law, Inheritance Law, General Principles of Civil Law, Adoption Law, Guarantee Law, Contract Law, Property Law, Tort Liability Law and General Principles of Civil Law were abolished at the same time. If you are involved in contract issues stipulated in civil law #

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