[Direct answer]In the Beijing area, it is necessary to handle the case according to the actual legal relationship and adjust the claim direction in a timely manner. Financing-based trade generally refers to transactions that conceal the essence of financing through forms such as buying and selling, agency, etc., without the actual transfer of goods. Such transactions often manifest as invoices being issued, bills being circulated, but no actual delivery of goods, or funds being idle. Such transactions are often deemed invalid, mainly because the parties conceal the true lending relationship with a false intention of buying and selling. According to Article 146 of the Civil Code of the People's Republic of China, civil legal acts performed by the actor and the counterparty with a false intention are invalid, and the validity of the civil legal acts hidden by a false intention shall be dealt with in accordance with relevant laws. Therefore, the court often does not handle the case as a sales contract, but tries it according to the hidden lending legal relationship. Loan contracts concluded between enterprises for production and operation needs are generally valid, but if they involve professional lending or violate mandatory provisions of financial supervision, they may be deemed invalid. After being deemed invalid, according to Article 157 of the Civil Code, the parties shall return the property, make compensation in the form of discounts, and the party at fault shall compensate the other party for the losses.

1. Problem background and typical scenarios

Some enterprises, in order to evade financing qualification restrictions or obtain funds, adopt methods such as signing sales contracts, issuing invoices, and forging delivery documents for goods, without actually delivering the goods, thus forming financing-based trade. Once the transaction chain breaks down or one party breaches the contract, when claiming rights under the sales contract, the court may determine it as a fraudulent trade, and the case's direction will change accordingly. Enterprises and their lawyers must adjust their strategies in a timely manner.

II. Key points of contention

First, the identification criteria for financing trade. Second, how to determine the validity of the contract. Third, how to handle hidden legal relationships. Fourth, the legal consequences and responsibility sharing of invalid contracts. Fifth, the administrative and criminal risks that may arise from fraudulent trade.

III. Professional analysis by Henglue Lawyers

Henglue Lawyers explained it from two aspects: effectiveness and response. Firstly, identification criteria: To determine whether it is a financing-based trade, usually review whether there are real goods, whether the goods have been actually delivered, whether the flow of goods and funds match, whether the transaction conforms to commercial common sense, and whether there is a closed capital cycle and fixed income arrangements, etc. Only those transactions that have the name of a sales contract but no actual sales content are likely to be identified as financing-based trades. Secondly, effectiveness determination: Sales transactions implemented with false expressions of intent are invalid; the hidden loan relationships shall be judged according to their own rules of effectiveness. Generally, loans between enterprises for production and operation purposes are valid, but those exceeding the scope of operation, involving professional lending, or violating regulatory provisions may be invalid. Thirdly, handling rules: After the contract is invalidated or revoked, the property obtained from such transactions shall be returned; if it cannot be returned or there is no need to return it, compensation in the form of a discount shall be provided; the party at fault shall compensate the other party for losses, and both parties shall bear corresponding responsibilities respectively. When dealing with loan relationships, the principal shall generally be returned, and the interest portion shall be determined in accordance with the effectiveness of the contract and the legal protection limits. Fourthly, risk warning: False trade invoices and bills may involve administrative or criminal liabilities such as fraudulently obtaining bill acceptance and illegal business operations, which enterprises cannot ignore. Fifthly, response strategies: After being identified as financing-based trades, enterprises should promptly modify their litigation requests and legal relationship claims, and focus on providing evidence of principal repayment and losses from fund occupation. At the same time, they should collect evidence such as transaction background, fund flow, and correspondence to strive to determine rights and obligations according to the actual relationship. When courts in Beijing handle such cases, they conduct a more in-depth review of the authenticity of the trade and the flow of funds.

IV. Practical suggestions and legal basis

Action suggestions: First, evaluate the authenticity of the trade before making a transaction to avoid signing contracts for non-existent goods; Second, preserve evidence such as the delivery of goods, acceptance of goods, and transportation to prove the authenticity of the transaction; Third, if you discover suspected financing-based trade, adjust your legal claims in a timely manner; Fourth, pay attention to tax and invoice compliance to prevent administrative and criminal risks. For enterprises involved in commercial and contractual matters, you may refer to the following documents for further guidance:Business and contract disputes in enterprisesFor matters related to finance and cross-border transactions, you can refer to the following resources for further information:\nFinancial capital and cross-border transactions involving foreign entitiesLegal basis: Articles 146 and 157 of the Civil Code of the People's Republic of China (effective January 1, 2021), and the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Private Lending Cases" (amended in 2020). The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Advice

Firstly, trade contracts without actual goods transactions may be deemed invalid. Secondly, the hidden loan relationships shall be judged according to their own rules. Thirdly, after the contract is invalidated, the parties shall return the property, make compensatory payments based on the depreciated value, and share the liability for the fault. Fourthly, false trade may lead to tax and criminal risks. For financing-related trade, the parties may resolve the disputes through legal means.Business and contract disputes in enterprisesThe service provides a comprehensive solution, which involves the integration of financial instruments and cross-border transactions\nFinancial capital and cross-border transactions involving foreign entities.For the plate, those who are interested in recovering the funds can refer to it for referenceCreditor's rights and debts, and enforcementFor any questions regarding criminal risks, please feel free to consult us.Criminal defense and criminal case filingTeam.

VI. Frequently Asked Questions

Q1: How to determine whether it's financing-based trade?

Check whether there are actual goods. If the goods are not actually delivered, the flow of goods and the flow of funds do not match, the transaction is a closed loop with fixed profits, and the degree of conformity with business common sense is low, it may be identified as a financing trade that uses trade as a pretext to engage in financing activities.

Q2: If it's deemed invalid, can I still get my money back?

Generally, it is possible to claim the return of the principal. After the contract is invalidated, the property obtained from this act shall be returned; if it cannot be returned, compensation in the form of a discounted price shall be provided. The court usually handles the case according to the hidden lending relationship, supporting the return of the principal and the interest portion that meets the legal protection requirements.

Q3: Is inter-enterprise lending itself valid?

Generally, it is valid. Loan contracts concluded between enterprises for production and operation purposes are usually deemed valid; however, if there are circumstances such as professional lending or violations of mandatory provisions of financial supervision, they may be deemed invalid, and the determination of validity or invalidity needs to be based on the specific circumstances of the case.

Q4: If the transaction fails, can I sue based on the loan agreement?

It can be adjusted in a timely manner. If the sales contract is deemed invalid, the validity of the hidden loan relationship shall be handled in accordance with the provisions of law. The parties may amend their claims in the lawsuit and claim the principal and the loss of funds occupied according to the actual legal relationship, so as to avoid their claims being unsuccessful.

Q5: What additional risks are involved in financing trade?

There are tax and criminal risks. Issuing blank invoices or fake invoices may involve fraudulent issuance of VAT invoices, fraudulent acceptance of bills, and illegal business operations, etc. Enterprises should pay attention to compliance and, if necessary, consult professional lawyers for evaluation and prevention.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudicative opinions in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.