[Direct answer]In the Beijing area, large-scale procurement contracts involve high amounts and long durations, and it is necessary to focus on controlling the counterparty's creditworthiness, quality standards and acceptance, payment and guarantee arrangements, as well as breach of contract and termination clauses. According to Article 595 of the Civil Code of the People's Republic of China, a sales contract is a contract in which the seller transfers the ownership of the subject matter to the buyer and the buyer pays the price; Article 596 stipulates that the content of a sales contract generally includes the name of the subject matter, quantity, quality, price, performance period, performance location and method, packaging method, inspection standards and methods, settlement method, etc.; Article 621 stipulates that where the parties agree on an inspection period, the buyer shall notify the seller of any situation where the quantity or quality of the subject matter does not conform to the agreed terms within the inspection period. Therefore, the purchaser should incorporate quality standards, inspection methods, and objection periods into the contract, and combine the amount and risk to design payment milestones, advance payment guarantees, retention of title or quality deposits, etc., to avoid losing both money and goods.

I. Problem background and typical scenarios

Procurement is a normal part of business operations, but the risks of large-scale procurement are more concentrated. Typical scenarios include: suppliers being branch offices or newly established companies with insufficient creditworthiness or actual performance capabilities; technical standards for equipment or raw materials being vaguely defined, only to find them failing to meet standards after delivery; the absence of acceptance deadlines and objection procedures, with late deliveries being deemed as meeting quality standards; excessively high prepayment ratios leading to suppliers failing to deliver on schedule; payments being made but the goods having legal defects or being seized; the counterparty's abnormal operations or even involvement in criminal offenses, making it difficult to recover funds; and verbal changes to specifications during the performance process without leaving records. In practice, disputes over quality and payment dominate contract disputes in the Beijing area, while the completeness of contract terms and the preservation of performance evidence often determine the difficulty of protecting rights and the recovery rate of losses.

II. Key points of dispute

First, whether the supplier's creditworthiness, qualifications, and performance capabilities have been verified. Second, whether the quality standards, technical parameters, and acceptance methods are clear and quantifiable. Third, how the inspection period and the notification method for quality objections are stipulated. Fourth, whether the payment milestones, the advance payment ratio, and the guarantee arrangements are reasonable. Fifth, how the ownership of the subject matter and the time of risk transfer are determined, and whether there is a need for retention of title. Sixth, whether the clauses on breach of contract, termination, and dispute resolution are feasible to implement.

III. Professional analysis by Henglue Law Firm

In the contract disputes handled by Henglue Law Firm, many disputes could have been resolved through clause design during the procurement process. Firstly, in investment contract disputes, the parties invested according to the transfer agreement of the right to income, and the other party promised to complete the screening before the agreed deadline or refund the investment. However, the film was never screened and the company was already dissolved. The lawyer argued that the contractual purpose could not be achieved, and the party in breach had the right to rescind the contract and demand the return of the investment. Combined with the circumstances of the shareholder's property independence in a single-member company and the shareholder's commitment before the company's dissolution, the court supported the request for the return of the investment. The lesson from this case is that verifying the other party's qualifications and performance ability before making payments and setting clear refund or breach clauses in the contract can significantly reduce the risk of loss of funds. Secondly, in a civil and criminal cross-case arising from a sales contract, the parties were sued by the creditor together with the real estate mortgage. After investigation, the lawyer revealed that the parties were victims of a series of fraud committed by others under the guise of real estate mortgage cooperation, and there was no genuine guarantee intention. The lawyer argued that the case involved suspected economic crimes, and the court ruled to dismiss the lawsuit and transfer the materials to the public security organ. The second-instance court maintained the ruling. This case shows that it is essential to verify the other party's creditworthiness and the compliance of the transaction structure in large-scale transactions. If any abnormalities are found, evidence should be fixed in time and efforts should be made to connect the criminal and civil paths. Thirdly, in another contract dispute, the parties signed an agreement and paid money for household registration. The lawyer argued that the agreement was invalid because it violated public order and good customs and claimed the return of the property, which was supported by the court, further confirming the value of legality review. In summary, the purchaser should incorporate four main lines into the contract: subject verification, quality standards, payment milestones, and breach remedies, and keep delivery notes, acceptance certificates, and correspondence during the performance. This case was handled by Beijing Henglue Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical Suggestions and Legal Basis

Action list: Firstly, verify the supplier's main qualifications, credentials, and performance capabilities, and, if necessary, check information related to litigation and abnormal business operations. Secondly, clarify the technical standards, quality indicators, and acceptance methods of the subject matter. Thirdly, stipulate the inspection period and the written notification method for quality objections to avoid considering overdue items as qualified. Fourthly, reasonably set the advance payment ratio, payment milestones, and quality deposits, and, if necessary, require guarantees. Fifthly, assess whether it is necessary to stipulate the retention of ownership or the point of risk transfer. Sixthly, retain delivery notes, acceptance notes, invoices, and correspondence to ensure traceability of performance. For disputes involving procurement and sales contracts, reference may be made to the relevant provisions.Business and contract disputes in enterprisesFor reference, you can check the information related to corporate law and compliance.Intellectual property protection and corporate lawFor matters involving the recovery and enforcement of funds, you may refer to the following for reference.Creditor's rights and debts, and enforcement casesLegal basis: The relevant provisions of Articles 595, 596, 615, 621, 626, and 641 of the Civil Code of the People's Republic of China (adopted on May 28, 2020 and implemented on January 1, 2021). The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

First, it is essential to verify the other party's creditworthiness and contractual performance capability before making large-scale purchases, rather than just focusing on the quotation. Second, the quality standards and acceptance methods should be specified in detail, otherwise it will be difficult to claim defects afterwards. Third, the inspection period and the method of raising objections should be clearly defined. Failure to do so may be regarded as the product meeting quality standards. Fourth, the proportion of advance payments should not be too high. Guarantees or retention of ownership can be used to reduce risks. Fifth, if the other party is found to be operating abnormally or suspected of committing crimes, evidence should be preserved and protective measures should be taken in a timely manner. For procurement and contract disputes, legal remedies can be sought through appropriate channels.Business and contract disputes in enterprisesThe service provides a comprehensive solution, which includes the option of recovering the funds involved in the case.Creditor's rights and debts, and enforcement casesHandle it.

VI. Frequently Asked Questions

Q1: What aspects should be verified before signing a large-scale procurement contract with a partner?

It is necessary to verify their main qualifications, business scope and relevant qualifications, actual performance and production capacity, as well as whether there are situations such as being involved in litigation, having abnormal business operations, or being subject to enforcement; for branch offices and agents, it is also necessary to check the authorization documents to avoid signing contracts with unqualified parties.

Q2: How should quality standards be written to avoid disputes as much as possible?

It is recommended to adopt national standards, industry standards, or clear technical parameters as much as possible, agree on inspection methods and sampling rules, and link the acceptance standards to the payment milestones. The more specific and quantifiable the standards are, the easier it will be to determine whether they have been met afterwards, and the fewer disputes there will be.

Q3: How long do I have to raise a quality complaint after the goods arrive?

The inspection period specified in the contract shall prevail. If the quantity or quality of the goods do not conform to the agreed terms, the buyer shall notify the seller within the time limit; if no time limit is specified, the buyer shall raise the objection within a reasonable period after discovering or should have discovered the defects. Any delay in doing so may affect the claim, so it is essential to pay attention to the written notice and delivery of the objection.

Q4: How to prevent the risk of advance payments?

It is possible to control the proportion of prepayments, make payments in stages according to the progress, require guarantees or agree on retention of title, and set default liability for late delivery; at the same time, keep payment receipts and correspondence, and once the other party breaches the contract, you can promptly claim for termination and compensation.

Q5: What should I do if the other party might be involved in contract fraud?

It is necessary to collect clues about the scam and transaction evidence in a timely manner, inform the court that there are suspicions of economic crimes in the case, and strive to obtain a ruling to dismiss the lawsuit and transfer the case to the public security organ; at the same time, pay attention to the preservation of property and the timing to avoid the funds being transferred and making it difficult to recover. If necessary, consult the connection between criminal and civil paths simultaneously.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence to avoid missing the statutory time limit. →Corporate commercial legal services·Attorney Xue Suhua·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public 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 a dispute arises, please consult a practicing lawyer in time.