[Direct answer]In the Beijing area, the main differences lie in whether the terms are pre-formulated by one party, whether they can be negotiated, and the different focuses of legal regulation. A standard contract typically refers to a contract concluded using standard terms, where the terms are pre-formulated by the parties for repeated use and are not negotiated with the other party during the contract-signing process. Its characteristics include standardization and high efficiency, but the bargaining space for the other party is relatively limited. A customized contract, on the other hand, involves the parties negotiating and determining the terms for a specific transaction on a case-by-case basis, which better meets the needs of the transaction but involves relatively high contracting costs. The law has special regulations for standard terms: According to Article 496 of the Civil Code of the People's Republic of China (effective January 1, 2021), the party providing the standard terms shall determine the rights and obligations between the parties in accordance with the principle of fairness, and shall adopt reasonable methods to prompt the other party to pay attention to clauses that exempt or mitigate their responsibilities and are of great significance to the other party's interests, and shall explain them according to the other party's requirements; if the party fails to fulfill the obligation of prompting or explaining, resulting in the other party not paying attention to or understanding the clauses that are of great significance to their interests, the other party may claim that the clause does not become part of the contract. Therefore, standard contracts are not necessarily valid, and their effectiveness is subject to the obligation of prompting and explaining and the principle of fairness.

1. Problem background and typical scenarios

In daily life, standard-form contracts are ubiquitous, such as insurance contracts, transportation contracts, online service agreements, commodity sales contracts, and real estate transaction contracts. At the same time, major commercial transactions, mergers and acquisitions, and engineering contracts are often customized contracts. Typical scenarios include: consumers failing to notice the exemption clauses when signing insurance or service agreements, only to find it difficult to obtain compensation after an insured event occurs; enterprises directly stamping their seals on the procurement contracts provided by the other party without reviewing the breach of contract liability and jurisdiction clauses; customized contracts stipulating acceptance standards and price adjustment mechanisms item by item, ensuring smoother performance; and one party concealing terms that are clearly unfavorable to the other party in small print or hidden in attachments, failing to fulfill their obligation to provide adequate notice. With frequent transaction activities in the Beijing area, standard-form and customized contracts coexist. For enterprises, understanding the differences between the two and the regulatory rules for standard-form clauses can not only help them safeguard their bottom lines when signing the other party's standard-form contracts, but also ensure compliance when designing their own standard-form contracts, avoiding clauses being deemed unestablished or invalid.

II. Key points of contention

First, the standard for identifying standard form clauses, and how to determine whether they are "prepared in advance" and "not negotiated with the other party". Second, the manner of fulfilling the obligation of providing notifications and explanations, and the standard of proof. Third, the specific circumstances under which standard form clauses are invalid. Fourth, the rules for handling conflicts between standard form clauses and non-standard form clauses. Fifth, the rules for interpreting standard form clauses, and whether an interpretation unfavorable to the provider should be made. Sixth, how enterprises, as providers, can design compliant standard form clauses. These issues determine whether the clauses can bind the other party.

III. Professional analysis by Henglue Lawyers

Henglue Lawyers advise that to understand standard form contracts, one should grasp three key points: "identification, obligations, and effectiveness". First, identification. To determine whether a clause is a standard form clause, the key lies in whether it was pre-formulated by one party for repeated use and whether it was negotiated with the other party during the contract process. In practice, even if both parties sign the contract, if the clause was pre-formulated unilaterally and the other party was not given the opportunity to negotiate, it may still be deemed a standard form clause. Second, obligations. The party providing the standard form clauses has the obligation to draft the clauses fairly and to provide warnings and explanations for clauses that exempt or reduce its liability, increase the other party's liability, or restrict the other party's main rights, which are of significant interest to the other party. The warnings should be sufficiently noticeable, and the explanations should enable the other party to understand the meaning and consequences of the clauses. Enterprises should keep records of fulfilling this obligation. Third, effectiveness. If the obligation to provide warnings or explanations is not fulfilled, the other party may claim that the clause does not become part of the contract. If the standard form clause unreasonably exempts or reduces the provider's liability, increases the other party's liability, or restricts or excludes the other party's main rights, the clause is invalid. If there are two or more interpretations of the standard form clause, the interpretation that is unfavorable to the party providing the standard form clause shall prevail. Fourth, practical value. When designing standard form contracts, enterprises should prominently highlight key clauses and keep records of the warnings. When signing the other party's standard form contracts, they should review the exemption and liability limitation clauses clause by clause and, if necessary, negotiate amendments or supplementary agreements. In a case handled by Henglue Lawyers, the parties signed an agreement stipulating that they would handle household registration in a specific manner and pay the relevant fees. However, the arrangement violated legal provisions and public order and good customs, and the court ultimately ruled that the agreement was void from the outset and ordered the return of the funds. This shows that whether the contract is standard or customized, its clauses must not violate mandatory legal provisions or public order and good customs, otherwise it will face the consequence of being invalidated. This case was handled by Beijing Henglue Law Firm.Xue SuhuaThe attorney (practice license number: 11101201211769926, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

Action recommendations: First, identify the standard clauses in the contract, with a focus on the exemption and liability limitation clauses; Second, when acting as the provider, fulfill the obligation of giving warnings and explanations and keep records; Third, when acting as the counterparty, raise objections to unfavorable clauses and strive to amend them; Fourth, when necessary, claim that the clauses are not valid, invalid, or interpreted in a way unfavorable to the provider. For related services, please refer to the following link for more information:Business and contract disputes in enterprisesAndIntellectual property protection and corporate lawColumn. Legal basis: Article 496 of the Civil Code of the People's Republic of China (effective January 1, 2021) on the definition of standard clauses and the obligation to provide explanations; Article 497 on the invalidity of standard clauses; and Article 498 on the interpretation of standard clauses. The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

Firstly, the standard clauses must fulfill the obligation of giving notice and making explanations. Otherwise, they may not become part of the contract. Secondly, clauses that are unreasonable in terms of exempting liability, imposing additional obligations on the other party, or excluding the other party's main rights are invalid. Thirdly, when there are two interpretations of the standard clauses, the interpretation that is unfavorable to the provider shall prevail. Fourthly, whether it is a standard clause or a customized clause, the clauses shall not violate mandatory provisions or public order and good customs. If you need to learn about the design and review of contract clauses, you can contact us through the following channels:Business and contract disputes in enterprisesAndIntellectual property protection and corporate lawFor column consultation, please contact us.Beijing Henglue Law Firm.

VI. Frequently Asked Questions

Q1: What is the difference between a standard contract and a customized contract?

The terms of a standard contract are predetermined by one party and are not negotiated with the other party at the time of signing. They are standardized but have limited room for negotiation. Customized contracts are determined through negotiations between the two parties and are more tailored to specific transactions, but they are more costly. The main legal difference between the two is that the terms of a standard contract are subject to special obligations of providing explanations and to the principle of fairness.

Q2: Are standard contract terms always valid?

Not necessarily. The provider should fulfill the obligation of giving warnings and explanations. Otherwise, the other party may claim that the clause does not form part of the contract. If the standard clause unreasonably exempts or reduces the provider's liability, increases the other party's liability, or restricts or excludes the other party's main rights, the clause will be invalid. Therefore, the validity of the standard clause needs to be specifically reviewed.

Q3: Once you've signed it, can't you change your mind?

Not really. Signing a contract indicates that both parties have reached an agreement, but if the standard terms fail to fulfill the obligation to provide explanations, or if the content is invalid, the parties can still claim that the terms are not binding or invalid. If the contract as a whole violates mandatory legal provisions or goes against public order and good morals, it may also be deemed invalid. The key issue is whether the terms themselves are legal and valid.

Q4: How should enterprises draft standard contract clauses?

The rights and obligations should be determined in accordance with the principle of fairness. Major clauses such as exemption from liability and limitation of liability should be prominently highlighted and clearly explained. Avoid unreasonably exempting oneself from liability or excluding the other party's main rights. Keep records of reminders and notifications, such as separate signature confirmations, bolded reminders, and response slips, to prove that the obligations have been fulfilled.

Q5: What should I do if there are ambiguities in the standard contract terms?

The terms should be interpreted in accordance with their common meaning. Where there are more than two interpretations of the standard terms, the interpretation unfavorable to the party providing the standard terms shall prevail. If the standard terms are inconsistent with the non-standard terms, the non-standard terms shall prevail. Therefore, the terms should be expressed as clearly as possible to avoid causing ambiguity and unfavorable interpretations.

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

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 limits. →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.