[Direct answer]It usually includes five stages. First, pre-contract review: verifying the other party's subject qualifications, operating status, creditworthiness, and performance capabilities. For franchises and qualification licenses, the corresponding qualifications should also be reviewed. Second, clause design: clarifying the subject matter, quantity and quality, price and payment, performance deadlines, location and methods, acceptance standards, breach of contract liability, dispute resolution methods, and delivery addresses to avoid ambiguity or imbalance of rights and obligations. Third, signing and authorization management: verifying the signatory's authority, standardizing the use of official seals, contract special seals, and power of attorney documents to prevent unauthorized signing and misuse of seals. Fourth, performance and evidence retention: performing according to the contract and retaining delivery notes, acceptance notes, reconciliation statements, payment vouchers, correspondence, and chat records to prepare evidence for potential disputes. Fifth, amendment, termination, and dispute response: contract amendments and terminations should be confirmed in writing. In the event of a breach of contract, promptly issue a notice of default, collect evidence, and choose negotiation, arbitration, or litigation as appropriate. Additionally, attention should be paid to whether the contract content violates mandatory legal provisions or goes against public order and good customs, to avoid the entire contract being invalidated.

1. Problem background and typical scenarios

A contract is a fundamental tool for business operations. The risk often lies not in whether a contract is signed, but in whether it is signed in a standardized manner and whether there is evidence of its performance. In practice, some enterprises sign and pay without verifying the other party's qualifications, only to find out later that the other party lacks the ability to perform the contract; some contracts are too general, lacking acceptance standards when quality disputes arise; some only have verbal agreements during the performance process, making it difficult to provide evidence in the event of a dispute; and some sign contracts beyond their authority or even forge contracts due to irregular stamp management. When handling such cases in the Beijing area, the court will review the effectiveness of the contract, the meaning of its clauses, the signing authority, and the evidence of its performance to determine liability. Understanding the risk points of the entire contract process can help enterprises take preventive measures in advance and reduce disputes and losses.

II. Key points of contention

First, the review method of the subject's qualification and performance capability. Second, the judgment of the completeness of the contract terms and their clear meaning. Third, the determination of the validity of the signing authority and the use of the seal. Fourth, the preservation of the evidence of performance and the effect of providing evidence. Fifth, the circumstances of the contract being invalid and the application of the public order and good customs provisions.

III. Professional analysis by Henglue Lawyers

Henglue Lawyers believe that the key to contract risk prevention and control is "preliminary review, on-site record keeping, and timely response after the event". In terms of preliminary review, it is necessary to verify the counterparty's basic information, business scope, and qualifications, and require guarantees or credit enhancement measures when necessary. In terms of clause design, clear provisions should be made regarding performance standards, acceptance methods, and breach of contract liabilities, avoiding vague expressions. During the signing process, it is necessary to verify whether the signatories have appropriate authorizations, standardize the use of official seals, and retain the authorization documents. Taking the contract dispute handled by Lawyer Xue Shuhua's team in our firm as an example: The client signed a "fake marriage" household registration agreement with others and paid 100,000 yuan to register their child's household, but failed to register due to policy reasons. The client therefore sued to confirm the invalidity of the agreement and recover the payment. The lawyer collected a complete chain of evidence including the service contract, the household registration agreement, transfer records, audio recordings, and related mediation documents, and cited Article 153 of the Civil Code of the People's Republic of China to argue that the agreement violated public order and good customs by evading household registration policies through a fake marriage and was therefore invalid from the outset. The court accepted the lawyer's arguments, confirmed the invalidity of the agreement, and ordered the recipient to return the full 100,000 yuan. This case vividly demonstrates that contract risk prevention and control not only includes technical reviews of clauses and performance, but also includes assessing the legality and compliance with public order and good customs of the contract content. Once the contract is deemed invalid due to violating laws or public order and good customs, the transaction purpose is often thwarted, and disputes over refunds and compensation may arise. Therefore, enterprises should conduct compliance reviews before signing contracts and refuse transaction arrangements aimed at evading laws or policies. 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 list: First, establish contract templates and review checklists, with a focus on verifying the qualifications and credentials of the parties involved; Second, conduct legal reviews of major contracts to clarify performance standards, breach of contract liabilities, and dispute resolution methods; Third, standardize contract signing authorization and stamping procedures, and retain authorization letters and stamping records; Fourth, preserve evidence of delivery, acceptance, reconciliation, payment, and communication during the performance process; Fifth, ensure that all contract amendments and terminations are confirmed in writing, and promptly issue notices of default and collect evidence in the event of a breach of contract. For corporate commercial and contract disputes, reference materials can be consulted as needed.Business and contract disputes in enterprisesAndSpecial servicesLegal basis: Articles 143, 153, 469, 509, 577, and 585 of the Civil Code of the People's Republic of China (effective January 1, 2021). The specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

Firstly, the legality of the contract content is the bottom line. Arrangements that evade laws or policies may be invalid. Secondly, clear clauses are more important than lengthy ones, and the performance standards and breach of contract liabilities should be clearly stated. Thirdly, stamping and authorization management are high-risk links, and it is necessary to establish an approval and registration system. Fourthly, evidence of performance should be kept on hand, and it is often difficult to provide evidence afterwards. For enterprise commercial and contract disputes, you can seek help throughBusiness and contract disputes in enterprisesWe provide a comprehensive solution for services, which integrates intellectual property and compliance issues.Intellectual property and corporate legal advisorsFor matters involving debt recovery and enforcement, you may refer to the following for referenceCreditor's rights and debts, and enforcementYou can consult us regarding the fixation of evidence and document servicesSpecial services.

VI. Frequently Asked Questions

Q1: What aspects does contract risk prevention and control include?

It mainly includes the subject and credit review before the contract, clause design and review, signing authorization and seal management, performance and evidence preservation, amendment and termination, dispute response, and compliance review of the legality of the contract content and public order and good customs, forming a prevention and control system covering the entire process.

Q2: What should I check about the other party before signing a contract?

It is necessary to verify the other party's qualifications and business scope, industrial and commercial registration and operating status, litigation and enforcement situation, qualification licenses and performance capabilities. When necessary, request guarantees or credit enhancement measures, and verify the signing party's authorization documents and identity information to reduce the other party's risk of breaching the contract.

Q3: Which clauses in the contract are the most important?

These usually include the subject matter and quality standards, the price and payment method, the performance period, location and method, the acceptance standards, the liability for breach of contract and the penalty for breach of contract, the dispute resolution method and the delivery address clause, etc. The more specific the terms are, the more predictable the disputes will be and the easier it will be to provide evidence in case of disputes.

Q4: What are the consequences of an invalid contract?

According to Article 157 of the Civil Code of the People's Republic of China (effective from January 1, 2021), after the contract is invalidated, the property obtained from the contract shall be returned; if it cannot be returned or there is no need to return it, compensation in the form of a price reduction shall be made; the party at fault shall compensate the other party for the losses suffered thereby, and the parties at fault shall each bear corresponding responsibilities.

Q5: How to preserve evidence during the performance of the contract?

Delivery notes, signing receipts, acceptance records, reconciliation statements, invoices, payment vouchers, correspondence, and instant messaging records should be preserved. For important communications, it is recommended to use written form and indicate the contract number. Electronic data should be kept in its original form and, if necessary, fixed through notarization or evidence storage platforms to enhance its probative force.

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

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

Disclaimer: This article is compiled based on current effective laws and regulations and publicly available 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. In the event of a dispute, please consult a practicing lawyer in a timely manner.