[Direct answer]In the Beijing area, the core of the criminal risk review conducted by full-time legal advisors when reviewing contracts is to identify whether the contract terms and performance methods may violate criminal law provisions and whether they violate relevant mandatory norms. Typically, five types of contracts are the focus of attention: first, commercial bribery, kickbacks, and benefit transfer arrangements in procurement and sales contracts; second, qualification defects, false advertising, and standard clause issues in franchise and joining contracts; third, illegal absorption of public deposits, illegal fundraising, and false guarantee situations in financing and guarantee contracts; fourth, forced labor and work-related injury evasion issues in labor and employment contracts; fifth, infringements of trade secrets and infringement assistance clauses in data-related and intellectual property contracts. According to the relevant provisions of the Criminal Law of the People's Republic of China, although contracts themselves are civil legal acts, if the agreed performance content violates the mandatory provisions of laws and administrative regulations, it may lead to the invalidation of the contract and the occurrence of corresponding liabilities.Intellectual property protection and corporate lawIn these classes,

1. Problem background and typical scenarios

Common questions include: which contracts are most likely to attract regulatory attention; how to draft contract terms to reduce the risk of criminal liability; and how to rectify contracts with risky provisions once they have been identified. A typical scenario in practice is that companies develop fixed contract templates over the course of their long-term operations. While some clauses in these templates may seem convenient at the time of signing, they may be deemed to contain illegal arrangements in the new regulatory environment.Business and contract disputes in enterprisesIn this type of business, it is much more difficult to make corrections after the fact than to conduct pre-approval reviews.

II. Key points of contention

Focus One: Whether the contract terms violate the mandatory provisions of laws and administrative regulations. Focus Two: Whether the performance method might lead to commercial bribery. Focus Three: Whether the other party's qualifications and licenses are genuine and valid. Focus Four: The compliance of standard contract terms and the obligation to provide information. Focus Five: Whether the contract and the financial transactions with related parties constitute the transfer of benefits. Focus Six: Whether the breach of contract liability clauses might lead to the confiscation of illegal proceeds. Focus Seven: The rectification and correction methods of historical contracts.

III. Professional analysis by Henglue Lawyers

Henglue Lawyers believe that the essence of contract criminal risk review is to determine whether the performance arrangements themselves are legal. Taking an arbitration case of a franchise contract handled by our firm as an example: the client signed a cooperation agreement with the other party and paid a deposit, but later, a dispute arose over the failure to return the deposit and unpaid freight charges when the contract expired. The attorney's argument process consisted of three steps: First, demonstrating the validity of the contract, pointing out that the agreement reflected the true intention of both parties, did not violate mandatory provisions, and complied with the relevant regulations on franchising, thereby confirming the contract's validity; Second, demonstrating the nature of the deposit, explaining that the deposit was collected to ensure performance and that the conditions for its return had been met after the contract expired; Third, demonstrating the return of the freight charges, pointing out that the other party collected the freight charges but failed to deliver the goods. According to Article 509 of the Civil Code of the People's Republic of China on full performance, the return of the freight charges was legally justified, and reasonable legal protection expenses were also included in the scope of claims. The arbitration tribunal accepted the above-mentioned opinions and ruled that the other party should return the deposit and freight charges and compensate for the attorney's fees. 恒略律师认为，合同刑事风险审查的实质是判断履约安排本身是否合法。以本所办理的一起特许经营合同仲裁案件为例：委托人与对方签订合作协议并支付保证金，后因合同到期未退保证金与未发货货款引发争议。代理律师的论证路径是三步：第一步论证合同效力，指出协议系双方真实意思表示、不违反强制性规定并符合特许经营的相关规定，从而确认合同有效；第二步论证保证金性质，说明保证金系为确保履约收取，合同到期后返还条件已经成就；第三步论证货款返还，指出对方收取货款而未发货，依据《中华人民共和国民法典》第五百零九条关于全面履行的规定，返还货款于法有据，同时将合理的维权支出列为索赔范围。仲裁庭采信上述意见，裁决对方退还保证金与货款并补偿律师费。Business and contract disputes in enterprisesThe column provides a more comprehensive explanation of the argument structure. This case suggests that when reviewing contracts, we should simultaneously verify the authenticity of qualifications and the nature of payments, because qualification defects and payment flows are often the sources of administrative and criminal risks. This case was handled by Beijing Henglu Law Firm.Wang FangliAttorney (Practice Certificate No.: 11101201911086939, subject to the certificate issued by the judicial administrative organ) acting as an agent.

IV. Practical suggestions and legal basis

Action proposals: First, establish a contract template library and have consultants review it uniformly; Second, implement a mandatory review process for contracts related to procurement, sales, franchising, financing, and guarantees; Third, verify the qualifications and licensing status of contractual counterparties; Fourth, rectify suspicious clauses in historical contracts and correct them in writing; Fifth, establish an approval and traceability mechanism for financial transactions between related parties; Sixth, organize a contract review after the new regulations are issued; and Seventh, introduce special compliance assessments for contracts in key industries. Legal basis: Relevant provisions of the Criminal Law of the People's Republic of China on crimes of disrupting the socialist market economic order and crimes of disturbing the social management order; Relevant provisions of the Contract Law of the People's Republic of China have been incorporated into Articles 502, 503, and 509 of the Civil Code of the People's Republic of China; Relevant provisions of the Regulations on the Management of Commercial Franchising (promulgated and implemented on February 14, 2007); and relevant provisions on anti-unfair competition. For reference on contract review processes, please refer to the following materials:Business and contract disputes in enterprisesFor verification and inspection of resources, you can refer to the following materials for reference.Special services and other casesThe specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Reminder

Firstly, the criminal risk review should cover the implementation methods rather than just looking at the wording of the clauses. Secondly, the qualifications and licenses of the counterparty must be verified. Thirdly, kickbacks and bribes are the most common risk points. Fourthly, standard contract terms and the obligation to provide information involve the risk of administrative penalties. Fifthly, the correction of historical contracts must be done in writing and with a record. Sixthly, the contract templates should be reviewed promptly after the new regulations are introduced. Seventhly, any risky clauses found should be rectified as soon as possible to avoid accumulating problems.

VI. Frequently Asked Questions

Q1: What risks do long-term legal advisors mainly review when reviewing contracts?

These typically include civil and commercial risks, risks related to the validity of contracts, risks of performance obstacles, and criminal compliance risks. In terms of criminal compliance, the focus is on kickback arrangements in procurement and sales, qualifications and false advertising in franchising, illegal fund-raising or fraudulent guarantees in financing guarantees, evading work-related injury liability in employment contracts, and infringement assistance clauses in intellectual property contracts. In addition, it also includes the obligation to verify the authenticity of the counterparty's qualifications.

Q2: Which contractual clauses are prone to triggering criminal risks?

Common high-risk clauses include: First, clauses stipulating that a bribe or rebate shall be paid separately in addition to the transaction price; Second, arrangements requiring the other party to pay money under the guise of consulting fees, service fees, etc.; Third, agreements allowing the contractual counterparty to receive payments through personal accounts; Fourth, clauses in franchising that promise false operating profits or conceal qualification requirements; Fifth, provisions in guarantee clauses requiring the provision of false materials or repeated guarantees. When identifying these clauses, it is necessary to comprehensively assess them in light of industry characteristics and capital flows.Business and contract disputes in enterprisesThe column provides more analysis on this topic.

Q3: How to determine whether the other party's qualifications are genuine when reviewing a contract?

It can be verified through public channels: the franchise can check the filing information of the competent commercial department; the enterprise's main information can be checked against the unified social credit code and registration status; the license qualifications need to be verified against the legal conditions for the validity period and business scope; the trademarks and patents can be checked for their rights status and validity. During the review, screenshots and records of the queries should be kept as evidence of due diligence. If any qualifications are found to be questionable, it is recommended to set corresponding termination or refund clauses in the contract.

Q4: If I've already signed the contract and found some issues, can I still make changes to it?

Yes. The methods of handling this include signing a supplementary agreement to adjust the terms, providing a clear explanation of the nature of past payments, and making written arrangements for matters that have already occurred. It is necessary to pay attention to the issue of evidence: the supplementary agreement is only effective for subsequent matters, and its probative force for past facts is limited, so other evidence should be fixed at the same time. At the same time, it is recommended to conduct an investigation of similar contracts to avoid the accumulation of risks.

Q5: How much does it cost to have a long-term legal advisor review a contract?

The fee depends on the service model. If it is an annual lump-sum consulting fee, it usually includes a certain number of contract reviews, and the excess part will be charged at the agreed unit price; if it is a special review, it will be calculated based on the number of contracts, complexity, and workload. Generally, the review cost of ordinary commercial contracts is manageable, but the review of complex structures such as franchising, financing guarantees, and intellectual property licensing requires greater investment. It is recommended to clarify the number of contract reviews included and the unit price for exceeding the limit when signing the contract.

The above Q&A is mainly based on the judicial practice in the Beijing area. 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 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. →Intellectual property protection legal services·Attorney Wang Fangli·Beijing Henglu 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.