[Direct answer]In the Beijing area, when reviewing the counterparty before signing a contract, it is recommended to conduct verification from six perspectives. First, check the status of the counterparty's existence: verify the registration information of the business license to confirm whether the enterprise is in normal operation, whether it has been revoked or deregistered, whether it has been included in the list of abnormal business operations, and whether it has serious violations of trust and credibility. These directly affect the validity of the contract subject's qualifications. Second, verify the business scope and qualification licenses: check whether the business scope covers the content of the current transaction. For special industries such as franchising, medical care, education, food, labor dispatch, and construction, also verify the corresponding licensing and filing status. If the matter requires specific qualifications, the counterparty's lack of qualifications may lead to legal risks in contract effectiveness or performance. Third, assess the counterparty's performance ability: understand the counterparty's asset scale, cash flow, staffing, historical projects, and customer evaluations to determine whether they have the ability to fulfill the agreed upon obligations. Fourth, verify the authorization chain: check whether the signing representative has valid authorization. If the legal representative signs personally, it is best to verify the original business license. For authorized agents, they should present a power of attorney and verify the scope of their authority. Fifth, check the counterparty's litigation and enforcement records: search for litigation information, records of being an enforced party, and information on dishonest enforced parties through public channels. Sixth, verify the counterparty's related parties and actual controllers: check the shareholder structure and actual controllers to identify potential pricing risks and benefit transfer in related transactions. Agreements that evade mandatory regulations or conceal illegal purposes under legal forms may be deemed invalid. Therefore, the review should not only focus on formal completeness, but also ensure that the transaction purpose is legitimate.Business and contract disputes in enterprisesThe risk prevention and control services in the column can assist the system in conducting reviews.

1. Problem background and typical scenarios

Common qualification review requirements include: lack of understanding when cooperating with new clients for the first time; being rushed to sign the contract without sufficient time for verification; large and irreversible transaction amounts; being required to pay a large advance; inconsistencies in the license information provided by the other party; and unclear backgrounds of cooperation partners introduced by third parties.Special services and other casesThe due diligence instructions in the column can be used for reference. The difficulty in implementing the review process often lies in the fast pace of business, which makes it easy for formal reviews to be compressed or even skipped.

II. Key points of contention

Focus One: Methods of verifying the qualifications of the main parties. Focus Two: Legal consequences of lacking qualifications. Focus Three: Methods of evaluating the contractual performance capability. Focus Four: Identifying defects in authorizations. Focus Five: The application of information on trustworthiness and enforcement actions. Focus Six: Reviewing the legality of the contractual purpose.Intellectual property protection and corporate lawThe compliance review approach in the column can be used for reference. Focus 7: the validity period of the review conclusion, and how to avoid the risks brought by the expiration of qualifications when the transaction cycle is relatively long.

III. Professional analysis by Henglue Law Firm

Take a contract dispute represented by Lawyer Xue Suhua of our firm as an example: The client signed an agreement with others to avoid household registration policies by pretending to get married, and paid the corresponding fees, but ultimately failed to achieve the purpose of household registration due to policy changes. In the representation process, the lawyer directly pointed out the purpose of the agreement: evading public management policies through a false marriage, which in essence was a legal form to cover up illegal purposes, violating public order, good customs, and mandatory legal provisions. Therefore, the agreement was invalid from the outset, and the payment should be returned. This case highlights an overlooked dimension in qualification review: although the formalities such as the parties' qualifications and the signing process are complete, if the purpose of the transaction itself is improper, the contract will still be invalid and difficult to obtain protection. Therefore, the review cannot stop at the level of certificates, but also needs to determine whether the transaction arrangement is legal and reasonable.Business and contract disputes in enterprisesThe review of the legality of the purpose of the column can be supplemented. This case is handled by Beijing Henglu Law Firm.Xue SuhuaThe attorney (practice certificate 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, establish a standardized review list of the other party; Second, verify the registration and litigation information through public channels; Third, verify the business scope and special qualifications; Fourth, request and verify the authorization documents; Fifth, evaluate the performance capacity and payment conditions; Sixth, review whether the purpose of the contract is legal. Legal basis: Articles 143, 144, and 146 of the Civil Code of the People's Republic of China (effective January 1, 2021) regarding the validity of civil legal acts; Article 150 regarding violations of public order and good customs; Articles of the Company Law of the People's Republic of China (amended and implemented on October 26, 2018) regarding the disclosure of information; Specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglue Law Firm's Advice

Firstly, the review should be completed before signing the contract, as it would cost a lot to rectify the situation afterwards. Secondly, the business license may require providing the original copy for verification to avoid the use of forged documents. Thirdly, special industries must verify the qualifications, otherwise it may affect the validity of the contract and its performance. Fourthly, the verification of authorization documents cannot be omitted. Signing beyond the scope of the agent's authority may result in the contract being invalid. Fifthly, the payment conditions and performance guarantees should be matched to avoid large-scale prepayments. Sixthly, if the review reveals that the purpose is illegal, the contract should be refused rather than just providing a risk warning.\nFinancial capital and cross-border transactions involving foreign entitiesThe main verification ideas in the column can be used as a reference for further study.

VI. Frequently Asked Questions

Q1: What exactly should I check when reviewing the other party's qualifications?

There are at least six items that need to be checked: First, the original business license, to confirm the name, unified social credit code, legal representative, address, and operating period; Second, whether the business scope covers the current transaction; Third, the permits and registrations required by special industries, such as franchise qualifications, construction qualifications, and food business licenses; Fourth, the authorization documents of the signing representatives; Fifth, litigation, enforcement, and credit records, which can be verified by searching through public channels; Sixth, the shareholder structure and actual controllers, to identify the relationship of affiliation. Together, this information forms the basis for determining whether the other party has the qualifications to sign the contract and the ability to fulfill its obligations.

Q2: Is the business license provided by the other party genuine? How can I verify it?

There are three ways to cross-check the information: First, verify whether the format of the unified social credit code is consistent with that recorded in the business license; Second, search for the subject through publicly available enterprise information query channels, and compare the registered information, operating status, and annual report disclosure; Third, require the other party to provide the original business license for on-site verification. There is a risk of forgery with just scanned copies or photos, especially when the other party urges you to sign the contract and the information sources are limited, so you need to be more cautious. If the other party refuses to provide the original license for verification, this itself is an important risk signal.

Q3: If the other party is a small company or a newly established enterprise, can we cooperate with them?

Yes, but the cooperation terms and risk control methods should be adjusted. Newly established or smaller-scale enterprises often lack a track record of performance, and risks can be mitigated through multiple measures: reducing the prepayment ratio, increasing the guarantee requirements for prepayments, making payments in stages and setting quality and progress milestones, requiring guarantees or credit enhancement measures, and stipulating clear default liabilities and termination conditions. At the same time, it should be evaluated whether additional safeguards can be provided by signing a guarantee contract with the actual controller personally. It should be noted that the high risk of small enterprises does not mean that cooperation is absolutely impossible, but rather that the risk exposure needs to be controlled within a range that you can tolerate.

Q4: If I can't find the other party's contact information, should I still cooperate with them?

It is recommended to exercise caution and refrain from signing the contract for the time being. If you cannot find valid contact information, it will be difficult to serve legal documents and assert rights in the event of a dispute, and the cost of searching for information in the enforcement phase will also increase significantly. In practice, it is recommended to verify the actual business location through on-site or online verification of the address provided by the other party; if it is an online transaction, you can request the other party to provide the original business license for verification and confirm it through a video call. If it is still impossible to verify the subject's information within a reasonable range, you should postpone signing the contract and wait until the information is verified before making a decision. Do not relax the basic review just because the other party is urging you or offering you a discount.

Q5: If problems are found during the review, can the contract still be signed?

It depends on the nature and severity of the problem. If it's a problem that can be rectified, such as a license about to expire or an authorization document that is not standardized, you can ask the other party to make corrections before signing the agreement. However, if it's a fundamental problem, such as the absence of a legal entity, the scope of business not covering the transaction content, the lack of special industry qualifications, or the transaction purpose itself violating mandatory legal provisions and public order and good customs, it is not recommended to sign the agreement, because such problems are often impossible to rectify afterwards. Especially for agreements with improper transaction purposes, even if they are signed and performed, they may be deemed invalid and result in the inability to recover the funds.Business and contract disputes in enterprisesThe column can also provide an explanation of the review process before signing a contract.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretation in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limits. →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. In case of disputes, please consult a practicing lawyer in time.