[Direct answer]In the Beijing area, after the contract is deemed invalid, the part that has been performed shall be liquidated in accordance with Article 157 of the Civil Code of the People's Republic of China (effective January 1, 2021): the property obtained from the contract shall be returned; if it cannot be returned or there is no need to return it, the party at fault shall compensate for it in a reduced value; the party at fault shall compensate for the other party's losses, and all parties shall bear corresponding responsibilities if they are at fault. The party that has paid the money may request a refund, the party that has delivered the goods may request a return or a compensation in a reduced value, and the party that has completed the project may be compensated in a reduced value. It is recommended to fix the evidence of performance and fault as soon as possible, and clarify the path of return or compensation. For more details, please refer to the following link:Business and contract dispute services for enterprises.

I. Problem Background and Typical Scenarios

After the contract is deemed invalid, liquidation is commonly seen in the fields of sales, loans, cooperation, and construction projects. Typical scenarios include: a construction contract signed without qualifications being ruled invalid, and how to value the completed project; a loan contract being invalid due to violating mandatory regulations, and whether the paid interest can be refunded; a cooperation development agreement being invalid, and how to liquidate the invested funds and dividends; as well as contracts that conceal illegal purposes with legal forms, and the mutual obligation of the parties to return the funds. In practice, parties often only focus on the validity of the contract and neglect the liquidation process, resulting in long-term unresolved property disputes. For cases involving real estate performance, it can be combined with other legal procedures to resolve the dispute.Real estate sales and construction project servicesEvaluation.

II. Key points of contention

The focus of the dispute centers on four points. Firstly, the scope of return: whether the original items include accrued interests and value-added parts, and the standard for calculating the discounted value. Secondly, the determination of non-returnable items: the target items are consumed or transferred to bona fide third parties, in which case only the discounted value can be returned. Thirdly, the apportionment of fault and losses: which party's fault leads to the invalidity of the contract, and how to quantify the losses. Fourthly, the interests of third parties: when bona fide acquisition is involved, the objects and scope of return are limited. In the judicial practice of Beijing, the discounted value of the project is often entrusted to appraisal, and the return of interest is handled according to the proportion of fault. In cases involving enforcement, reference can be made to the relevant provisions.Creditor-debtor relations and enforcement case services.

III. Professional analysis by Hengluo Lawyers

Take a case of contract validity handled by our firm as an example: Zhang Na and Wang Xiaoyong signed the "Beijing Household Registration Marriage Registration Agreement" with Zhao Chenyang to register their child's household registration. They agreed to fake a marriage to obtain household registration and pay 100,000 yuan. However, due to the failure of the household registration policy, the two entrusted Xue Shuhua's lawyer team from Beijing Henglu Law Firm to sue for the invalidation of the agreement and the recovery of the payment. The court ruled that the agreement was invalid from the outset due to evading the household registration policy through a sham marriage and violating public order and good customs, in accordance with Article 152 of the Civil Code. According to Article 157, the court ordered the direct recipient, Zhao Chenyang, to return the 100,000 yuan within a specified period. This case clearly demonstrates the liquidation path after an invalid contract: while the validity of the contract is denied, the property obtained through the contract is returned in its original amount. The lawyer eliminated the defense space with a complete chain of evidence (agreement, transfer, divorce certificate, and audio recording), and the court fully supported his claim. This case was handled by Beijing Henglu 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

The core basis is Article 153 (Invalidity due to violation of mandatory provisions or public order and good customs) and Article 157 (Invalid legal consequences: return, discount, compensation) of the Civil Code of the People's Republic of China (effective from January 1, 2021). Practical suggestions: When suing, confirm the invalidity and return requests in parallel; organize contracts, payment vouchers, and delivery records to prove performance; provide evidence of losses and faults; and apply for appraisal and preservation of the project or goods in a timely manner. All parties' faults should be described truthfully to avoid excessive claims. For cases involving inheritance and family property, it may be combined with other relevant provisions.Inheritance succession and family property division services.

5. Hengluo Law Firm's Reminder

The invalidity of the contract does not mean that the losses shall be borne by the party itself. Restitution and compensation are statutory remedies. However, when making a request for restitution, attention should be paid to the state of the property. If the original item is lost, only a reduction in value can be claimed; compensation is limited to actual losses and faults, and the interests of contract performance cannot be claimed. It is recommended to fix the evidence of performance as soon as possible, prevent the transfer of property, and handle the liquidation together in the litigation to avoid winning the case but not being able to recover the property. If you need assistance, please contact us.Beijing Henglu Law Firm.

VI. Frequently Asked Questions

Q1: After the contract is deemed invalid, can I get all the money I've already paid back?

Generally, a request for return can be made. According to Article 157 of the Civil Code, the property obtained from an invalid contract shall be returned; if the payer proves that the payment has been made and the other party has no legal basis for retaining it, the court will generally support the return of the original amount. However, if the funds have been converted into consumables or transferred to a bona fide third party, compensation may only be provided in the form of a discount. The party at fault must also compensate the other party for the losses incurred as a result, and the parties shall share the liability according to their respective faults. The outcome will depend on the evidence and the determination of fault.

Q2: After claiming that the contract is invalid and requesting a refund, what evidence do I need to prepare?

The core evidence includes: the contract text and evidence of defects in effectiveness (violation of mandatory provisions or public order and good customs); payment receipts and transfer records to prove performance; proof of delivery or acceptance of performance (receiving notes, completion materials); evidence of the current state of the property (whether the original items can be returned); and evidence of the other party's fault (knowingly violating the law, inducing the signing of the contract). The evidence should focus on the performance and the returnability of the property. If necessary, an appraisal should be applied for.

Q3: If the contract is invalid and needs to be liquidated, how much would it cost to hire a lawyer?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Costs" based on the amount of the subject matter requested to be returned or compensated, and shall be borne by the losing party; the attorney's fees shall be negotiated between the law firm and the client, usually on a per-case basis or a percentage of the subject matter value, subject to the specific provisions of the entrustment contract, with no nationwide standard pricing. The appraisal fees related to the depreciation of the project shall be calculated separately. It is recommended to weigh the costs against the recoverable benefits and to assert claims decisively for large-amount performances.

Q4: How long does it usually take from confirming the invalidation to completing the liquidation?

Civil litigation in the first instance is concluded within six months under the ordinary procedure and within three months under the summary procedure; the period involved in the appraisal of projects or goods is not included in the time limit for trial, and the overall process usually takes several months to a year. The confirmation of invalidity and the return of funds are usually tried together, but the enforcement stage is counted separately. It is recommended to apply for property preservation during the litigation to prevent the transferred property from being transferred and to shorten the actual collection period.

Q5: The contract has just been deemed invalid. What should I do first?

Here's the translation of the Chinese sentence into English with a detailed explanation: Suggested four steps: 1. Organize contracts, payment and delivery evidence to determine the scope of performance; 2. Assess whether the property can be returned in its original state or needs to be discounted, and collect evidence of its current condition; 3. Provide evidence of the other party's fault and their own losses; 4. Parallelly assert claims for invalidation, return, and compensation in the litigation, and apply for preservation measures. Throughout the process, keep communication records and, if necessary, hire a lawyer to coordinate the liquidation plan.

The above content is based on the judicial practice in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific situations.

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. →Business and commercial legal services·Attorney Xue Suhua·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 jurisdiction differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.