[Direct answer]Of course, corporate legal advisors can and should review contracts, which is the first line of defense for corporate risk control. According to Article 509 of the Civil Code of the People's Republic of China, parties shall perform their obligations in full in accordance with the agreement and abide by the principle of good faith. The core of contract review is to identify flaws in effectiveness and loopholes in payment and breach of contract clauses before signing the contract. Taking franchising as an example, the Regulations on the Management of Commercial Franchising require that the franchisor have the qualification of "two stores in one year" and be subject to filing and disclosure. If enterprises outsource contract review to professional lawyers, they can significantly reduce the risk of being defaulted on deposits and payments. Beijing Henglu Law FirmCorporate Legal TeamI have handled many contract disputes and suggest that enterprises should entrust a lawyer to review the agreements related to franchising, procurement, and investment before signing them.Wang FangliThe lawyer reviews the terms to avoid the cost of protecting one's rights being multiplied exponentially afterwards.

I. Legal basis and interpretation of provisions

1. Article 509 of the Civil Code of the People's Republic of China (effective January 1, 2021)

This article establishes the principle of full performance and good faith: the parties shall fully perform their obligations as agreed, and comply with the principle of good faith in performing obligations such as notification, assistance, and confidentiality. Contract review is precisely about putting this principle first, identifying in advance any omissions or ambiguities in clauses such as the subject's qualifications, the subject matter, the price, the performance period, the liability for breach of contract, and the jurisdiction of disputes, so as to avoid being caught off guard after signing the contract. For standard terms, it is also necessary to alert the other party to the content that exempts or mitigates their responsibilities, otherwise it may affect the effectiveness of the clauses.

2. Article 3 and Article 7 of the Regulations on the Management of Commercial Franchise (effective May 1, 2007)

The regulations stipulate that the franchisor shall have a mature business model, two directly-operated stores that have been in operation for at least one year, and shall be registered with the competent commercial department and disclose relevant information. When reviewing the franchise contract, the enterprise shall verify the franchisor's qualifications, trademark ownership, and registration status to prevent signing contracts with unqualified or invalid trademark franchisors, thereby rendering the contract purpose futile. This provision is a key basis for determining whether the franchise contract is legal and valid, and whether the deposit can be refunded. It is also a key risk point in the review by consultants.

3. Practical adjudication guidelines

The court usually reviews the validity of a contract based on whether the expression of intent is genuine, whether it violates mandatory provisions, and whether it goes against public order and good morals. Common loopholes focus on the conditions for refunding the deposit, jurisdiction agreements, and unclear liability for breach of contract and the right of rescission. Henglue Lawyers found that the franchisees are most likely to suffer losses from "the deposit not being refunded in general" and "there being no corresponding breach of contract clauses for the obligation to deliver the goods". It is recommended that lawyers issue a written review opinion before signing the contract, and if necessary, they can refer to it for reference.Xiong BinrongThe lawyer's practical experience in handling similar franchise disputes involves incorporating the qualification defects and refund procedures into the contract.

II. Henglue Lawyer's Real Cases (Detailed Review)

Review of the case:On July 31, 2018, Zhang * signed the "XX Cooperation Agreement" with a clothing company in Guangzhou to operate its clothing accessories in Guangdong for a contract period of three years. Zhang * paid a franchise operation deposit of 30,000 yuan. The agreement stipulated that disputes would be submitted to the Guangzhou Arbitration Commission for adjudication. On August 29, 2019, Zhang * paid a purchase price of 5,756.6 yuan, but the company failed to deliver the goods. On November 15, 2021, Zhang * submitted a "Closing Store Application Form", indicating that the contract would no longer be renewed upon its expiration. However, the company has yet to refund the unused purchase price and deposit. Zhang * has entrusted Beijing Henglu Law Firm to handle the case.Wang FangliThe lawyer initiated arbitration and requested the return of the deposit of 20,000 yuan, the payment of 5,756.6 yuan, and the lawyer's fees and arbitration fees. By this time, the company had lost contact and the evidence was scattered, making it extremely difficult to protect their rights.

The focus of the controversy:First, the validity of the franchise contract and whether the agreement complies with the "Regulations on the Management of Commercial Franchise Businesses"; Second, whether the deposit should be refunded and whether the conditions for the franchisee to receive the deposit after the contract expires have been met; Third, whether the unshipped payment and the legal fees for protecting rights can be supported.

Our position and that of the other party are as follows:Zhang * claimed that the company failed to refund the deposit and pay the outstanding payment after the contract expired, and requested the return of the deposit of 20,000 yuan, the outstanding payment of 5,756.6 yuan, and the attorney's fees, and that the company should bear the arbitration fees; the respondent company failed to appear in court for defense after being legally notified, and also failed to submit a written opinion, which was deemed as waiving its right to defense.

Attorney's Strategy and Legal Opinions:Attorney Wang Fangli pointed out that the cooperation agreement involved in the case is a true expression of the parties' intention, does not violate mandatory provisions, and complies with the "Regulations on the Management of Commercial Franchise", which is legal and effective; the deposit is collected to ensure performance, and it should be returned to Zhang * after the contract expires. The company's arrears of 20,000 yuan in the deposit should be returned in time; the company charged 5,756.6 yuan without delivering the goods, and it is legally justified to return the payment according to Article 509 of the Civil Code; the attorney's fees are reasonable expenses for safeguarding rights, and the breaching party should compensate for them. The attorney used the validity of the contract and the nature of the deposit as the main argument to form a complete chain of evidence.

The court's reasoning and case handling results:The arbitration tribunal accepted the evidence submitted by the applicant as corroborating each other, adopted the opinions and claims put forward by Henglue Law Firm, and ruled in accordance with the relevant provisions of the Civil Code: First, the clothing company shall refund the deposit of 20,000 yuan and the return payment of 5,756.6 yuan, totaling 25,756.6 yuan; Second, the clothing company shall compensate Zhang * for his attorney's fees; Third, the arbitration fees in this case shall be borne by the clothing company. The client successfully recovered the deposit, the payment for the goods, and the attorney's fees, achieving a complete victory in the arbitration case.

This case is handled by Beijing Henglu Law Firm.Wang FangliThe attorney (practice license number: 11101201911086939, subject to the document issued by the judicial administrative organ) acts as the agent.

III. Frequently Asked Questions

Q1: What aspects do corporate legal advisors mainly review when reviewing contracts?

The review usually focuses on seven categories of risks: the qualifications and operating licenses of the parties, whether the subject and quantity are clear, the price and payment deadlines, the performance period and location, the liability for breach of contract and the right of rescission, the jurisdiction of disputes and service, and confidentiality and non-compete clauses. For franchising, it is also necessary to verify the "two stores in one year" qualifications and trademark registration. The lawyer will issue a written review opinion, listing the proposed amendments and risk levels, rather than just providing verbal advice.

Q2: Can I still claim the payment for the goods if we haven't signed a written contract?

Yes. Although no written contract has been signed, delivery notes, receipt records, chat logs, reconciliation statements, invoices, etc. can form a chain of evidence to prove the factual contractual relationship, and the buyer can claim the payment according to the Contract Chapter of the Civil Code. However, the difficulty of providing evidence is higher than that of a written contract, so it is equally important to review the contract before signing it and leave traces during the performance of the contract. It is recommended that the lawyer sort out the list of evidence before collecting the payment or initiating litigation.

Q3: How much do legal consultants typically charge for reviewing contracts?

The annual consulting fee typically includes a fixed number of review contracts, or a per-contract fee, which is negotiated based on the complexity of the contract and the contract amount. The base contract fee ranges from hundreds to thousands of yuan, while complex agreements such as investment and financing and franchising are charged based on the workload. According to the "Measures for the Administration of Lawyer's Service Fees", these fees are generally within the scope of the government's guidance prices. It is recommended to sign a written contract after discussing the client's needs in person to avoid disputes arising from verbal agreements.

Q4: Can the payment already made be refunded after the contract is deemed invalid?

Yes. According to the relevant provisions of the Civil Code, the property obtained from the invalid contract shall be returned, and if it cannot be returned or there is no need to return it, it shall be compensated at a discounted price; the party at fault shall compensate the other party for the losses, and both parties shall bear their own responsibilities if they are at fault. In the case of franchising, if the franchisor lacks qualifications or the trademark is invalid, resulting in the failure of the contractual purpose, the franchisee may claim a refund of the fees already paid, and the court will determine the amount based on the performance and the fault of the parties.

Q5: How long does it usually take to review a contract?

For ordinary sales and service contracts, opinions are generally issued within one to three working days. For complex investment and financing, franchise, and joint venture agreements, it takes five to ten working days, and the revised version and risk description shall be attached. Urgent contracts can be negotiated for expedited processing. It is recommended that enterprises set aside a review period and do not submit the contract to the lawyer on the same day of signing, otherwise, it can only be a formal check and it is difficult to eliminate potential risks in substance. Relevant requirements can be combined with other needs.Business commercial contract disputesSpecial service arrangements.

IV. Suggestions for Protecting Rights

  • Before signing franchise, procurement, or investment agreements, it is necessary to have them reviewed in writing by a legal advisor, with a focus on verifying the qualifications, refund provisions, and breach of contract clauses.
  • During the performance of the contract, keep the delivery notes, chat records, and reconciliation statements to form a chain of evidence and prevent difficulties in providing evidence after the other party goes missing.
  • If you find that the franchisor does not have the qualification of "two stores in one year" or that the trademark is invalid, you should promptly entrust a lawyer to fix the evidence and claim a refund.
  • As soon as possible, consult a professional lawyer with the contract and communication records to resolve the dispute before arbitration or litigation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limit.Intellectual property protection legal services·Attorney Wang Fangli·Beijing Henglu Law Firm