[Direct answer]The prevention and control of contract risks in enterprises should focus on four key aspects: 1. Verifying the counterparty's qualifications and performance capabilities before signing the contract; 2. Specifying the price, acceptance criteria, breach of contract liability, and dispute resolution clauses in a written contract during the contract negotiation process; 3. Maintaining written records of all changes, acceptances, and payments during the contract execution; 4. Promptly sending notices of default, preserving evidence, and assessing the feasibility of arbitration or litigation after a breach of contract. The emphasis lies in proactive prevention and control.

I. Problem Background and Typical Scenarios

Many companies view contractual risks as "problems that arise during litigation," but the seeds of actual disputes are often sown before the contract is signed: failing to verify whether the other party truly has the qualifications of a production company, whether the authorization chain is complete, omitting refund conditions and breach of contract liabilities in the clauses, and relying entirely on verbal agreements for performance changes. It's not until the payment is made and the project is left unfinished that they realize the other party is a shell company or has been deregistered, making it difficult to identify the party to protect their rights against. The four stages of risk prevention—due diligence, contract negotiation, performance execution, and dispute response—are interconnected. Investing just a little effort in the first two stages can result in significant losses in the latter two stages.

II. Key points of contention

  • Subject and qualification review: Whether the counterparty is genuinely in existence, whether it has the corresponding qualifications and authorizations, who the actual controller is, and whether the operating conditions can support the performance of the contract.
  • Key provisions are missing: the payment schedule and acceptance standards do not match, the refund conditions are vague, the liability for breach of contract and attorney's fee provisions are absent, and the jurisdiction agreement is unclear.
  • Output: Lack of traceability in the execution process: changes not confirmed in writing, no records of acceptance, unclear payment basis, and being at a disadvantage when providing evidence in disputes.

III. Professional analysis by Henglue Lawyers

A dispute over an investment contract handled by Henglue Law Firm exposed typical pre-contract loopholes. Xu * signed a "Transfer of Profit Rights Agreement" with Company A, investing 300,000 yuan to acquire a 0.25% profit-sharing right in a certain film. The agreement promised that the film would be released before December 31, 2022, otherwise all investment funds would be refunded. However, after Xu * made the payment, he discovered that Company A was not the film's production company. The film failed to be released on time, and the company was even deregistered in July 2022.Wang DongThe lawyer sued according to the contract termination and refund path: the film was not released, resulting in the failure of the contract purpose, and according to the contract, he had the right to terminate the contract and refund the money; when signing the contract, Liu * was the sole shareholder of Company A, and if he could not prove that the company's property was independent of his personal property, he should bear joint and several liability; before the company was dissolved, shareholders Zhang * and Zhao * promised to clear all creditor's rights and debts, but they still should pay off the unpaid debts. The first-instance court ordered the three defendants to jointly repay 300,000 yuan and legal fees and other losses, and the second-instance court upheld the judgment. If the ownership documents were verified before the investment and the shareholders were required to provide guarantees, the risks could have been mitigated in advance —— this is the significance of preventing risks before making payments.

IV. Practical Suggestions and Legal Basis

In terms of legal basis, Article 509 of the Civil Code requires parties to fully perform their obligations in accordance with the agreement and abide by the principle of good faith. Article 153 stipulates that contracts that violate mandatory provisions of law or go against public order and good customs are invalid, and it is necessary to review the legality of the transaction when signing the contract. Article 23 Paragraph 3 of the current Company Law continues the rule of property confusion in one-person companies, which cooperates with the arrangement requiring shareholders to provide guarantees for major transactions. Article 577 of the Civil Code provides a safety net for remedies for breach of contract. Operational suggestions: Establish a contract template library and a graded approval and stamping system. Major contracts should be reviewed by lawyers. Retrieve the business registration files and litigation information of the counterparties for the first time of cooperation. Strictly link payment milestones with delivery and acceptance. Establish a performance monitoring system, and all changes must be signed in a supplementary agreement. Daily contract management and compliance can be referred to for reference.Intellectual property protection and corporate lawFor services and special types of transactions, please refer to the relevant guidelines.Special servicesThe page.

5. Henglue Law Firm's Reminder

Contract risk prevention and control is the lowest-cost "insurance" for enterprises: using templates first, conducting reviews in advance, and making it a habit to keep records. This case is handled byWang DongAttorney (Practice Certificate No.: 11101201910090334, subject to the certificate issued by the judicial administrative organ) provides legal representation. For contract review and risk control system establishment, please feel free to consult us for more information.Business and contract disputes in enterprisesService or accessBeijing Henglue Law Firm.

Q1: What information should I verify about the other party before signing a contract?

At least five items: First, the business license and the latest industrial and commercial files to confirm the survival status, registered capital, shareholders, and change records; Second, litigation and enforcement information to assess credit and repayment risks; Third, special qualifications, licenses, or upstream authorization documents to verify the existence of contractual performance qualifications, such as verifying the producer and ownership chain for investment-related contracts; Fourth, actual controllers and affiliated enterprises to identify shell companies and risks of related-party transactions; Fifth, conduct on-site inspections or request shareholder guarantees when necessary. If the counterparty is a natural person, the identity and financial status should also be verified.

Q2: Is it valid to verbally amend the contract content during the performance of the contract?

In legal terms, verbal amendments can be valid, but once a dispute arises, it is extremely difficult to provide evidence, and it is almost impossible to prove the content of the amendment if the other party denies it. The standard practice is: for any adjustments involving the subject matter, price, construction period, or acceptance standards, a written supplementary agreement must be signed. If the situation is urgent and there is no time to sign the agreement, the amendment content and the process of confirming it with both parties should be fully documented through emails or work groups, and noted as a supplement to the original contract. The settlement and payment vouchers should also correspond to the amended content to avoid the misalignment of "oral amendments but unchanged in the accounts".

Q3: Is the effect of a contract stamped with the "contract-specific stamp" the same as that of a contract stamped with the official seal?

The same applies. Contract stamps registered in accordance with the law and official stamps can both represent the company's will, but the key lies in the authenticity of the stamps and the authorization of the stamp users. Risk prevention points include: checking whether the stamps have been registered with the public security authorities and whether they are consistent with the reserved stamps; requiring the legal representative or the person holding the power of attorney to sign and stamp important contracts; being vigilant against the risk of illegally engraving stamps, which can be verified through public channels; and stamping the pages with cross-stamps to prevent page substitution and tampering. In addition to stamps, the authority of the signatories also needs to be reviewed.

Q4: Is there any risk if the other party signs the contract in the name of its branch company?

When a branch office obtains a business license, it can sign contracts in its own name, but its civil liability is borne by the parent company, providing an additional layer of protection when seeking compensation. A subsidiary, however, is an independent legal entity and is solely responsible for its own debts. If its repayment capacity is weak, creditors may face the risk of unpaid debts. Therefore, when reviewing the contracting parties, it is not just about the name, but also about who will ultimately bear the contractual obligations. For large-scale transactions with subsidiaries, the parent company should be required to provide a guarantee or a joint and several guarantee by its controlling shareholders. If necessary, the parent company should be listed as a co-signatory to solidify the liability subject.

Q5: Is it necessary for enterprises to hire permanent legal advisors?

For enterprises with high-frequency contract signing and multi-party operation, the cost-effectiveness is obvious: consulting lawyers can build a contract template library, conduct rapid review and hierarchical authorization design before signing contracts, provide training on contract performance and employment risks, and intervene with letters at the early stage of disputes to resolve most disputes at the negotiation level. The comprehensive cost is far lower than that of litigation representation for a single case. When selecting lawyers, attention should be paid to the industry service experience of the lawyer team, response efficiency, and staffing arrangements. The scope of services, methods, and fees should be clearly defined in a written contract to avoid the "consulting" being just a formality.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Business and commercial legal services·Attorney Wang Dong·Beijing Henglue Law Firm