[Direct answer]The contract review generally focuses on five aspects: First, the subject review, which involves checking the other party's business license, scope of business, qualification licenses, and performance capabilities, and, if necessary, inquiring about litigation and trust-breaking records; Second, the effectiveness review, which excludes invalid circumstances such as violating mandatory legal provisions, going against public order and good customs, or colluding maliciously to harm others' rights (Articles 153, 154 of the Civil Code of the People's Republic of China); Third, the clause review, which verifies the core contents such as the subject matter, quantity and quality, payment of the price, performance period, acceptance standards, and ownership of intellectual property on a clause-by-clause basis (Article 470 of the Civil Code of the People's Republic of China); Fourth, the risk review, which focuses on breach of contract liability, conditions for termination, deposits, scope of compensation, and dispute resolution methods; Fifth, the form review, which ensures that the seals and signatures, authorization documents, and attachments are complete and consistent.

1. Problem background and typical scenarios

Many corporate contract disputes can be traced back to the "just-good-enough" attitude during the contract signing process: directly using online templates without changing the main contractor's name; signing the other party's standard contract without reading the last page; being vague about critical clauses such as payment deadlines, acceptance standards, and breach of contract liability; handling the annex separately after finalizing the main contract, leading to conflicting content between the two documents; and verbally changing the delivery date via WeChat without written confirmation. These oversights may not seem to have any impact in the ordinary course of business, but once the other party breaches the contract or market fluctuations occur, the gaps in the clauses will be magnified step by step. The purpose of contract review is to identify potential risks before signing, negotiate and clarify them, and eliminate disputes before they occur.

II. Key points of contention

  • Legal risk: For transactions arranged with the aim of violating regulations and against public order and good customs, even if the parties voluntarily sign the agreement and have even partially performed it, they may still be deemed invalid. During the review process, we need to analyze the essence of the transaction rather than just focusing on the literal provisions.
  • Contractual loopholes: Unclear acceptance standards lead to disputes over quality with no basis for resolution, payment and acceptance being disconnected, resulting in uncontrolled situations where payments are made before acceptance, and penalties for breach of contract being either absent or set at abnormally high or low levels. The clause requiring either arbitration or litigation for dispute resolution being ineffective are all common problems.
  • Signature and Evidence: Whether the stamp and signature are complete, whether the signatories are authorized, whether the standard clauses fulfill the obligation of giving notice and explanation, and whether the list of attachments is consistent with the main text directly affect the validity of the contract and the provision of evidence afterwards.

III. Professional analysis by Henglue Law Firm

Two real-life scenarios illustrate the cost of lacking review. First, Zhang and Wang, who were once married, signed a "fake marriage" settlement agreement with Zhao to help their children obtain household registration, and paid 100,000 yuan. However, due to policy changes, the registration failed and their request for a refund was denied, so they sued the court. The court ruled that the agreement violated public order and good customs by using a false marriage to evade household registration policies, and declared it invalid from the outset according to Article 152 of the Civil Code of the People's Republic of China, ordering the recipient to return the 100,000 yuan. If professional review had been conducted before signing the agreement, such transactions with illegal purposes could have been identified and avoided at the source, protecting the parties' funds and avoiding negative reputational impacts. Second, a company continued to supply goods to its partner, but the 83.5 million yuan payment was overdue. After suing, problems emerged in the guarantee process: the guarantor claimed that his signature was obtained through fraudulent collusion with third parties, and the series of fraud cases had been registered by the public security organ. The court ultimately dismissed the lawsuit and transferred the materials to the public security organ. If basic due diligence had been conducted on the transaction background, related parties, and the guarantee process before cooperation, abnormal signals would not have gone unnoticed. Reviewing contracts is not just about correcting typos, but also a comprehensive check of the legality of the transaction, the credibility of the counterparty, and the enforceability of the terms. For enterprises that need regular contract management support, please contact us for more information.Intellectual property protection and corporate legal servicesIf a breach of contract has occurred and compensation is needed, you can refer to the following for guidance.Creditor-debtor relations and enforcement case services.

IV. Practical suggestions and legal basis

Legal basis: Article 143 of the Civil Code of the People's Republic of China stipulates the effective elements of civil legal acts, namely that the actor has the corresponding civil capacity, the expression of intent is true, does not violate mandatory provisions of law, and does not violate public order and good customs; Article 470 lists the general terms of a contract, including the parties' information, subject matter, quantity, quality, price, performance period and place, methods, breach of contract liability, and dispute resolution methods, which constitute the basic framework of the review list; Article 496 stipulates that the party providing standard terms has the obligation to provide a prompt explanation of the clauses that are of great interest to the other party. If this obligation is not fulfilled, the other party may claim that the clause does not become part of the contract; Articles 153, 154 define the red line of invalidity; Articles 586, 587 stipulate the rules of the deposit, and the party receiving the deposit shall double the amount if it breaches the contract. Practical suggestions: Establish classified review lists according to types such as procurement, sales, leasing, and cooperation; Conduct double review of major contracts by both business and legal departments; Check the consistency of annexes, quotations, technical agreements, and the main text item by item; Fix the negotiation process and modification content in written records and file them together with the contract.

5. Henglu Law Firm's Reminder

The value of contract review lies not in nitpicking, but in pricing the transaction: answering the three questions of who the other party is, how the money will be paid, and who will be responsible if something goes wrong before signing the contract. Every ambiguous clause found during the review is a source of uncertainty in future litigation; the cost of review is usually far lower than the losses of a dispute. In practice, it is also necessary to adhere to the bottom line of compliance: transactions that violate public order and good customs or are conducted for illegal purposes, even if they have already been performed, are still difficult to obtain legal protection. This case was 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.

Q1: How long does it usually take to review a contract?

It depends on the complexity of the contract. For procurement or sales contracts with small amounts and standard terms, it usually takes one to three working days to issue a review opinion. For complex arrangements such as equity, joint ventures, intellectual property licensing, and foreign transactions, it often takes about a week, and there may be multiple rounds of negotiations and amendments. When time is tight, lawyers can be asked to distinguish between "major risks that must be modified" and "acceptable commercial concessions", and prioritize protecting the key clauses. It is recommended to set aside a buffer period for the review and incorporate the lawyer's feedback into the negotiation process to avoid rushing to handle matters near the signing date, which may lead to signing important contracts with unresolved risks.

Q2: The company doesn't have a legal department. How much would it cost to hire a lawyer to review important contracts?

There are three common billing methods in the market: per-contract billing, where the cost of a single contract ranges from hundreds to thousands of yuan, depending on the length and complexity; annual package billing, which includes a certain number of contract reviews in the annual legal advisory service, with the overall cost usually lower than per-contract billing and making it easier for lawyers to become familiar with the company's business; and billing by project phase for complex projects such as mergers and major collaborations. When choosing a billing method, the focus should be on the granularity of the review: whether there are annotations and suggestions for amendments for each clause, whether the risk level and negotiation space are explained, rather than just comparing the price quotes. For enterprises with frequent contract transactions, the cost-performance ratio of the regular legal advisory model is generally higher.

Q3: For the standard contract sent by the other party, which clauses should we pay particular attention to?

Prioritize the following five types of clauses: 1. Payment conditions and acceptance standards. Prevent situations where payments are made before acceptance or where there is no clear basis for acceptance. 2. Liability for breach of contract and compensation caps. Check whether these are unilaterally imposed or set at unreasonably high levels. 3. Termination and rescission clauses. Understand the circumstances under which the other party can withdraw from the contract at any time. 4. Liability exemption and rights waiver clauses. According to Article 496 of the Civil Code of the People's Republic of China, if the party providing the standard terms fails to provide a clear explanation of clauses related to significant interests, the other party may claim that such clauses do not form part of the contract. 5. Jurisdiction and dispute resolution clauses. Jurisdiction in a different location or arbitration clauses can significantly impact the cost of protecting rights. When there are many amendment requests, it is more efficient to send a revised version of the contract as a whole rather than making scattered annotations, which can improve negotiation efficiency.

Q4: Is the contract valid if it only has a stamp but no signature, or only has a signature but no stamp?

It is usually effective. According to Article 490 of the Civil Code of the People's Republic of China, where the parties enter into a contract in the form of a contract document, the contract shall be deemed to have been concluded when both parties sign, seal, or affix their fingerprints on it. Either signature or seal is sufficient, and the law does not require both to be present simultaneously. The key lies in whether the signing act can represent the parties' true intention: if it is stamped with a genuine official seal, or signed by the legal representative or authorized representative, it can generally be deemed to have been concluded; if it is signed by unauthorized personnel, it is necessary to judge whether it constitutes apparent agency in light of the actual performance of the contract. It is safer to require both the stamp and the signature of the legal representative or authorized representative, and to check the authorization documents. Stamping the document with a running stitch can further reduce the risk of page replacement.

Q5: What is the difference between contract review and contract drafting?

The review process involves risk assessment of existing texts, with a focus on identifying loopholes, imbalances, and illegal clauses, and providing suggestions for modification. Drafting involves constructing transactional texts from scratch, requiring first translating commercial arrangements into a structured clause system. This involves greater workload and responsibility, and typically incurs higher costs. In practice, the division of labor is often as follows: the other party provides a draft for review, while our firm takes the lead in drafting transactions involving major interests to maintain control over the clauses. Regardless of the approach, it is essential to prepare annexes and a list of settlement documents simultaneously to ensure a complete contract system. High-frequency trading enterprises can also commission lawyers to customize contract template libraries, striking a balance between efficiency and security.

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 Xue Suhua·Beijing Henglue Law Firm