[Direct answer]In the Beijing area, contracts signed under fraudulent circumstances are not automatically invalid, but revocable contracts. According to Article 148 of the Civil Code of the People's Republic of China (effective January 1, 2021), if a party uses fraudulent means to make the other party perform a civil legal act against their true intention, the party who was defrauded has the right to request the people's court or arbitration institution to revoke it; if the third party commits fraud and the contracting party knows or should have known about it, it can also be revoked according to Article 149. The right of revocation shall be exercised within one year from the date when the party knows or should have known the grounds for revocation (Article 152), and the right will be extinguished after the expiration of the time limit. After the contract is revoked, it will be invalid from the beginning, and the party can request the return of property and compensation for losses according to Article 157. It is recommended to immediately fix the evidence of fraud and file a lawsuit or apply for arbitration within the exclusion period. For more details, please refer to the following link:Business and contract dispute services for enterprises.

I. Problem Background and Typical Scenarios

Fraudulent contract signing often occurs in transactions involving information asymmetry: investors are lured into signing contracts by being misled with exaggerated returns and concealed risks; franchisees are tricked into signing franchise agreements by being deceived about the store's revenue and support policies; in real estate transactions, sellers conceal major facts such as the property being mortgaged or seized; and employees are induced to sign guarantee documents. Many victims mistakenly believe that "contracts signed under fraud are automatically invalid", but in reality, the contract remains valid until it is revoked. If the revocation is not claimed within one year, the contractor may only continue to perform the contract and bear the losses themselves. Such cases handled by Beijing courts are mainly concentrated in the fields of commercial sales, franchise cooperation, and elderly-related investments.

II. Key points of dispute

The focus of the dispute lies in four aspects. Firstly, fraud determination: it is necessary to prove that the other party intentionally provided false information or concealed the truth, which is sufficient to make the other party fall into a mistaken understanding and make a decision to sign the contract; simple exaggerated promotion and commercial hype usually do not constitute fraud. Secondly, the boundaries of silence: concealment when there is a statutory or contractual obligation to inform may constitute fraud, but silence on matters unrelated to the transaction does not constitute fraud. Thirdly, the calculation of the exclusion period: the one-year period starts from the date when the party knows or should have known the grounds for revocation, and the rights of revocation that are not exercised within five years from the date of the act do not apply to suspension and interruption. Fourthly, the allocation of responsibilities after revocation: after the contract is revoked, the party shall return the property and make compensation in the form of a discount, and the party at fault in the fraud shall also compensate for the losses; the other party often argues that the plaintiff himself failed to fulfill the obligation of review, and the court will allocate the responsibilities according to the degree of fault of both parties.

III. Professional analysis by Henglue Lawyers

Henglue once handled a typical dispute over the validity of a contract. On February 4, 2023, Zhang Na signed a "Consulting Intermediary Service Contract" with a legal consulting firm and paid 150,000 yuan in service fees; on March 17, Zhang Na divorced Wang Xiaoyong; on March 21, Zhang Na signed a "Beijing Hukou Marriage Registration Agreement" with Zhao Chenyang, stipulating that the marriage was solely for the purpose of obtaining a hukou and had no substantive marital relationship. On the same day, Wang Xiaoyong paid 100,000 yuan to Zhao Chenyang. However, due to policy restrictions, the hukou registration failed, and the couple sued to declare the agreement invalid and recover the funds, but the defendant refused to appear in court. Lawyer Xue Shuhua's team collected the agreement text, transfer records, divorce certificates, and phone recordings, establishing the fact that Zhao Chenyang admitted to receiving the payment and splitting the money with the intermediary. They cited Article 153 of the Civil Code to argue that the agreement was invalid from the outset because it used a fake marriage to evade hukou policies and violated public order and good customs. They also requested the direct recipients to return all the funds in accordance with Article 157. The court adopted the lawyer's arguments, declared the agreement invalid, and ordered Zhao Chenyang to return 100,000 yuan within a specified period and bear the case acceptance fees and announcement fees. This case was handled by Beijing Henglue Law Firm.Xue SuhuaThe attorney (practice certificate number: 11101201211769926, subject to the document issued by the judicial administrative organ) acts as the agent. Compared with the fraudulent contract, the agreement in this case is invalid because it violates public order and good customs. The reasons for the effectiveness defects of the two contracts are different, but the consequences are the same: the contract does not produce the expected effect, and the obtained property should be returned. If the fraud clues point to crimes such as contract fraud, it also involves the cross-handling of civil and criminal cases, which can be referred to for reference.Criminal defense and criminal case filing servicesEvaluate the prioritization strategy for reporting cases and initiating litigation.

IV. Practical suggestions and legal basis

The core basis is Article 148 (Fraud is revocable), Article 149 (Fraud by a third party and the counterparty knowing or should have known is revocable), Article 152 (One-year exclusionary period for the right of revocation, ninety days for major misunderstanding, and a maximum period of five years from the date of the act), Article 153 (Invalidity due to violation of mandatory provisions or public order and good customs), and Article 157 (Return of property and compensation for losses) of the Civil Code of the People's Republic of China (effective January 1, 2021); the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the General Provisions of the Civil Code of the People's Republic of China (effective March 1, 2022) elaborates on the standards for identifying fraud. Practical suggestions: Preserve the original contract, chat and call records, transfer receipts, promotional materials, and witness information as soon as possible; send a written demand for return and keep the evidence of delivery; initiate legal action immediately when the exclusionary period is approaching; if the other party refuses to return the property after winning the lawsuit, you can proceed through legal channels to enforce the judgment.Creditor-debtor relations and enforcement case servicesApply for enforcement.

5. Henglue Law Firm's Reminder

A thorough review before signing a contract is always better than seeking remedies after the fact: verify the other party's qualifications and authorization documents, require oral promises to be included in the contract, and conduct background checks for major transactions. After discovering fraud, first secure evidence and then negotiate to avoid alerting the other party and losing evidence. The one-year statute of limitations is an immutable period. Any waiting or delay will erode rights. Don't believe the myth that "the money will automatically come back once the contract is revoked." Return and compensation still require court judgments and enforcement. When entrusting sensitive matters such as marriage and household registration, extra vigilance is needed. Agreements that tout policy evasion as a selling point are likely invalid, and associated risks can be referenced for further analysis.Divorce litigation and family dispute resolution servicesEvaluation. If you need a case-by-case evaluation to determine whether to revoke a space, you can refer to the following guidelines for reference.Special services and other case servicesObtain professional advice.

VI. Frequently Asked Questions

Q1: If you sue to revoke a contract signed under fraudulent circumstances, can you win the case?

The key lies in whether the evidence of fraud can form a closed loop. If you can prove that the other party intentionally fabricated facts or concealed the truth, and this situation directly led to your decision to sign the contract, the court is more likely to support the revocation; if it's just a commercial exaggeration or your own trust, the risk of losing the lawsuit is higher. At the same time, you need to confirm that you are still within the one-year exclusion period. If you sue after the deadline, your lawsuit will be dismissed. It is recommended that you first let a lawyer evaluate the strength of the evidence and the benefits of the time period before deciding to sue. Any promise of winning the lawsuit is not credible. Only an objective evaluation conclusion has reference value.

Q2: If you claim that the contract can be revoked due to fraud, what evidence do you need to prepare?

Suggested collection: contract text and records of the signing process, chat records or audio recordings of the other party's promotional materials and promises, transfer and payment receipts, forged qualifications or data files from the other party, witness statements, and evidence of the losses suffered by the party. The goal of proof is to establish a complete chain of "the other party intentionally deceived you—you fell into a mistaken understanding—the mistaken understanding led to the signing of the contract—and you suffered losses as a result". All four links are indispensable. The more complete the materials are, the less room there is for the other party to defend themselves. If necessary, you can apply for evidence preservation.

Q3: How much does it cost to file a lawsuit to rescind a contract?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Fees" (implemented on April 1, 2007) and accumulated by segments based on the amount of the litigation request. For requests for the return of property, the fees shall be paid in accordance with the standards for property cases, and shall be borne by the losing party or shared proportionally; there is no unified standard for attorney's fees, which are usually charged on a per-case basis or as a percentage of the subject matter value, subject to the terms of the power of attorney; and where appraisal is involved, the appraisal fees shall also be borne. It is recommended to calculate the recoverable amount and the cost of protecting rights before suing, determine the scope of claims reasonably, and avoid paying excessive costs for small-amount disputes.

Q4: Within what timeframe must one claim rescission after being defrauded?

According to Article 152 of the Civil Code, the right of rescission shall be exercised within one year from the date on which the party knows or should have known of the grounds for rescission; if the right of rescission is not exercised within five years from the date of signing the contract, it shall be extinguished. This period is a preclusive period and shall not be suspended or interrupted by the parties' consultation or complaints. If the party sues after the expiration of the time limit, he will lose the right of rescission. If there is a dispute over the time of rescission, the court will review when the party knows or should have known of the fraudulent facts, so it is very important to keep the communication records when discovering that you have been cheated.

Q5: If you find that you've been cheated into signing a contract, what should you do first?

It is recommended to follow four steps: First, immediately preserve evidence and have the chat records, promotional materials, and audio recordings notarized or archived, and keep the originals safely; Second, check the exclusion period to confirm whether it is still within one year since the discovery of the fraudulent facts; Third, send a written objection letter to the other party, claiming for rescission or negotiating for return, and keep the delivery receipt; Fourth, if no agreement is reached, sue or apply for arbitration as soon as possible, and report the case to the public security organ if the losses are significant and there is a suspicion of crime. Throughout the process, avoid excessive confrontation and prevent oneself from being held liable for counter-litigation.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are 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 limit. →Corporate commercial legal services·Attorney Xue Suhua·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on 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 jurisdictional differences of individual cases may affect the conclusions. In the event of a dispute, please consult a practicing lawyer in a timely manner.