[Direct answer]The branch office shall bear responsibility. The business license issued to the branch office and the contracts signed in its own name are valid, and the civil liability arising therefrom shall be borne by the head office. The branch office may first use the property it manages to bear the liability, and if it is insufficient, the head office shall bear the responsibility; in litigation, the creditor may list the branch office as a defendant separately, or list the head office as a co-defendant; if the person in charge of the branch office signs the contract beyond his authority, the bona fide counterparty may also claim that the company should bear responsibility according to the rules of apparent agency.

I. Problem background and typical scenarios

Purchasing contracts, lease contracts, and service contracts—the situation of branch offices signing and stamping contracts can be seen everywhere. After an incident occurs, the other party might say, "We are an independently accounting branch office, and we bear responsibility ourselves," in an attempt to absolve the head office of liability. Conversely, when the branch office goes bankrupt and leaves debts unpaid, suppliers holding contracts may not know whom to sue. The legal status of branch offices can be summed up in one sentence: they are not independent legal entities, but merely branches of the head office—this statement determines the entire underlying logic of contract validity and responsibility attribution.

II. Key points of contention

Firstly, the legal validity of the contracts signed by the branch office. Secondly, the order of liability assumption and the scope of assets. Thirdly, the list of litigation subjects and the execution path. Fourthly, the identification of ultra vires signing and apparent agency.

III. Professional analysis by Henglue Lawyers

This case is handled by Beijing Henglu Law FirmXue SuhuaLawyer (Practice Certificate No.: 11101201211769926, subject to the certificate issued by the judicial administrative authority): **First Level: Contract Effectiveness** Article 14 of the *Company Law of the People's Republic of China* explicitly states that branch companies do not have legal person status, and their civil liabilities are borne by the parent company. Article 74 of the *Civil Code of the People's Republic of China* further stipulates that legal persons may establish branch offices according to law. Branch offices may engage in civil activities in their own name, and the resulting civil liabilities are borne by the legal person. If the branch office's assets are insufficient to cover the liabilities, the parent company must assume responsibility. - Branch companies hold business licenses and sign contracts in their own name within their operating scope, making their contracts fully valid. There is no such thing as "contracts signed by branch companies not being legally binding." Exceptions apply to activities subject to state restrictions or licensing requirements, which do not affect ordinary commercial contracts. - **Second Level: Liability Hierarchy** The statutory order is "first, the branch company's assets; if insufficient, the parent company compensates." Branch company assets include funds in their accounts and operational assets. In enforcement proceedings, the court first seizes the branch company's assets and, if insufficient, may proceed to seize the parent company's assets. This hierarchy guides creditor enforcement strategies: - If the branch company's assets are poor, the parent company is directly involved to expand enforcement scope, as the parent company is the ultimate liable party who cannot evade responsibility. - **Third Level: Litigation and Enforcement Paths** Article 52 of the *Interpretation of the Civil Procedure Law of the People's Republic of China* lists legal persons (including branch offices established and licensed according to law) as parties. Branch offices can sue and be sued in their own name. Creditor litigation strategies include: - Listing the branch company alone (if assets are sufficient); - Listing both the branch and parent company (to seek joint enforcement); - Listing only the parent company (when the branch has been dissolved or demonstrably lacks solvency, without requiring prior litigation against the branch). - If branch company assets are insufficient during enforcement, apply to add the parent company as a defendant (the parent's objections do not exempt it from statutory liability). - **Fourth Level: Ultra Vires and Apparent Agency** The parent company's internal authority restrictions over branch office managers cannot be invoked against bona fide third parties (Article 504 of the Civil Code). - If a branch office signs contracts exceeding its authority without the third party's knowledge or reasonable awareness of the overstepping (e.g., contract stamps, business licenses, operational scenarios), the company remains liable. - If the third party knew of the overstepping or colluded with the manager, the company may raise defenses to avoid liability. - **Advice to Contracting Parties** When conducting large-scale transactions with branch offices, retain authorization documents or parent company confirmation letters to establish evidence of the "bona fide third party" in advance.The fifth layer, reverse perspective and risk control: on the side of the head office - the contract management of the branch offices should be centralized (control of the contract seal, graded authorization limits, and approval of major contracts), and the head office ultimately bears the responsibility for the debts of the branch offices. The more "independent accounting" the branch offices are, the more closely the head office needs to monitor them; on the side of the branch offices - independent accounting is a financial concept rather than a legal concept. Every contract signed behind the scenes relies on the credit of the head office; on the side of transactions with branch offices - check the business license (to confirm legal establishment), check the creditworthiness of the head office (where the real solvency lies), and consider the courts of the head office and branch offices when stipulating jurisdiction. The security of transactions relies on the credit of the head office rather than the promises of the branch offices.

IV. Practical suggestions and legal basis

The first step is to verify the subject: check the authenticity of the business license, authorization documents, and seals item by item; the second step is to list the defendants: select the method based on the property status of the branch company to strive for the inclusion of the head office and branch company in the scope of enforcement; the third step is to preserve evidence: fix the appearance basis under the scenario of exceeding authority to support the claim of apparent agency; the fourth step is to manage risks: the head office should centralize contract control, and the creditor should focus on the clues of the head office's property. The main legal basis: Article 14 of the Company Law of the People's Republic of China, Articles 74 and 504 of the Civil Code of the People's Republic of China, and Article 52 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China; the specific application shall be subject to the currently effective provisions.

5. Henglue Law Firm's Reminder

The three responsibilities of branch companies are as follows: the contracts signed by branch companies are valid, and the head office is the ultimate responsible party; the head office will cover the shortage if the branch company's assets are not sufficient; internal authorization restrictions cannot counteract bona fide third parties, and apparent agency is a safety net for contracting parties. For matters involving contracts signed by branch companies and commercial contracts, you can consult with us for assistance.Business and contract disputes in enterprisesThe service provides a comprehensive solution, which involves the recovery of arrears and the enforcement of additional payments, which can be combined togetherCreditor's rights and debts, and enforcement casesFor reference, you can refer to the sections related to contract text and authorization system designSpecialised legal servicesFor reference, you can refer to the clauses related to the lease of business premises and real estate contractsReal estate transactions and construction projects板块。

VI. Frequently Asked Questions

Q1: Is it okay to only notify the branch company and not the head company?

Yes. The branch can sue as a party on its own. If the property is insufficient to make the payment, the branch can apply to add the head office as the person subject to enforcement during the enforcement stage.

Q2: Does the internal quota agreement of the head office have binding force against third parties?

Internal-wise, the company shall handle the accountability in accordance with the agreement with the branch company; externally, the company shall not oppose bona fide counterparties. Even if the company signs contracts beyond its authority and meets the formal requirements, it shall still bear legal responsibility.

Q3: Whose responsibility is it to sign the contract with the project department's stamp?

Based on the authorization of the company's seal and the appearance of the transaction, if the project department uses the company's seal to form apparent agency, the company that established the branch shall bear the responsibility.

Q4: Who should I contact if there are debts left unpaid after the branch office is deregistered?

Find the head office. The assets of the branch office belong to the head office, and after its dissolution, the head office shall assume the responsibility for paying off its debts.

Q5: What should I pay attention to when signing a large-value contract with a branch office?

Check the business license and authorization documents, understand the creditworthiness of the head office, and, if necessary, request the head office to confirm or guarantee the transaction. Ensure the transaction's security by relying on the head office's creditworthiness.

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 evidence materials, to avoid missing the statutory time limit. →Business and commercial legal services·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 jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.