The most important thing is to get the Chinese company to stamp the contract. In addition, it is better to have the contract also signed by the legal representative whose name is on the company’s business license.
This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection.
As we said in the article Execute a Contract with a Chinese Company: How to Make it Legally Effective in China: “If you enter into a contract with a Chinese company which you wish to come into effect under Chinese laws, you had better require the company to adopt the above means.”
Similarly, as mentioned by IP Australia, the Australian government agency, in its article, “Contracts in China“, on the website:
“The individual signing on behalf of the Chinese company should be the listed legal representative or another person who is authorised to act on behalf of the company. In addition, the Chinese company should stamp the contract with its official company seal. Having both signature and seal is the safest way to execute the contract.”
1. Stamping with the seal is the most common way for Chinese companies to conclude a contract.
In China, the official company seal is a symbol of corporate power. Anything stamped with the official company seal is considered to be on behalf of the company’s will.
The person who has the right to use the official company seal is the actual controller of the company. If the person who negotiates with you on behalf of a Chinese company can’t get the controller of the company to stamp the contract with the official company seal, then he/she is highly unlikely to represent the company.
So, if you’re going to do business with a Chinese company, the contract has to be stamped with the official company seal. In this way, the Chinese court and law enforcement authorities will recognize that the contract is concluded by the said company.
2. The signature of the legal representative validates the contract
In China, companies are required to designate a person who can represent the company in their registration information. During the period when the said person is registered as the legal representative of the company, the person may act on behalf of the company in any way in relation to his/her position.
Therefore, the contract signed by the legal representative on behalf of the company is also valid.
In theory, either the official company seal or the signature of the legal representative can make the contract valid. However, we do not know if someone will impersonate the legal representative to sign.
Therefore, we strongly suggest that in addition to the signature, the official company seal should also be affixed, as it is harder to forge an official seal.
To sum up, the signature of the legal representative is not necessarily required, but the company seal is.
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Contributors: Meng Yu 余萌
