Do you think this title is ridiculous? Many people may nod their heads. However, the fact is even more ridiculous. Wang planned to decorate his new apartment. He signed a contract with the “branch” of a well-known K decoration company and paid. Unfortunately, the “branch” suddenly went out of business after received the payment. Wang requested K to perform the contract, but he was told that the counterparty signed the contract was not the real branch of K. Wang checked the name of the party, and he found this party did not registered. It is not easy for Wang to claim for his loss to this nonregistered party.
These cases are not rare. For example, you sign a contract with a boss who has many companies, but the seal on the contract belongs to one of his companies which is with bad credit; when you have to solve dispute, you find the counterparty in your mind is different from the counterparty on the contract, and etc.. It is difficult for you to protect your legal rights and benefits under such circumstances.
In practice, you could take some measures to reduce legal risks:
While entering into contracts with a person, you should pay attention to those aspects: (1) in order to reduce the risk related to the identity of the counterparty, for example, a person who signs a contract has the same name with the real counterparty that you want to enter into a contract with, or a person signs a contract by using another person’s name and etc., it is recommended to check the name and identity information of the counterparty, and it would be better to ask the counterparty to provide a copy of his ID card. (2) in order to avoid the situation that a person signs a contract without the authorization of the real counterparty, it is recommended to sign the contract face to face with the real counterparty.
While entering into contracts with the enterprise, it is recommended to confirm and follow up with the counterparty’s name by the following aspects:
Firstly, to confirm the counterparty’s name during the negotiation period. Even if the counterparty’s legal representative is negotiating with you, you still have to confirm the counterparty’s real name. Because a person, may be the legal representative of one company, but this person may invest some other companies as well, those companies may have different business conditions and contractual capacities. After confirmed with the counterparty, it would be better to check the relevant information and business conditions of the counterparty on the National Enterprise Credit Information Publicity System.
Secondly, while signing the contract, you shall make a double check on the name and seal of the counterparty. If you have done business with the counterparty before, it is recommended to check whether the name or seal has any difference, whether those information is in correspondence with the information registered by the administrative authority.
Thirdly, to confirm the authorization of the person who signs the contract. Normally, the legal representative or the authorized person could sign the contract on behalf of a company. The legal representative is the person in charge who carries out civil activities on behalf of the company in accordance with the law, which does not require an authorization. The authorized person is a natural person who is legally authorized by the company to exercise its civil rights. If you have to negotiate with the authorized person, because of the commercial consideration, it may be not appropriate for you to confirm with the person on his authorization, or ask him to provide the Letter of Authorization. Under such circumstance, it is recommended to write email to the person’s working email address and copy to the legal representative before signing the contract or other similar methods, by which you can confirm the authority of this person indirectly. If the legal representative neglects the email, and you sign the contract with the person without authority, it is highly possible to be determined as agency by estoppel.