Once both parties agree on all the terms and conditions of the contract, then comes the next step—signing the contract.
To execute a contract properly is as important as preparing the contract. A contract can only be binding once it’s properly executed. Or in other words, a contract is invalid if it’s not executed correctly.
Then what’s the common practice to execute a contract in China? What do the related regulations say?
1. Company seal
According to the law, if the party is a company, the right way is for the company to affix their seal on the contract. Usually, the company will affix the company seal on the last page of the contract ( You may read our post: FAQ About Corporate Seals in China to know more). Sometimes，the company will affix cross-page seal in addition to the seal on the last page. Though it’s not required by the law, it’s a pretty common practice if anything important is involved. In this way, it’s not easy for anyone to change the content of the contract by replacing any page thereof.
The Company seal is required if the party to the contract is a company, while the signature is not important under such circumstances. In practice, the legal representative or a duly authorized representative of the company would affix his/her signature in the contract at the same time, though it’s not a must according to the law. However, the validity of a contract only affixed with the signature of the legal representative or a duly authorized representative would be challenged. In addition, a shareholder of a company is not necessarily a duly authorized representative, only the legal representative has the authorization or anyone with a proper POA (Power of Attorney).
2. Signature of individual
If any party is an individual, then his/her signature needs to be affixed to validate the contract. Also, a cross-page signature is highly recommended for the same purpose.
3. Copy of identification
To avoid any possible confusion, it’s highly recommended to include each party’s detailed information in the contract, and attach a copy of the identification. For an individual, the ID number should be included, as it’s unique for each person. For a company, the company name, registered address and the credit code（tax number）should be included. As we have emphasized multiple times, no matter what English name the party calls themselves, a Chinese citizen’s only official name is the name on his/her ID card, as a Chinese company’s only official name is the name on its business license. Make sure the company seal and the company name in the contract match the one on the business license.
