Who Should Sign on behalf of the Foreign Company the Contract with Chinese Companies?
Directors of foreign companies can sign contracts with Chinese counterparts, and the absence of the foreign company’s stamp won’t invalidate the contract, except in cases where specific agreements or the foreign company’s articles of association impose restrictions on the directors’ signing authority.
As we introduced in the previous posts, when a Chinese company signs a contract with you, if the contract is to be effective in China, it is better for the Chinese company to seal the contract with a company stamp. If the Chinese company does not have its company stamp sealed, the contract can only be signed by its legal representative; in the case of having its company stamp sealed, anyone can sign on the contract as the company stamp alone is sufficient to make the contract effective.
As the other party to the contract, i.e. the foreign company, who should sign the contract before the Chinese court confirms the validity of the contract?
The Chinese court holds that the act of a director of a foreign company signing and entering into a contract in the form of a written agreement, a letter, a data message or by any other means on behalf of the company may be considered as an expression of the company’s will. This means that once the director signs on the contract, it signifies that the company has entered into the contract.
If the contract is not stamped with the company seal of the foreign company, as long as it is signed by the director, it will not affect the validity of the contract.
There are two points to consider:
1. If you and the Chinese company have agreed in the contract on other methods of signing a contract, or the law of the foreign company’s country provides for other methods of signing contracts, the contract will only be valid if it is signed in accordance with such methods.
2. The company’s articles of association or the company’s authority restricts the representative rights of its directors so that they do not have the power to sign contracts on behalf of the company. In such case, so long as the Chinese company has good faith when accepting the signature of a director of the foreign company, the contract signed by such director will still be valid, unless otherwise provided by the laws of the country where the foreign company is incorporated.