The contract stipulates that "signature and seal take effect" or "signature and seal take effect". Do you need to sign and seal to take effect?- Zhiheng Law Firm

Author | Hongyan Lawyer Team, Lawyer Min Na

In the signing of a written contract, in order to confirm the meaning of both parties and the validity of the contract, it will generally take effect after the final agreement of the contract needs to be signed and sealed by both parties. Common examples are "this contract will take effect after both parties sign and seal", "this contract will take effect after both parties sign or seal". From a literal semantic point of view, the former means that "signature" and "seal" are juxtaposed relationships, and both elements are met to make the contract effective. The latter means that "signature" and "seal" are optional relationships. When the contract is signed, you can choose one of the two, and generally it will not cause ambiguity or dispute of understanding.

However, in practice, expressions such as "this contract shall enter into force after both parties sign and seal it" and "this contract shall enter into force after both parties sign and seal it" are often seen. What should be the meaning of these two expressions? Do you need to sign and seal to determine that the contract is effective, or just sign or seal it?

If the parties have different understandings of this and even cause disputes, how is the legal effect of these two expressions determined in judicial practice?

I. Relevant provisions of the law on the legal effect of "signature" and "seal"

Article 490 of the Civil Code states, "If a party enters into a contract in the form of a contract, the contract shall be established when all parties sign, seal or press their fingerprints. Before signing, sealing or pressing their fingerprints, one party has performed its main obligations and the other party accepts it, the contract shall be established.

The contract shall be concluded in writing as stipulated by laws and administrative regulations or agreed upon by the parties. If the parties do not use the written form but one party has performed its main obligations, the contract shall be established when the other party accepts it. "

1. The law specifies the time of establishment of a contract in writing

In the conclusion of a contract or other transaction activities, a natural person usually confirms a written document by signing or fingerprinting to express his true will, while a corporate legal person clearly expresses his intention by stamping. A contract concluded in writing is generally established when the parties sign, seal or fingerprint.

Signing or sealing is a legally binding act. Once a contract is signed, it becomes binding on the parties and requires compliance with the agreement and performance of obligations.

2. The law also clarifies the rules for correcting defects in the form of contract formation

Although a written contract is generally formed by signing a seal, it is not limited to signing, stamping or fingerprinting. In some transactions, there are defects in the form of the contract, and even the two parties fail to enter into a written contract, but if one party has fulfilled the main obligations and the other party accepts it, it does not affect the establishment of the contract. This correction rule is also known as the performance healing rule.

In judicial practice, disputes based on contract signatures or seals are often caused by one party claiming that the contract is not established or has not come into effect because the form of the contract signature does not conform to the agreement. However, according to the above legal provisions, even if it is only signed but not sealed, or only sealed but not signed, when one party has fulfilled its obligations and the other party accepts it, the court will not only stick to the form of the contract signature to make a simple determination, but through the actual behavior of both parties to explore the true meaning of their hearts and make judicial decisions.

II. Typical cases

1. "Signed and stamped" is not the same as "Signed and stamped"

Case 1: China Machine Tool Corporation and Klaas Furniture Mall Agency Contract Dispute

(2013) Min Shen Zi No. 72

The agreement stipulates:"This agreement will take effect after both parties sign and seal it"

One of the reasons for the retrial application of Klas Furniture Mall:Although the "Agreement" was stamped with the seal of the Furniture Mall, after internal review, the Furniture Mall was not clear about the matter. The agreement stipulates that "it will take effect after both parties sign and seal", and its effective conditions should be the "signature" and "seal" of both parties. Although the "Agreement" has the signature of the person in charge of the machine tool company and the seal of the Furniture Mall, it does not meet the agreed effective conditions, and the "Agreement" has not taken legal effect.

The Supreme Court reconsidered that:The seal of the Furniture Mall on the "Agreement" is stamped with the same seal as the seal in the industrial and commercial archives, and the Furniture Mall recognizes the appraisal conclusion. The "Agreement" is stamped with the real official seal of the Furniture Mall. Although there is no signature of the legal representative of the Furniture Mall or its entrusted agent, it is enough to show that the "Agreement" is the true meaning of the Furniture Mall.

Although the "Agreement" is only signed by the legal representative of the machine tool company and does not have the official seal of the machine tool company, the machine tool company does not deny the authenticity of the "Agreement". Accordingly, the 1st and second-instance judgment found that the "Agreement" is true and valid, and the reason for the retrial application of Furniture Mall to deny the authenticity and effectiveness of the "Agreement" cannot be established.

Case 2: Contract dispute between Huapengfei Company and Yueda Company

(2020) Supreme Court Minshen No. 5507

The agreement stipulates:"The agreement will take effect from the date of signature and seal of the three parties"

One of the reasons for Yueda's retrial application:The entry into force conditions stipulated in the Framework Agreement shall be that it shall take effect after all parties sign and seal it. Yueda Company only has a seal on the Framework Agreement, but not a signature, which does not meet the conditions for it to take effect after being signed and sealed by all parties as stipulated in the Framework Agreement.

The Supreme Court reconsidered that:Article 5 of the Framework Agreement stipulates that the agreement will take effect from the date when the three parties sign and seal it, which can be understood as the agreement will take effect after signing or sealing, rather than the agreement must meet the two conditions of signing and sealing at the same time. Therefore, it is not improper for the original court to determine that the Framework Agreement has taken effect based on Yueda's sealing behavior on the signing page.

Yueda Company only uses the combination of words and words expressed in the aforementioned terms of the agreement, that is, the analysis claims that the agreement must be signed and stamped with the official seal before it comes into effect, and therefore claims that the Framework Agreement has not yet come into force, and the reasons are insufficient, and this court will not accept it.

2. "Signed and stamped" does not necessarily mean "signed and stamped"

Case 3: Xinji Company, Baixin Company and Enterprise Lending Dispute Case

(2018) Yue01 Minjian No. 5253

The agreement stipulates:"This Agreement shall come into force on the date of signature and seal of the parties."

One of the reasons for Baixin's appeal is:At the signing of the agreement, Party A Xinji Company only signed but not sealed, and Party B Baixin Company only sealed but not signed, so although the agreement was established, it did not take effect, that is, the terms agreed in the loan agreement were not effective for both parties.

Guangzhou Intermediate Court second-instance believes that:After the two parties signed the Loan Agreement, the appellant Xinji Company paid the loan 6.50 million yuan to the appellant Baixin Company on the same day, and Baixin Company repaid the relevant amount including the loan under the loan contract in this case in June 2014. Therefore, both parties have fulfilled the main obligations of the "Loan Agreement". Although Baixin Company only stamped the "Loan Agreement" without signing it, it did not affect the establishment and validity of the "Loan Agreement". The "Loan Agreement" is the true meaning of both parties, and the content does not violate the mandatory provisions of laws and administrative regulations. It is legal and valid, and it is binding on all parties.

Case 4: Contract disputes between Shan Reconstruction Machine Company, Nanjing Huichang Company, Jiangsu Shengkun Company, etc

(2019) Lu Minquan No. 2132

The agreement stipulates: "This agreement shall take effect from the date of signature and seal of the parties."

One of the reasons for Nanjing Huichang Company's appeal:Article 38 of the "Product Distribution Agreement" is very clear about the effective and valid period, that is, this agreement will take effect after being signed and sealed by the legal representatives or duly authorized representatives of the relevant parties. If one of the two conditions is missing, the agreement will not take effect.

Shandong High Court second-instance believes that:Regarding the validity of the "Product Distribution Agreement", even if there are defects in the form of the agreement, the agreement is stamped with the official seal of Jiangsu Shengkun Company, and Lu Guangde, the legal representative of Nanjing Huichang Company, admitted in the first instance trial that the signature of the guarantor in the "Guarantee Letter" attached to the agreement was signed by him.

Not only that, the second article of the "Agreement" signed by Party A Jiangsu Shengkun Machinery Co., Ltd., Party B Jiangsu Shengkun Company, Bingfangshan Reconstruction Machine Company and the guarantor on January 31, 2014 submitted by Jiangsu Shengkun Company clearly states that "On August 29, 2013, after the three parties reached an agreement, Party C and Party B signed a" Product Distribution Agreement "to establish a distribution business relationship..." After that, Mountain Reconstruction Machine Company and Jiangsu Shengkun Company signed a series of "Industrial Products Sale and Purchase Contracts", and Jiangsu Shengkun Company recognized that it owed Mountain Reconstruction Machine Company payment and a series of facts, all of which confirmed the "Product Distribution Agreement" Entered into force.

Third, the lawyer reminds

1. The interpretation of contract terms cannot rely solely on the semantic understanding of literal expressions, but should explore the true meaning in combination with the actual performance behavior of both parties.

Signing or sealing is a legally binding act. Once a contract is signed, it becomes binding on the parties and requires compliance with the agreement and performance of obligations.

2. Contracts should be signed and reviewed as accurately and rigorously as possible to avoid ambiguity or controversy.

Contracts are the carrier of transactions and the source of risks. In practice, many disputes may arise from a clause or a keyword of the contract, or even a punctuation mark. The difference between the words is thousands of miles, and it also leaves hidden dangers for the follow-up. When signing and reviewing a contract, it should be as accurate and rigorous as possible. For example, according to the situation of both parties, it is clearly stipulated in the terms that "this contract shall take effect after both parties sign and/or seal", and try to ensure the completeness of the contract signing form at the time of signing, so as to avoid subsequent disputes caused by ambiguity in the terms.

Lawyer Profile

Lawyer Min Na

Full-time lawyer of

Guangdong

is a full-time practicing lawyer, focusing on corporate legal counsel, enterprise risk prevention and control and compliance governance, intellectual property rights and other fields. He has many years of experience in large-scale enterprise management, and has accumulated rich practical experience in business negotiation, labor dispute resolution, and civil and commercial dispute resolution.

Team Profile

Hongyan lawyer team

The Hongyan lawyer team is headed by lawyer Liu Hong, and is composed of lawyer Min Na, lawyer Chen Ruitan, lawyer Wang Ting, and lawyer Zhou Gaofeng as the backbone of the business. The team members are handsome and have their own advantages; their business literacy is stable and solid, and they have profound experience in the industry. They abide by professional ethics, focus on business practice, integrate knowledge and practice, and constantly achieve far-reaching goals.

The team's business areas are mainly engaged in civil and commercial legal affairs and financial legal affairs, focusing on corporate governance and compliance management, professional handling of real estate development, operation and property management, intellectual property disputes, labor disputes and arbitration, contract disputes, tort liability disputes, marriage and family disputes and other civil and commercial legal affairs, employed as a perennial legal consultant or special project legal consultant for many domestic and foreign enterprises and institutions, engaged in equity mergers and acquisitions, restructuring, fund fundraising and withdrawal affairs and company IPO and other professional legal affairs, successfully handled a number of difficult equity, restructuring, mergers and acquisitions and financial guarantee disputes, good at handling major and complex civil and commercial litigation and arbitration cases, The business covers both domestic and overseas, and is deeply praised by customers.

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