Summary: A contract is not only a record of cooperation—it is the principal tool for allocating transaction risks. The earlier risks are identified, the lower the cost of managing them.

Before Signing

1. Verify the counterparty. Confirm its registered name, legal status, business scope, credit standing, licenses, contact details, and ability to perform.

2. Check signing authority. Ensure that the signatory is the legal representative or holds valid written authorization. Verify the authenticity and permitted use of company seals.

3. Define the transaction clearly. Specify the subject matter, specifications, quantity, quality standards, price, taxes, delivery, acceptance, payment, invoices, and project milestones.

4. Allocate risks in advance. Address confidentiality, intellectual property, data protection, force majeure, changes in circumstances, warranties, indemnities, and insurance where relevant.

5. Design workable remedies. Clearly state breach events, cure periods, liquidated damages, loss calculation, suspension rights, termination rights, and dispute-resolution mechanisms.

Risk alert: Do not rely solely on the other party’s template, oral promises, chat messages, quotations, or purchase orders. Confirm that all transaction documents are consistent and form a complete contractual arrangement.

During Performance

1. Assign responsibility. Designate personnel to track deadlines, deliverables, acceptance, payments, notices, and outstanding issues.

2. Preserve evidence. Keep signed contracts, appendices, authorizations, orders, delivery records, acceptance documents, invoices, payment records, emails, and business correspondence.

3. Document every change. Any change to price, scope, schedule, quality, payment, or delivery should be agreed in writing by authorized representatives.

4. Respond promptly to non-performance. Issue timely notices, demands, objections, reservations of rights, or cure requests. Silence or delay may weaken your position.

5. Check unusual payments. If the payer or recipient differs from the contractual party, obtain written confirmation explaining and authorizing the arrangement.

Rescission or Termination

Before stopping performance or sending a termination notice, confirm whether the contractual or statutory grounds have been satisfied. Review notice requirements, delivery methods, cure periods, settlement obligations, return of property, confidentiality, data deletion, intellectual-property arrangements, and continuing liabilities.

A termination notice sent without sufficient grounds or through an improper procedure may itself constitute a breach. For material transactions or emerging disputes, obtain legal advice before taking action.

Ten Warning Signs Requiring Immediate Attention

1. The counterparty refuses to use its registered name or provide qualification documents.

2. The signatory cannot produce valid authorization.

3. Key terms are vague, missing, or inconsistent across documents.

4. Payment is requested to an unrelated entity or personal account.

5. Delivery or acceptance standards cannot be objectively verified.

6. The counterparty repeatedly requests oral changes but avoids written confirmation.

7. Performance is delayed, defective, incomplete, or materially different from the agreement.

8. Important notices are sent only through informal or untraceable channels.

9. The counterparty shows signs of financial distress, asset transfers, closure, or loss of contact.

10. A dispute has arisen, but evidence has not yet been collected and preserved systematically.

How We Can Help

• Contract drafting, review, and revision.

• Counterparty and signing-authority risk review.

• Contract-template and contract-management system development.

• Support during performance, changes, payment collection, notices, and evidence preservation.

• Rescission, termination, negotiation, demand letters, and dispute-resolution planning.

Practical suggestion: For high-value, long-term, cross-border, technically complex, or strategically important transactions, legal review before signing is generally more efficient and economical than remediation after a dispute.

Disclaimer: This checklist provides general information only and does not constitute legal advice for any specific transaction. Contract risks should be assessed in light of the documents, facts, applicable law, and the parties’ commercial objectives.