Is A Contract Valid If There Is No Company Stamp?

·About The Author·

· Author of Chinese Law Books: Intellectual Property, Commercial, Company and Economic Law In A Minute

· Author of English Law Book: Business Law In A Minute

· Co-Author of Peking University Textbook: Business Ethics

· Graduated from Fudan University Law School

· Interviewed by Bloomberg and Timeout

· Mentor at Bloom Education (Charity)

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CHINA LAW 101

Video 72

This is the 15th video of the Investing In China Chapter.

In the world of business, it is common for contracts to require both signatures and seals for validity. While some may perceive this requirement as a mere formality, it holds immense significance. Signatures represent the agreement and intent of the parties involved, while seals symbolize the official endorsement of a company. Together, they create a binding document that ensures the enforceability of contractual terms.

However, what happens when the signatures and seals do not match? To understand the implications, we must examine two scenarios: contracts with the company seal affixed and contracts without the company seal, but signed by the legal representative or authorized representative.

In the case of contracts with the company seal affixed, the seal serves as a tangible representation of the company's intent. Surprisingly, even if the parties agreed that both signatures and seals are necessary for validity, contracts with only the seal and no signatures are still recognized as valid in practice. This recognition is based on the understanding that the company seal embodies the intention of the organization and carries sufficient weight to validate the contract.

Now, let us turn our attention to contracts without the company seal, but signed by the legal representative or authorized representative. Here, the validity of the contract is contingent upon the specific agreement regarding the seal between the parties involved. There are two scenarios to consider:

Firstly, if the agreement states that the contract becomes effective upon signature or seal affixation by both parties, it implies that either a signature or a seal is sufficient for the contract to be valid. Unless there is evidence of a special agreement requiring both, a contract signed by the legal representative or authorized representative without the company seal remains valid. This interpretation acknowledges the intention of the parties to prioritize the signature as an indicative factor of agreement.

Secondly, if the agreement explicitly stipulates that the contract becomes effective only when both parties sign and affix their seals, the presence of both signature and seal is imperative for the contract's validity. In this scenario, if the contract is signed only by the legal representative or authorized representative without the company seal, it is deemed invalid. This requirement emphasizes the significance of the company seal as a formal act of endorsement.

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