Contract Execution Clause

Formal Validity

Chinese law recognizes the physical company chop as the primary evidence of corporate intent for domestic transactions. A contract execution clause usually stipulates that the agreement only takes effect once both parties have affixed their official seals and the legal representatives have signed. Digital signatures are increasingly accepted provided they meet the standards set by the Electronic Signature Law of the People’s Republic of China to ensure non-repudiation.

Without the correct seal or a valid signature from an authorized person, the document may not be enforceable in a local court even if partial performance has occurred.

Administrative Approval

Certain industries like telecommunications or mining require state registration before a private agreement becomes fully operational. The contract execution clause must account for the time needed to obtain these licenses from the relevant ministry or local bureau. If a required permit is denied, the clause often dictates how the parties will handle the resulting termination or modification.

Sequence Effect

Performance typically begins only after all conditions listed in this section are satisfied. Failure to observe the requirements of the contract execution clause can lead to a court declaring the entire document void. This prevents one party from demanding payment or delivery before the legal framework of the deal is officially locked.