China Contracts: Is That a Real Company Chop?

Chinese company due diligence Seal or Chop

Got an email the other day with the following questions:

What does a real China company chop look like? What are its characteristics? What features does the law require? What are some examples of fake company chops and what’s wrong with them?

All I know is to be real it has to have a tax number on it. Circle or oval, what’s the difference?

Good question.

Every contract with a Chinese company must be executed by a person with authority and must be chopped by the official company chop/seal. However, there are many types of company chops. Which one should be used? How do you know if the company chop is real?

Here is how you should deal with the situation.

The rules/requirements for Chinese company chops are different in every city, so there is oftentimes no way to know whether a company’s chop is a proper, legally registered and authorized company chop or not, just by looking at it. Given that situation, the Chinese courts have decided they do not care. That is, so long as the document is chopped with something that purports to be the company chop and so long as the signer is either the legal rep or a person with apparent authority based on the business card of that person, Chinese courts will not invalidate the contract based on a technical argument related to the validity of the company chop or the authority of the signer.

Since there are so many kinds of company chops, it is best to insist on the standard round company chop using red ink. Some of these company chops are numbered and some are not. This varies by district and is not an indicator of validity. The oval company chops in black and purple are not common and should be avoided for companies that want to take the cautious approach. Unfortunately, some districts have moved to using these oval company chops for reasons that are not clear. Nonetheless, I have never personally dealt with a Chinese company that did not have access to the standard round company chop with a star in the middle.

However, the bottom line is that so long as the company chop looks authoritative to the average person and so long as the signer has apparent authority, that is all that is required. Due to the variations in practice from district to district regarding company chops, it is usually going to be a waste of effort to do anything more. However, insisting that that any legal document be chopped is still required in China, so the basic best practice described above should be used for all China contracts.

2 responses to “China Contracts: Is That a Real Company Chop?”

  1. An eligible real chop can validate a contract but it’s not must under Chinese law, to chop a contract is just a common practice being insisted by some people, but not required by law. A Chinese trader may have several types of chops, all those chops are real, but you need to identify which one is eligible to chop a contract according to its designated usuage, and as far as usually a real chop need to be enrolled in a national register managed by relevant governmental agencies, e.g., PSB and SAIC.

  2. And also a contract can be executed either by stamp it with a right seal/chop, or by include the name of a person with authority, either of the two methods can be taken an effective execution of the contract from Chinese contract law perspective, it’s not necessary to execute a contract with both of the two methods overlapped, even though most Chinese company may be inclined to require to use seal/chop to execute a contract, it’s more of a habit based upon custom but not law requirement.

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