In a joint venture, a land sale, or any high-value investment, the contract is the one piece of legal armour you have. Surprisingly, many businesspeople try to save money by downloading a “ready-made template contract” from the internet — which is usually loose and leads to being taken advantage of when a dispute arises.
Due diligence — check the other party before you sign
A safe contract always starts with checking the other party’s status first: does the company genuinely exist, what is its registered capital, who truly has authority to sign, and — importantly — does it have any litigation or bankruptcy history?
The clauses you cannot omit
A good contract must state its purpose clearly, set out measurable timelines and payment conditions, and — indispensably — include “provisions on breach and penalties” so that you can immediately claim damages when the other side tries to wriggle out.
An excessive penalty can be reduced by the court
Where a penalty is set sky-high beyond reality, the court has power to reduce it to a reasonable amount under Section 383 of the Civil and Commercial Code. A penalty must therefore reflect real loss, and the contract should also specify the court with jurisdiction. Having a lawyer draft and review the contract before you sign is like buying the most worthwhile risk insurance there is.
