Contract Review And Risk Management

I.The Relationship between Contract Review and Risk Management

Contract review is a thinking process-a rational analysis for contract.This process includes: clarifying of contract related facts, measure of the feasibility of contract, and forecast of contract risks.

Risk control is to predict and avoid contract-related risks in order to minimize the risks of our business, financial capital, as well as legal risk,in short,is a process to prevent a damage that may occur. Contract review and control of legal risk show the relationships between means and purpose, as well as form and substance.The process of contract review is the process for controlling risk; Contract review aims at controlling risk. As a result, the essences of these two issues we are talking about are inseparable and complementary, or even in some way the same.

II.The Significance of the Contract Review and Classification

1.The meaning of contract review
the significance of contract review depends primarily on the meaning of contract. Contract plays a crucial role on management, operations, business activities of enterprises, being the key for foreign economic activity, and deeply impacts on and decides the legitimate rights and interests of enterprises. Therefore, we must take contract review very serious.

2.Classification of Contract Review

Prior Review and Post Review
Operation Review and Legal Review
Formal Review and Substantive Review
III.How to Review a Contract (e.g. Lease Contract)

1.Formal Review

Review of the subject matter
Review of general information
Review of qualification
Review of credibility and contractual capacity
2.Substantive Review
Contract is made of various provisions. Any rights and obligations of both parties come out of the provisions by each piece of term. Therefore, we conclude that all the provision review plays the decisive role.

Subject
Commodity
Quantity
Application
Lease Term
Rent and Payment
Transportation and Delivery
Packaging
Product Quality and Inspection
Quality inspection and acceptance on delivery
Quality inspection and acceptance on redelivery
Methods, deadline and the confirmation method of inspection and acceptance, as well as the punishment should be declared
Redelivery
Maintenance and Preservation
Relenting and Leasehold Disposition on Expiration
Advance Deposit Clause
Advance deposit and enrollment payment
Deposit Limit
Intellectual Property Rights
Confidentiality Clause
Responsibility for Breach of Contract
Dispute Settlement
Selection of Dispute Settlement Solutions
Selection of Administrative Law Court
Modification, Cancellation and Termination of Contract
Signature and Seal
Signatory (Authorization)
Seal (Official Seal)
Relationship between Signature and Seal
Seal on Modification
Others
Sublease
Force Majeure Clause

VI.Notice after the signing of the contract

Since fulfilling the contract is a continuous process, contract signing means not that the whole procedure is over. After signing a contract we have to continue to follow up contract management, and to monitor the performance of the contract. Mainly in the following areas:

Archiving the Original Document
Following up the Fulfillment of Contract
Drawing up the Contract System for Governing Projects and Supervising, as well as Early Warning Mechanism
Preserving Evidence of Contract Fulfillment