Crime of Contract Fraud under laws of China

Most of the time, it’s a good experience to have a deal with Chinese companies, as China is one of the biggest market in the world and produced goods with high quality and cheaper price.
However, when it comes to a dispute with a China company, you should know how to safeguard your rights according to the laws of China. Apart from the civil and commercial proceedings to resolve a controversy, there are also criminal remedies which may help you when it’s hard to do a normal civil or criminal lawsuit. Here below Lawyer Jingzhan.Wang introduces one of provisions of China Criminal Law: the crime of contract fraud.
Contract fraud is that an individual or company cheats other’s property by way of signing or performing contract, and with the intention of illegal possession.
Firstly the defendant has cheated the counterparty with deliberation, having the intention of illegal possession. To prove the deliberation is oftenly the most tricky part to accuse a suspect of the crime of contract fraud. The counterparty may take the excuse of a commercial dispute.
Secondly the defendant has the behaviour of cheating in the method of concealing facts who:
• Sign or perform contract in the name of a fake company or fraudulent use of others’ name.
• Provide security by forgery, falsified, or annulled cheque or other fake property rights.
• Without the ability to fulfilment, induce victims to sign or perform contract by executing a contract of small value or partial performance.
• Escape away and hide after receiving counterparty’s payment, goods, down payment or secure property.
• Cheat to get property and money by other methods.
Thirdly the victim is cheated for a big amount.
The defendant should be sentenced to an imprisonment of no more than three years, or criminal detention, and/or fine, if the amount involved is big; the defendant should be sentenced to an imprisonment of no less than three years but no more than ten years, plus fine, if the amount involved is huge or there is some other severe circumstances; the defendant should be sentenced to an imprisonment of not less than ten years, or life imprisonment, plus fine or confiscation of property.

The above is the introduce to the stipulation of the contract fraud under criminal laws, however, in practice, it’s very complicated to decide whether a case is criminal or commercial. On one side, the victim should have the remedy under criminal laws; on other side, a normal business should be avoided to be disrupted by a criminal investigation, even though there may be some disputes in a deal.

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