Our China Lawyers were helping one of our clients to formulate a Standard Contracts of Purchase and Sale, when the General Manager of the client asked if would be OK if he prepared some blank contracts with the company seal to give to some of the employees. He thought it will be convenient and flexible for their daily business and management.
WOW, BIG No No! This question leads to legal questions relating to the responsibility for management of the company’s seals and the legal risks for the company if the chops are misused.
Generally speaking, the company as a legal entity shall be responsible for managing all of its seals. The chops serve as the legal “signature” of the company and the company normally shall be the first legally “responsible person” for the documents that affixed with its chops.
Of course, the company may formulate some company rules or policies to assign the power of keeping and managing the chops to specific personnel of the company. However if such personnel misuse the company seal, or other person who is unauthorized uses the company seals to execute some financial contracts, defraud others of their money for his or her own possess or use, or even to conduct other criminal activities, the company will normally the first one to be investigated or be held responsible. In such case, the company has burden of proof to show that it was not involved and should not be responsible. However in practice it’s normally very hard to prove that and in most cases of seal misuse the company always bears some liability for its poor supervise and management to its chop.
Back to the client’s “blank contract” question, our Chinese lawyers will always advise against such an action. Whatever convenience is gained by having such pre-stamped documentation available is far outweighed by potential for employees to print themselves or their friends favorable loans of company funds or business contracts!
If a company for some reason insists on conducting its operations this way there should be a strict system of registration and monitoring for all such blank documentation. The company should have a meticulous policy on management of such documents and a specific responsible person should be named who is authorized to approve utilization of the blank pages.