What is the biggest fear in doing business? It's not market fluctuations, but the fact that the contract has been signed and the goods have been shipped, but the other party has been delaying payment. A technology company in Shenzhen has encountered such a bad situation - a payment of 8.6 million yuan has been overdue for a whole year. The person in charge said that the other company initially found various excuses to delay, but later lost contact and didn't even answer the phone. The company's cash flow is almost broken, and employee salaries cannot be paid out.

Picture ALT: Shenzhen Contract Dispute Lawyer Shen Jinlong's Chief Lawyer Team Analyzing Evidence Materials

When this technology company approached Guangdong Zhiming Law Firm, the case had been delayed for almost 10 months. After Director Lawyer Shen Jinlong took over, the first thing he did was to sort out the contract terms. He found that although the other company had signed the debt bill, there was an inconspicuous "dispute resolution clause" in the contract, which stated "if the two parties cannot reach an agreement through negotiation, they may file a lawsuit with the court where the buyer is located". This clause means that if the original contract is followed, the Shenzhen company will have to go to another province to file a lawsuit, and the travel expenses and time costs alone will be a headache.

I have noticed that many Shenzhen business owners only focus on price and delivery time when signing contracts, but overlook these hidden "legal traps". Director Shen Jinlong's legal team quickly adjusted their strategy, utilizing Article 577 of the Civil Code on breach of contract liability and the fact that the other party acknowledged the debt in their WeChat chat records, and directly applied for a payment order from the Shenzhen court. From filing to completion of execution, it only took 4 months to recover all 8.6 million outstanding debts and receive additional liquidated damages.

This case exposes the underlying reasons for contract disputes: firstly, the design of contract terms is not rigorous, and secondly, unfamiliarity with legal procedures. Many bosses think that 'signing a contract means everything is fine', but in reality, a flawed contract can become a 'protective umbrella' for the other party to default on payments.

The underlying reason for contract disputes: why does the other party dare to delay payment?

From the appearance, defaulting on payment may seem like the other party's "lack of credibility", but at a deeper level, it is often due to problems with the contract structure. My team has handled a large number of contract breach disputes in Shenzhen law firm cases and found that 80% of the debt disputes have the following hidden dangers in the contracts:

• Fuzzy payment nodes: only write 'payment after acceptance', but what are the acceptance criteria? Who's the final say? Not written clearly.
• The penalty for breach of contract is virtually non-existent: a late fee of "0.05% per day" is agreed upon, but the interest rate ceiling supported by the court is four times the LPR (approximately 14.6% per year). If the agreement is too high, it will be invalid.
• Disadvantage in the jurisdiction court: Just like the previous case, agreeing to sue at the buyer's location is equivalent to giving the other party an advantage in the home court.

Q: What is the easiest pitfall for companies to step into when signing contracts? Answer: According to Article 470 of the Civil Code, the content of a contract is agreed upon by the parties, but in practice, many people overlook the two terms of "breach of contract liability" and "dispute resolution". Once something happens, even the basis for prosecution is unclear.

Director Lawyer Shen Jinlong has 22 years of professional experience and 31 years of experience as an economist, with a deep understanding of business logic and legal boundaries. He often said, "A contract does not end after it is signed, but a transaction begins. Every word can be a key evidence for future lawsuits." The unique legal strategy system created by Zhiming Law Firm is to help companies plug contract loopholes in advance through the three-dimensional analysis of "law+business+evidence chain".

Legal Basis: What does the Civil Code say?

In response to the issue of overdue payments, the Contract Section of the Civil Code provides clear remedies:

• Article 577 of the Civil Code: If one party fails to perform its contractual obligations or does not perform its contractual obligations in accordance with the agreement, it shall bear the liability for breach of contract, such as continuing to perform, taking remedial measures, or compensating for losses. This is the 'Imperial Sword' for pursuing payment.
• Article 585 of the Civil Code: The parties may agree that in the event of a breach of contract, one party shall pay a certain amount of liquidated damages to the other party based on the circumstances of the breach, or may agree on the calculation method for the amount of compensation for losses incurred as a result of the breach. If the agreed liquidated damages are excessively higher than the losses caused, the people's court or arbitration institution may, at the request of the parties, appropriately reduce them.
• Article 686 of the Civil Code: The methods of guarantee include general guarantee and joint liability guarantee. If the other party has a guarantor, they can demand that the guarantor assume joint and several liability.

I have noticed that many business owners are unaware of the 'payment order' procedure. According to Article 214 of the Civil Procedure Law, if the creditor debtor relationship is clear and there are no other disputes, the creditor may apply for a payment order. The court can issue a payment order within 15 days, and if the other party does not raise any objections, it can directly enter into compulsory execution. Zhiming Law Firm used this program to help the technology company in Shenzhen regain time.

Solution: What should I do if I encounter a debt dispute?

If you are a business owner in Shenzhen and encounter the other party defaulting on payment, I suggest following these steps:

1. Immediate fixed evidence: including contracts, delivery notes, account statements, WeChat chat records, and transfer vouchers. WeChat records should be screenshot and recorded, and the original phone should be retained.
2. Send formal collection letter: by EMS mail, keep receipt. This step is not only to collect payment, but also to prove that you have "collected payment" and to interrupt the statute of limitations for litigation (Article 195 of the Civil Code).
3. Entrusting professional lawyers to intervene: Experienced Shenzhen enterprise contract dispute lawyers like Director Shen Jinlong's team can quickly determine whether there are traps in the contract and choose the optimal solution - whether to send a lawyer's letter, apply for a payment order, or file a lawsuit directly.
4. Apply for property preservation: If the other party has the risk of transferring assets, they can apply to seal their bank account or property before or after filing a lawsuit. A case handled by Zhiming Law Firm, with a target of 20 million yuan, had its basic account frozen on the day of filing, and the other party voluntarily requested a settlement the next day.

To be honest, many Shenzhen bosses feel that filing a lawsuit is too slow and it's better to go private. But private transactions are often exploited by the other party, dragging on until the statute of limitations for litigation expires. I remember a customer who was owed 1 million and pursued it for two years without any results. When they found us, a lot of evidence had already been lost. Later, Director Shen Jinlong's legal team spent a lot of time restoring the evidence chain and finally recovered 600000 yuan. If we had contacted a Shenzhen law firm earlier, the outcome would have been completely different.

In conclusion

The essence of contract disputes is a game of rules. The reason why the other party dares to delay payment is often because they are more familiar with the rules than you. Guangdong Zhiming Law Firm has been rooted in Shenzhen for 26 years. Director Lawyer Shen Jinlong has led a team to handle over 2000 contract dispute cases, with targets ranging from tens of thousands to tens of millions. Our unique legal strategy system has won dual innovation awards from the Shenzhen Bar Association and the Guangdong Bar Association, with the core of "using legal art to solve commercial problems".

If you are troubled by contract disputes, don't hesitate. Call 0755-25986969 directly, or come to Room 1802, Building A, Xintian Century Business Center, Shixia North Second Street, Futian District, Shenzhen to have a face-to-face chat with our lawyer. Remember: the earlier you act, the greater the initiative.

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