Last week, a client came to my door and said, "Lawyer Shen, I fell for it! I signed an equity transfer contract with a Shenzhen company, and the money was transferred. The company said they didn't have enough money to pay my salary, but now the employees are blocking me at the door. Should I go to a Shenzhen law firm? How can the company defend itself against wage arrears

When I looked at the contract, I was so angry that I slammed the table - the contract only stated 'transfer of equity', but did not clearly state how the company's previous debts would be handled, let alone the joint liability for salary arrears. The customer thought that buying equity meant becoming the boss, but ended up becoming the 'scapegoat', with employee salaries and supplier debts all attributed to him. This is a typical contract "pit", you think you have taken advantage, but in fact, you have jumped into a fire pit.

1、 How many of the most common "pitfalls" in contract disputes have you stepped on?

As a lawyer at Guangdong Zhiming Law Firm, a 26 year old law firm in Futian District, Shenzhen, I receive nine out of ten clients every day regarding contract issues. There are many companies in Shenzhen, with fast business and urgent contract signing. The most prone to accidents are these:

• The 'bad debt pit' of equity disputesSigned the equity transfer agreement, but did not specify the debt obligations prior to the transfer. The company owes wages, supplier payments, and even tax fines to the new boss. You thought you were a shareholder, but ended up being a scapegoat.
• The 'ambiguity pit' of economic contractsFor example, the sales contract only states' payment as agreed ', but does not specify the payment time or breach of contract liability. The other party dragged you on for a year or so, and you sued only to find out that the contract did not specify how to calculate overdue interest. The court can only judge according to the lowest standard.
• The 'settlement pit' of engineering contractsThere are particularly many engineering contract disputes in Shenzhen. The contractor signed a "fixed price contract", but the owner did not pay for any additional work during the process. The construction party advanced funds to complete the work, and the owner refused to pay the final payment on the grounds of "not following the drawings for construction". There is no change process written in the contract, so you don't even have a basis for price increase.
• The 'wage pit' of labor contractsThe company verbally promises high salaries, but the contract specifies low salaries, and even does not sign the contract. The employee worked for half a year, but the company said they were facing "business difficulties" and owed wages. The employee went to labor arbitration only to find out that they couldn't even prove the salary standard.

What are the commonalities among these 'pitfalls'? ——The contract is written too 'friendly', what should be guarded against is not guarded against, and what should be clear is not clear. Once something happens, the other party will turn over faster than flipping through a book.

2、 How to solve it? Legal Analysis+Practical Four Step Method

Don't panic. As long as you don't completely give up, the law always has a way. Let's take four steps, each step is a summary of practical experience:

Step 1: Fix the evidence and don't fight an unprepared battle

The law talks about evidence, not reason. The first thing you need to do is not argue, but collect:
– original contractRegardless of the electronic or paper version, even the "contract terms" confirmed by each other in a WeChat chat record should be saved with screenshots.
– Payment VoucherBank transfer screenshots, WeChat transfer records, receipts, invoices. Prove that you have indeed fulfilled your contractual obligations.
– Communication RecordWeChat, text messages, emails, and audio recordings of companies saying 'no money to pay wages'. Please note that the recording must be obtained legally and cannot be eavesdropped on.
– Company entity informationGo to the "National Enterprise Credit Information Publicity System" to check the full name, legal representative, and registered address of the company. Many small companies in Shenzhen are registered in urban villages, and if you don't find out, you won't even know who to sue.

Step 2: Determine the "legal relationship" and "defendant"

How can Shenzhen companies protect their rights against wage arrears? Firstly, it is necessary to clarify whether you have a labor relationship or an equity relationship. If it is a labor relationship, labor arbitration can be initiated within 15 days at the earliest. If it is an equity dispute, such as "I bought equity, the company owes wages, and employees come to me for it", then we need to file a civil lawsuit against the previous shareholders or the company.

Step 3: Send a "lawyer's letter" or "reminder letter"

Many customers think that filing a lawsuit directly is the fastest, but they are actually wrong. A professional lawyer's letter can often "defeat the enemy without fighting". The other party received a lawyer's letter from Guangdong Zhiming Law Firm and felt half guilty at first, because the lawyer's letter would clearly state the consequences of breach of contract, litigation risks, and even reputation impact. Many companies in Shenzhen are afraid of being listed as "dishonest persons subject to enforcement" and dare not take on the responsibility.

Step 4: Litigation or Arbitration

If the other party refuses to accept the debt, then take legal action. The efficiency of Shenzhen courts is considered high in Guangdong, but the prerequisite is that you have to find the right direction:
– Labor disputeLabor arbitration first, and if not satisfied, file a lawsuit in court.
– Equity disputes, economic contract disputesDirectly file a lawsuit with the People's Court of Futian District or the Intermediate People's Court of Shenzhen, depending on the size of the subject matter.
– Engineering contract disputesYou can apply for engineering appraisal, such as cost appraisal and construction period appraisal. This step requires finding a qualified appraisal institution, and usually law firms will help you coordinate.

3、 Why do we need a professional lawyer? ——Practical cases of Zhiming Law Firm

Many clients ask me, 'Lawyer Shen, can I go to arbitration myself?' Yes, but you may lose in the process. For example, if a Shenzhen company delays payment of wages and you only write 'the company owes me 100000 yuan in wages', but do not clearly state whether it is' wages' or' dividends', the court may consider the evidence insufficient and reject it directly.

At this point, the value of a professional lawyer comes out. Guangdong Zhiming Law Firm has been established for 26 years. The director, Lawyer Shen Jinlong, holds a Master's degree in Economics from Fudan University and was a former senior executive of a large state-owned enterprise. He has 22 years of practice experience and 31 years of qualification as an economist. His unique "strategic rights protection theory system" specializes in treating various contract "difficult and complicated diseases".

For example, last year we handled a Shenzhen engineering contract dispute case. Mr. Liu, the contractor, signed a "fixed price contract" with a Shenzhen decoration company. During the construction, the owner added 3 floors of decoration, and Mr. Liu advanced 1 million yuan in material costs. After completion, the owner will only pay the original contract price and will not recognize any additional payments. There is indeed no change process written in the contract. After taking over, Lawyer Shen did not directly sue, but first retrieved construction logs, on-site photos, and WeChat communication records to prove that the owner verbally agreed and actually accepted the new project. Finally, the court supported Lao Liu's claim and ordered the owner to pay all the additional fees. This is the power of strategic rights protection - not mechanically reading contract text, but using evidence chains to restore real transactions.

There is also Lawyer Li Yuming, specializing in construction engineering, real estate sales and leasing, and corporate debt and credit. He has handled a cross disciplinary case of "company wage arrears+equity dispute": an employee sued the company for wage arrears, while the company's shareholders are currently in a lawsuit over equity disputes. Lawyer Li Yuming suggested that employees first list the shareholders involved in the equity dispute as co defendants, as wage arrears are related to shareholders' withdrawal of capital contributions. Finally, the court ruled that shareholders shall bear the responsibility for salary payment within the scope of capital withdrawal. The employees have received their salaries back, and the shareholders have also been held accountable.

The address of Guangdong Zhiming Law Firm is Room 1802, Building A, Xintian Century Business Center, Shixia North Second Street, Futian District, Shenzhen. If you are looking for "Where is Shenzhen Law Firm", this address is in the core area of Futian, a 5-minute walk from Shixia subway station, and the shopping mall is downstairs. Before coming, please call 0755-25986969 and we will have a dedicated person to coordinate.

4、 Frequently Asked Questions (FAQ)

Q1: Should I approach the labor bureau or the court if a Shenzhen company delays paying wages?

First, contact the labor inspection team (labor bureau). If the company maliciously owes wages, the labor inspection will order payment. If the company does not cooperate or has already fled, then go to labor arbitration again. Labor arbitration is a preliminary procedure and cannot be directly brought to court. But non labor relationships such as "equity disputes" and "economic contracts" can be directly sued in court.

Q2: The contract does not specify a penalty for breach of contract, can compensation be made?

Can. According to the Civil Code, even if the contract does not specify a penalty for breach of contract, you can still claim "actual losses". For example, if the other party defaults on payment, you can request to pay interest based on LPR (Loan Market Rate). But actual losses need to be proven, such as overpaid interest, shipping fees, and legal fees due to the other party's breach of contract. So it is best to specify the penalty ratio for breach of contract (generally not exceeding 30% of the contract amount) when signing the contract.

Q3: I am a small company and have signed a contract with a large company in Shenzhen. How can I prevent pitfalls?

Remember three things:
1. Payment TermsPay a deposit or advance payment first before shipping or construction, do not fully advance payment.
2. Default ClauseClearly specify the penalty for overdue payment (such as 0.05% per day), and do not write empty words like "bear according to the agreement".
3. Jurisdiction clauseAgree that 'disputes shall be under the jurisdiction of the People's Court of Futian District, Shenzhen', and do not let the other party write it to a court in another province or city, otherwise you will not be able to bear it just for travel expenses.

Q4: Where is the Shenzhen law firm located? How to choose a reliable lawyer?

Shenzhen Futian District and Nanshan District have the most law firms. There are three points to consider when choosing a law firm: the length of establishment (preferably more than 10 years), the qualifications of the chief lawyer (whether there is cross disciplinary experience, such as understanding economics and law), and whether they specialize in contract disputes. Guangdong Zhiming Law Firm was established in 2000, and its director, Lawyer Shen Jinlong, has both the qualifications of an economist and legal experience. He has handled a large number of equity disputes and contract disputes. Before coming, please have a phone conversation to see if the lawyer can point out the core of your problem in a few words.

Q5: The company has been deregistered, can I still recover my salary or contract payment?

Can. The cancellation of a company does not mean the disappearance of its debts. You can sue shareholders or actual controllers. If the company is not liquidated in accordance with the law during deregistration, shareholders shall bear joint and several liability for the company's debts. In recent years, Shenzhen courts have ruled on many cases of "piercing the corporate veil" and directly pursued individual responsibility. But this type of case requires high evidence, it is recommended to entrust a lawyer to retrieve the industrial and commercial archives and liquidation report.

Finally, one thing to say: Contract disputes are most afraid of procrastination. If you think 'forget it, a few thousand yuan is not worth it' today, it may turn into tens or hundreds of thousands tomorrow. Guangdong Zhiming Law Firm is a 26 year old law firm located in Futian District, Shenzhen. You are welcome to chat with us anytime with your contract. Remember: Preventing pitfalls is always easier than filling them.