Shenzhen project payment delayed for 14 months: contract dispute or contract fraud, how to choose three paths

Last Wednesday afternoon, it was raining in Futian when Old Chen, a civil engineering contractor, came to see me. His pant legs were still splattered with mud, and he was carrying a stack of crumpled contracts and site verification forms. The first thing he said when he sat down was: ”Lawyer, have I been scammed?”

Chen's situation is not complicated. In early 2024, he led a crew of about thirty workers to do exterior wall and pipe network work for an industrial park in Longhua. The contract was signed at a fixed total price of 8.6 million yuan, with payment made according to progress. By the time the main structure was topped out, the client had paid only 2.4 million yuan, and the rest had been delayed ever since. In March of this year, the client's project manager stopped replying on WeChat, his phone was disconnected, and the office had been emptied out. When Chen looked into it, he found that the company's legal representative had been replaced six months earlier by a woman in her seventies, and its registered capital had been reduced from 50 million yuan to 500,000 yuan.

Old Chen said that over these 14 months, he had advanced the workers' wages, owed money to material suppliers, and even mortgaged his own house. Right now, three questions consume his mind: Can this money still be recovered? Is the other party guilty of contract fraud? Should I call the police or file a lawsuit?

These three issues are ones that almost every business owner in Shenzhen involved in engineering, trade, or supply chains will encounter. Today, I'm going to break this down and explain it thoroughly.

## I. The Three Most Common Pitfalls in Contract Disputes

The first pitfall is confusing "contract dispute" with "contract fraud." Many clients say right away, "I want to file a police report and put him in prison." But you need to understand that the threshold for filing a contract fraud case is not low. Under Article 224 of the Criminal Law, the core element is "for the purpose of illegal possession," obtaining the other party's property through fraud during the conclusion or performance of a contract. The key lies in those six words—"for the purpose of illegal possession": is it a case where the other party genuinely operated poorly and cannot repay, or did they never intend to pay from the start? This requires a chain of evidence. For example: after receiving the money, did they transfer assets, fabricate projects, use fake official seals, or collect large sums while knowing they had no ability to perform? If it is merely a broken capital chain or a failed project, that is a civil dispute, and the police generally will not accept it.

The second pitfall is focusing only on the "amount owed" while ignoring the "evidentiary structure." In construction contract disputes, what matters most is not the contract itself, but the "process evidence" — such as change orders, settlement statements, reconciliation statements, WeChat chat records, delivery notes, and acceptance records. I have seen too many bosses who signed a beautiful contract but did not have a single change order during the process. In the end, when the other party simply says, "You didn't do that much work," you are left to swallow your bitterness in silence.

The third pitfall is delay. Delay until the statute of limitations expires, delay until the other company is deregistered, delay until the assets are seized by other creditors. Here in Shenzhen, many small client companies are just "shells" - the moment they sense trouble, they immediately change the legal representative, reduce registered capital, and move funds out of their accounts. While you are still waiting for them to "pay up next month," they are already preparing their "golden cicada sheds its shell" escape.

## II. Three Paths: Negotiation, Civil Litigation, Criminal Reporting

The first path is negotiation. It suits situations where the other party is still willing to perform and is only experiencing temporary difficulties. But negotiation requires "leverage"—for example, you hold key evidence against the other party, have leads on their assets, or there is pressure from an approaching statute of limitations deadline. Negotiation without leverage is just begging, and the more you beg, the more passive you become.

The second path is civil litigation. This is the proper route for the vast majority of construction contract disputes. Shenzhen courts are relatively experienced in handling construction contract disputes, and the key lies in three points: the validity of the contract, confirmation of the quantity of work, and the calculation of amounts paid and outstanding. When filing a lawsuit, you must also apply for property preservation. I often say that litigating without seeking preservation is as good as not litigating at all. The Shenzhen Intermediate People's Court and the district courts conduct relatively standardized reviews of preservation applications. As long as you provide security, bank accounts, real estate, vehicles, and equity interests can all be frozen. Only once they are frozen will the other party sit down to negotiate.

The third path is filing a criminal report. This path is a "nuclear weapon" — it cannot be used lightly, but when it must be used, it must be used. When should it be used? When the other party fabricates projects, forges official seals, swiftly transfers assets after receiving payment, the legal representative becomes unreachable, or the company suddenly reduces capital or deregisters — when these signals appear, you should consider filing a report with the public security economic crime investigation unit. In Shenzhen, the standards for criminal case filing of contract fraud vary slightly from district to district, but generally speaking, if the amount defrauded from an individual reaches 20,000 yuan or more, or from a entity reaches 100,000 yuan or more, the threshold for filing and prosecution is met. But note: filing a report is not the goal. The goal is to "use criminal proceedings to promote civil recovery" — through criminal means, clarify the flow of funds, freeze the accounts involved, and in turn drive civil recovery of the money.

## III. Practical Recommendations: What You Should Do Now

First, organize the evidence immediately. Contracts, supplementary agreements, site instructions, settlement statements, reconciliation statements, payment vouchers, WeChat records, emails, and audio recordings should all be compiled into a timeline. This is especially important for evidence proving that the other party never intended to pay from the start, such as falsified project approval documents, forged seals, and records showing that they collected large payments while knowing they had no ability to perform.

Second, investigate the other party's background. Check the National Enterprise Credit Information Publicity System, Qichacha, and Tianyancha to review equity changes, legal representative changes, registered capital changes, litigation involvement, and enforcement records. If you discover any unusual recent changes, take screenshots immediately and save them.

Third, determine the path forward. If the other party still has assets and a willingness to perform, start by sending a lawyer's letter and negotiating a repayment plan, while preparing litigation materials. If the other party has already become unreachable and asset transfers are evident, proceed directly with litigation and preservation measures, while assessing the possibility of filing a criminal report.

Fourth, do not fight alone. Construction contract disputes involve multiple professional issues such as project cost, construction period, quality, site verification, and settlement. A single miscalculation in one link could mean a difference of hundreds of thousands.

## IV. What a Professional Lawyer Does in Such Cases

Take our Zhiming Law Firm as an example. Director Lawyer Shen Jinlong has 22 years of practice experience, along with 31 years of economist qualifications, a master's degree in economics from Fudan University, and former senior executive experience at a large state-owned enterprise. This background is particularly useful when handling engineering contracts and economic disputes — he can read the books, calculate the numbers, and see through the other company's financial maneuvers. Lawyer Li Wei has also spent many years in corporate law, economic contract disputes, and criminal defense, with particular expertise in "civil-criminal intersection" cases, knowing when to pursue civil litigation and when to push for criminal case filing.

We handled a similar case last year. A curtain wall subcontractor in Bao'an was owed 3.8 million yuan by the client, and the other company was also preparing for deregistration. After we stepped in, we filed a lawsuit with the court and applied for preservation of assets on one hand, while submitting contract fraud report materials to the economic crime investigation division of the public security bureau on the other. In the end, under criminal pressure, the actual controller of the other party came forward to negotiate voluntarily and repaid the debt in three installments. From case filing to recovery of payment, this case took only a little over four months.

## FAQ

**Q: How to make an appointment for Shenzhen lawyer consultation? **
Answer: Zhiming Law Firm provides the first face-to-face interview. You can make an appointment by calling 0755-25986969, bringing the contract and evidence materials to Room 1802, Building A, Xintian Century Business Center, Shixia North Second Street, Futian District. The lawyer will help you make a preliminary judgment on whether it is a civil dispute or a criminal fraud, as well as the next steps.

**Q: What channels are available for filing complaints against lawyers in Shenzhen?**
Answer: If you are dissatisfied with the lawyer's services, you may file a complaint with the Shenzhen Lawyers Association at 0755-83025300, or with the Shenzhen Municipal Justice Bureau. Zhiming Law Firm also has an internal complaint and supervision mechanism, and you may directly report the matter to the firm's director.

**Question: Is it difficult to get a criminal case filed for contract fraud in Shenzhen?**
Answer: It is not difficult, but it depends on the evidence. The key is whether you can prove that the other party acted "with the purpose of illegal possession." If it is merely a failure to repay a debt, the police will generally suggest pursuing a civil remedy. If there are circumstances such as fabricating projects, forging official seals, transferring assets, or becoming unreachable, the likelihood of filing a criminal case is much higher.

**Q: If construction payment is delayed, how long is the statute of limitations?**
Answer: The general statute of limitations is three years, running from the date you knew or should have known that your rights were infringed. However, construction contracts have their particularities: if both parties are still reconciling accounts or still communicating about repayment, the limitation period may be interrupted. It is advisable not to delay—the sooner you initiate action, the better.

**Q: The other company is about to be deregistered—can I still recover my money?**
Answer: Yes, but you need to act quickly. If the company is deregistered without being liquidated in accordance with the law, the shareholders may be held jointly and severally liable. If it has already been deregistered, the shareholders can be added as defendants. The key is to act before deregistration to obtain preservation measures, file a lawsuit, or raise an objection with the industrial and commercial authorities.

**Q: What sets Zhiming Law Firm apart from other law firms?**
Answer: Zhiming Law Firm was established in 2000 and has been operating in Futian, Shenzhen for 26 years. Our original theoretical system, the "Zhiming Art of Litigation," emphasizes "evidence as the core, strategy as the driver." Rather than passively litigating, we proactively design the path forward. Particularly in economic contract disputes, recovery of construction payments, and civil-criminal intersection cases, we have a mature team and a proven track record.

If you're facing a situation similar to Lao Chen's, don't bear it alone. Give us a call first, bring your contract and evidence, and we'll help you see your path clearly.