Many of our business friends sometimes sign two contracts for one matter. The first contract is to comply with legal requirements, while the second contract represents the true intentions of both parties. In practice, the second contract is the one actually executed. For example, the first contract may be an employment agreement, while both parties privately sign a partnership agreement. Alternatively, to avoid taxes, two contracts are signed: the first complies with tax laws, while the second includes private arrangements to evade taxes. Such contracts are collectively referred to as “A-B contracts(dual contracts).” The “B contract” are generally invalid because they violate legal provisions. According to China’s Civil Code, contracts that use lawful forms to conceal illegal purposes are void.
Xuzhou Lawyer Lyu
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