Can an individual not yet establish a legal entity, but wants to sign a contract immediately so as not to miss a business opportunity?

Legal grounds:

• Enterprise Law 2020.

We receive the following questions:

I am negotiating to sign a business cooperation contract and need to sign the contract soon for implementation. Can I sign a contract first before opening the company? because I want to evaluate the project further.

According to civil law regulations,  individuals can sign all types of contracts to carry out business activities, except in certain cases where the law requires the establishment of a legal entity to be able to do business.

Therefore, if it is not a specific business line, an individual can sign a business cooperation contract, then establish an enterprise to continue implementing the signed contract.

Specifically, based on Article 18 of the Enterprise Law 2020 as follows:

Article 18. Contract before business registration

1. The business founder may sign a contract to serve the establishment and operation of the business before and during the business registration process.
2. In case of being granted a Business Registration Certificate, the enterprise must continue to exercise the rights and obligations arising from the signed contract specified in Clause 1 of this Article and the parties must carry out the transfer of contractual  rights and obligations according to the provisions of the Civil Code, unless otherwise agreed in the contract.
3. In case the enterprise is not granted a Business Registration Certificate, the person signing the contract as prescribed in Clause 1 of this Article is responsible for implementing the contract; In case another person participates in establishing a business, they are jointly responsible for implementing that contract.

According to the above regulations, the business founder can sign a contract to serve the business’s operations before officially establishing the business.

• If the business is established, the business will continue to perform the contract that the individual establishing the business previously signed;
• If the enterprise is not established, the individual who signed the contract will continue to perform that contract.