Court Orders Repayment of CNY 52,500 Loan from 1996
In this case, a plaintiff from Eastern China City brought a lawsuit against a defendant to recover a loan of CNY 52,500 made in 1996. The court ruled in favor of the plaintiff, ordering the defendant to repay the principal plus overdue interest. The defendant did not appear at the hearing, and the court proceeded with a default judgment.
The plaintiff, Mr. Chen, also known as Mr. Lou, claimed that on September 13, 1996, the defendant, Mr. Wang, borrowed CNY 52,500 to address cash flow difficulties in his business. Mr. Wang issued a handwritten IOU to Mr. Chen. Despite repeated requests for repayment over many years, Mr. Wang allegedly delayed and refused to return the money. Mr. Chen filed a lawsuit on December 13, 2011, seeking repayment of the principal and interest at double the benchmark lending rate published by the People’s Bank of China, calculated from the date of the lawsuit until full payment. He also asked the defendant to bear the litigation costs.
The court accepted the case on the same day and held a public hearing on March 14, 2012. Mr. Wang was properly served with a summons but failed to appear without justification, thereby waiving his rights to present a defense and to cross-examine evidence. Mr. Chen submitted three pieces of evidence: his own identity card, the defendant’s household registration certificate, and a certificate from the local village committee proving that Mr. Chen and Mr. Lou were the same person. He also provided the original IOU. The court found all evidence authentic and admissible, noting that the official documents and the IOU were originals with reliable content.
The court determined that a valid loan agreement existed between Mr. Chen and Mr. Wang. The IOU clearly stated the borrower, lender, and amount. The village committee’s certificate confirmed that the lender named on the IOU was identical to the plaintiff. The defendant had not repaid any part of the loan. Because the IOU did not specify a repayment date or interest rate, the loan was treated as an interest-free demand loan. The court held that the defendant was in breach of contract for failing to repay after being requested to do so, and thus must bear civil liability.
Under relevant law, including the Contract Law of the People’s Republic of China and the Civil Procedure Law, the court analyzed the legal nature of the debt. Since no interest was agreed upon, no interest accrued before the lawsuit was filed. However, the defendant was required to pay overdue interest from the date the plaintiff initiated legal proceedings. The court rejected the plaintiff’s request for double interest, finding that the statutory benchmark lending rate was the appropriate measure. The judgment required the defendant to pay overdue interest at the one-year benchmark rate from December 13, 2011, until the date of actual repayment.
The court ordered Mr. Wang to repay the principal of CNY 52,500 plus overdue interest as calculated, within ten days of the judgment taking effect. All other claims by Mr. Chen were dismissed. The defendant was also ordered to bear most of the court costs, totaling CNY 1,400, while the plaintiff bore CNY 10. The ruling serves as a reminder that even a decades-old loan can be enforced if the borrower acknowledges the debt in writing. It also highlights the court’s willingness to proceed with a default judgment when a defendant fails to respond to a properly served summons.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.