Court Orders Payment of CNY 78,850 in Truck Sale Dispute
A logistics company in Eastern China City obtained a court judgment against two buyers who failed to pay the remaining balance on a heavy semi-trailer truck purchased under an installment contract. The court ordered the first defendant to pay CNY 78,850 in outstanding principal plus interest, and held the second defendant jointly liable as a guarantor. The ruling, issued in March 2012, confirmed the validity of the sale agreement and the promissory notes that governed the payment terms.
In March 2011, the two defendants, identified as Mr. Wang and Mr. Zhang, entered into a vehicle installment sale contract with the plaintiff logistics company to purchase a heavy semi-trailer truck. The total down payment was set at CNY 200,193. The buyers paid CNY 100,193 at signing, leaving a balance of CNY 100,000. They executed two promissory notes alongside the contract. The first note required Mr. Wang to repay CNY 20,000 by April 1, 2011, and the second note required repayment of CNY 80,000 by June 25, 2011. Interest was set at a monthly rate of 15‰, with default interest at 20‰ per month on overdue principal. Mr. Zhang provided a guarantee for the full amount, with the guarantee period extending until the debt was fully cleared. In August 2011, Mr. Wang made a partial payment of CNY 21,150 plus interest, reducing the outstanding balance to CNY 78,850. Despite repeated demands, the defendants did not pay the remaining sum.
The plaintiff filed suit on January 11, 2012, and the court accepted the case the same day. A public hearing was held on March 1, 2012, before a single judge. The plaintiff’s legal representative attended, but both defendants failed to appear despite proper service of summons. The court admitted into evidence the installment sale contract, the two promissory notes, and a receipt for the partial payment. Reviewing the documents, the court found them to be authentic, lawful, and relevant to the dispute. The plaintiff initially sought full payment of CNY 80,000 plus interest but later amended the claim to CNY 78,850 plus interest calculated according to the agreed rates.
The court held that the sale contract and promissory notes were legally binding. The parties had the legal capacity to contract, and the terms were genuine and lawful. Mr. Wang, as the primary buyer, received the truck but failed to pay the balance on time, constituting a breach of contract. Mr. Zhang, having voluntarily guaranteed the debt, was obligated to assume joint and several liability. The court noted that the plaintiff’s amendment of the claim did not harm the defendants’ rights and therefore approved it. Since the defendants did not appear, the court treated their absence as a waiver of the right to present a defense.
Legally, the court applied the Contract Law of the People’s Republic of China, which requires buyers to pay the agreed price at the agreed time. The court also applied the Guarantee Law, under which a guarantor who does not specify the guarantee method is deemed to provide joint and several liability. Because the guarantee clause in the promissory notes stated that the guarantor would remain liable until the debt and interest were fully repaid, the guarantee period was considered indefinite, extending two years after the principal debt’s due date under the relevant judicial interpretation. The interest calculation was straightforward: 15‰ per month from March 25, 2011, to June 25, 2011, and 20‰ per month from June 26, 2011, onward until full payment.
The court ordered Mr. Wang to pay the outstanding principal of CNY 78,850 plus interest as specified within ten days of the judgment becoming effective. Mr. Zhang was ordered to bear joint and several liability for the full amount. If payment was delayed, the defendants would owe double the overdue interest under the Civil Procedure Law. The court also ordered the defendants to share the reduced court costs of CNY 1,250. This case illustrates how installment sale disputes involving vehicles and personal guarantees are resolved under Chinese contract and guarantee laws. Buyers and guarantors should be aware that default can lead to accelerated interest and joint liability.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.