Eastern China Credit Union Wins CNY 300,000 Loan Judgment
The Eastern China City Rural Credit Cooperative Daxi Credit Union obtained a court judgment against a borrower and two guarantors for a defaulted loan of CNY 300,000. The court upheld the validity of the guarantee contracts and ordered all three defendants to repay the principal plus accrued interest. The case highlights the enforceability of standard financial contracts and the liability of guarantors when a borrower fails to meet payment obligations.
The dispute arose from a loan agreement signed on July 9, 2009. The plaintiff, a credit union based in Eastern China City, lent CNY 300,000 to Mr. Li, with a repayment deadline of July 8, 2010. Ms. Wang and Mr. Zhang each signed separate guarantee agreements, providing joint and several liability for the loan principal and interest. When Mr. Li failed to make payments after the due date, the plaintiff filed a lawsuit seeking repayment of the principal, interest calculated to November 23, 2011 totaling CNY 112,547.16, and continued interest until full payment. The plaintiff also requested that both guarantors be held jointly liable.
During the hearing, the plaintiff presented three key documents: the loan guarantee contract, the loan receipt, an interest statement, and the separate guarantee contract signed by Mr. Zhang. All documents were verified against the originals. The defendants, although properly notified by the court, did not appear at the hearing or submit any defense. The court noted that their absence amounted to a waiver of the right to cross-examine the evidence. The plaintiff’s evidence was accepted as credible, and the court adopted the facts as alleged by the plaintiff.
The court found the loan contract and the guarantee agreements to be legally valid and binding. Since the plaintiff had fulfilled its obligation by disbursing the loan, Mr. Li was required to repay principal and interest on time. His failure to do so constituted a breach of contract. The court also held that Ms. Wang and Mr. Zhang, as guarantors, were jointly and severally liable for the outstanding debt. The court ruled that the plaintiff’s claims were both proper and lawful, and therefore granted the requested relief.
Under the Contract Law of the People’s Republic of China, a borrower must repay principal and interest as stipulated, and default triggers liability for continued interest. The Guarantee Law provides that a guarantor who undertakes joint and several liability may be sued directly without first exhausting remedies against the borrower. The court also noted that after performing the guarantee, Ms. Wang and Mr. Zhang have the right to seek reimbursement from Mr. Li for the amounts paid. The judgment allows the plaintiff to recover the full loan amount, interest calculated from October 21, 2009 until the date of actual payment, and doubled interest for any delayed payment under the Civil Procedure Law.
This case illustrates that financial institutions in Eastern China City can rely on standard guarantee contracts to recover defaulted loans. Borrowers and guarantors should be aware that non-appearance in court does not prevent a judgment. Guarantors assume significant financial risk, and the court will enforce their obligations strictly. The plaintiff may enforce the judgment within two years from the final payment deadline. The decision reinforces the importance of clear contractual terms and the legal consequences of default.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.