Court Orders Repayment of CNY 59,000 in Loan Dispute
The court resolved a private lending dispute between Ms. Li and two defendants, Mr. Wang and Mr. Guo. Ms. Li claimed that she had repaid a debt on behalf of Mr. Wang in 1999 under a written agreement, and that Mr. Wang had only partially repaid the principal and interest. She sought repayment of the remaining balance plus accumulated interest, totaling CNY 59,000. The defendants raised defenses based on statute of limitations and expiry of the guarantee period.
In 1999, with Mr. Guo acting as guarantor, Ms. Li repaid a loan that Mr. Wang owed to a rural cooperative fund in Eastern China City. On 18 December 1999, Mr. Wang signed a repayment agreement acknowledging a debt of CNY 86,538, with full repayment due by 1 January 2001, and monthly interest of 1.5 per cent if late. Mr. Guo signed as guarantor, and a witness from the cooperative also signed. Mr. Wang later paid CNY 10,384 in interest for the period before 2000, and returned CNY 70,000 of the principal in installments before 2011. The final payment of CNY 10,000 occurred on 13 January 2011. Ms. Li made repeated demands for the remaining CNY 16,538 in principal and the overdue interest, but received no further payments.
At trial, Mr. Wang argued that the entire principal had been repaid before 2001 and that the claim was time-barred. Mr. Guo argued that the guarantee had expired under the Guarantee Law because the creditor had not made a demand within the statutory period. The court examined the repayment agreement, receipts, party statements, and witness testimony. Two witnesses, including the cooperative representative, confirmed that Mr. Wang made a payment of CNY 10,000 as late as January 2011, contradicting his claim that all principal was paid early. Mr. Wang could not produce receipts for the alleged earlier full repayment.
The court held that the lending relationship was lawful and valid. It found that Mr. Wang had failed to prove that the CNY 70,000 principal was repaid before 2001, as required by the burden of proof. The evidence showed that only CNY 10,384 in pre-2000 interest and CNY 70,000 of principal had been paid, leaving CNY 16,538 outstanding. The court also accepted Ms. Li’s calculation of interest on the unpaid principal from 1 January 2001 to 17 February 2011 at the agreed monthly rate of 1.5 per cent, resulting in CNY 32,745. Additionally, the court ordered interest of CNY 10,000 on the CNY 10,000 payment made on 13 January 2011, calculated from the same start date to that payment date, because Ms. Li’s claim for CNY 10,000 was less than the interest actually accrued under the agreement.
Regarding the guarantor, the court applied the Guarantee Law. Since the repayment agreement specified a due date of 1 January 2001, and the guarantee period was not explicitly defined, the law implies a six-month period from the due date for the creditor to demand performance from the guarantor. Ms. Li did not make any demand on Mr. Guo within that six-month window, nor within two years if the period was treated as unclear. Therefore, Mr. Guo’s guarantee liability was discharged. The court also noted that the guarantee period cannot be extended by interruption or suspension. The statute of limitations defense raised by Mr. Wang was not accepted because the partial payment in 2011 demonstrated ongoing acknowledgment of the debt.
The court entered judgment requiring Mr. Wang to pay Ms. Li CNY 16,538 in principal and CNY 32,745 in interest, plus CNY 10,000 in interest on the late principal payment, for a total of approximately CNY 59,283. All other claims from both sides were dismissed. The court also ordered Mr. Wang to bear half of the litigation costs. This case illustrates that courts will enforce clear repayment agreements and interest terms, but that guarantors may be released if the creditor fails to act promptly within the statutory guarantee period.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.