Court Orders Repayment of CNY 80,000 Loan Plus Interest and Legal Fees
A court in Eastern China City has ruled in favor of a postal savings bank branch in a financial loan dispute, ordering four defendants to repay an outstanding loan of CNY 80,000 along with interest, penalties, and legal fees. The case involved two borrowers and two guarantors who failed to meet their contractual obligations after making only partial interest payments.
The plaintiff, a branch of China Postal Savings Bank in Eastern China City, entered into a small joint guarantee loan contract with Mr. Jin and Ms. Ye on January 30, 2011. The contract provided a loan of CNY 80,000 with a 12-month term and an annual interest rate of 13.5 percent. Repayment was structured as a phased equal principal and interest method. Mr. Jin Yi and Ms. Chen acted as joint and several guarantors for the debt. The borrowers paid interest only through June 30, 2011, and then defaulted on both the principal and all subsequent interest. The guarantors also failed to fulfill their guarantee obligations.
During the court hearing, the plaintiff presented eight pieces of evidence, including the small merchant joint loan application form, the joint guarantee loan contract, a loan receipt and disbursement slip, a current account detail, a loan settlement record, the marriage certificate of the borrowers, and the entrustment contract along with provincial attorney fee standards. The court noted that the defendants were properly summoned by public notice but did not appear in court without justification. The court treated this as a waiver of their rights to cross-examine evidence and to present a defense.
The court found that the loan contract and the joint guarantee agreement were genuine expressions of the parties’ intent and legally valid. It confirmed that Mr. Jin and Ms. Ye still owed the full principal of CNY 80,000 plus interest from July 1, 2011 onward. The evidence clearly demonstrated their default. The court further held that Mr. Jin Yi and Ms. Chen, as joint guarantors, bore legal responsibility for the debt. The plaintiff’s claims were deemed lawful and well-supported.
Under the Contract Law of the People’s Republic of China, Articles 205, 206, and 207, borrowers must repay principal and interest on time, and default triggers additional penalty interest. The Guarantee Law, Article 18, establishes joint and several liability for guarantors. The court applied these provisions to order Mr. Jin and Ms. Ye to repay the full loan amount plus interest and penalty interest calculated from July 1, 2011 until actual repayment, in accordance with the contract terms. Additionally, they were ordered to pay the bank’s lawyer fee of CNY 6,500. Mr. Jin Yi and Ms. Chen were held jointly and severally liable for the entire debt.
The court emphasized that all payments must be made within three days of the judgment taking effect. If the defendants delay payment, they must pay double the interest on the overdue amount as penalty. The judgment also required the borrowers to bear the litigation cost of CNY 2,018. This case underscores the enforceability of loan contracts and guarantee agreements under Chinese law. Borrowers and guarantors should be aware that non-payment and failure to appear in court can lead to default judgments with additional financial consequences.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.