CNY 35,000 Loan Dispute – Court Upholds 1.5% Monthly Interest

A court in Eastern China City has ruled in favor of a lender seeking repayment of a 35,000 CNY loan plus interest at 1.5% per month. The borrower failed to appear at trial despite proper summons. The judgment confirms the validity of the oral loan agreement supported by a written promissory note.

The dispute arose between Mr. Feng, the plaintiff, and Mr. Cheng, the defendant. On February 21, 2009, Mr. Cheng borrowed 35,000 CNY from Mr. Feng, stating the funds were needed for project working capital. The parties agreed on a monthly interest rate of 1.5% but did not set a repayment date. After repeated demands, Mr. Cheng made no repayment. Mr. Feng filed suit on February 23, 2012, seeking return of the principal and interest calculated from February 22, 2009, until full payment.

At the hearing on March 19, 2012, Mr. Feng appeared and submitted a single piece of evidence: a promissory note dated February 22, 2009. The note stated the loan amount and the interest rate. Mr. Cheng was properly served with summons but did not attend or provide any defense. The court noted that the defendant’s absence constituted a waiver of his right to challenge the plaintiff’s claims and evidence. The judge reviewed the document and found it met the requirements for valid evidence, establishing the borrowing as a fact.

The court held that the loan relationship between the parties was legally established. The promissory note clearly proved Mr. Cheng’s receipt of 35,000 CNY. The obligation to repay was immediate because the loan lacked a fixed term. The agreed interest rate of 1.5% per month was within the statutory ceiling for private lending at the time. Therefore, the court upheld the plaintiff’s request for interest at that rate from the day after the loan was made.

According to relevant law, the contract for loan of money is governed by the principle that borrowed funds must be returned. The Civil Code provisions in effect at the time required the borrower to repay upon demand when no maturity date was set. The interest rate of 1.5% per month (18% per annum) was not usurious under the judicial guidelines for private lending disputes. The court also applied procedural rules allowing a default judgment when a defendant fails to appear without justification. The evidence showed clear documentary proof, and the court exercised its discretion to grant the full claim.

This case illustrates that written loan documents are critical for enforcing repayment in private lending. The court’s decision reinforces that properly documented loans with interest rates within legal limits will be upheld even when the borrower is absent from proceedings. Borrowers who ignore court summons risk losing the chance to contest the claim. The judgment orders Mr. Cheng to pay the principal plus interest within ten days, with additional penalties for delayed payment. Parties in similar situations should maintain clear records of loans and interest agreements.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.