Guarantor Liable for CNY 200,000 Loan Default
In this case, a guarantor was ordered to repay a loan of 200,000 CNY plus interest after the primary borrower failed to pay. The plaintiff, Mr. Li, filed a lawsuit against the defendant, Mr. Shen, who had signed as a连带责任保证人 (joint and several liability guarantor) on a loan agreement. The dispute arose when the borrower, Mr. Fu, did not repay the loan by the due date, and Mr. Shen refused to honor the guarantee. The case was heard in a local court and decided in favor of the plaintiff.
The facts showed that on August 20, 2011, Mr. Fu borrowed 200,000 CNY from Mr. Li, with interest calculated at four times the benchmark bank loan rate for the same period. The loan was due on September 20, 2011. Mr. Shen signed the same promissory note as a guarantor, agreeing to assume joint and several liability for repayment. The guarantee period was set for two years after the loan maturity. After the due date, Mr. Li made multiple demands for payment, but neither Mr. Fu nor Mr. Shen repaid. Mr. Li then sued Mr. Shen for the principal and interest, seeking 23,400 CNY in accrued interest as of February 20, 2012, plus ongoing interest at the contractual rate.
At the hearing, Mr. Shen argued that the actual lender was not Mr. Li but a person named Mr. Zhao. He claimed that Mr. Fu had already repaid the entire loan principal and interest. Mr. Shen presented a receipt dated October 14, 2011, signed by Mr. Zhao, which he said proved that Mr. Fu had repaid 100,000 CNY to Mr. Zhao. Mr. Shen also stated that he had made partial repayments himself, totaling 174,000 CNY between October and November 2011, and that the remaining balance was paid by Mr. Fu and his wife. Mr. Shen asked the court to dismiss the case and to add Mr. Fu as a necessary party.
The court examined the evidence. Mr. Li submitted the original promissory note, which bore Mr. Shen’s signature and fingerprint. Mr. Shen did not dispute the authenticity of his signature but repeated his claim that the loan came from Mr. Zhao. However, he provided no proof to support that assertion. As for Mr. Shen’s receipt from Mr. Zhao, the court noted that Mr. Zhao did not appear as a witness, and the receipt’s content did not clearly connect to the loan at issue. Mr. Li also disputed the receipt’s relevance. The court therefore accepted Mr. Li’s evidence as valid proof of the loan and guarantee, and it rejected Mr. Shen’s evidence for lack of credibility and connection to the case.
The court found that the loan agreement between Mr. Li and Mr. Fu was a bona fide expression of the parties’ intent and was legally valid. Mr. Shen’s guarantee was also valid under the relevant law. Since the borrower failed to repay, the plaintiff had the right to demand performance from the guarantor directly. The court held that Mr. Shen was obligated to repay the full principal of 200,000 CNY plus interest calculated from August 20, 2011, at four times the central bank’s benchmark lending rate, until the date of actual payment. The court ordered Mr. Shen to make payment within three days of the judgment, and warned that any delay would result in double interest under the applicable procedural law.
This judgment reinforces the principle that a guarantor who signs a promissory note as a joint and several surety cannot escape liability by claiming the loan came from a different lender or that the borrower already paid. The court emphasized that the guarantor’s obligation is independent of the borrower’s performance, and the plaintiff may choose to sue only the guarantor. For legal practitioners, this case highlights the importance of clear documentation and the limited evidentiary value of third-party receipts without witness testimony or direct connection to the debt.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.