Court Orders Repayment of CNY 100,000 Loan with Interest
A civil dispute over an unpaid personal loan has been resolved by a court in Eastern China City, with the defendant ordered to repay the principal of CNY 100,000 plus interest at a monthly rate of 20 per thousand. The case arose when the lender sought judicial intervention after the borrower failed to return the money within the agreed three-month period. The court ruled in favor of the plaintiff, rejecting the defendant’s claim that an outstanding debt from a separate furniture purchase should offset the loan.
The plaintiff, Mr. Chen, initiated the lawsuit in February 2012, alleging that the defendant, Mr. Wang, borrowed CNY 100,000 on September 20, 2011, for working capital at his factory. The parties signed a promissory note stipulating a three-month repayment term and interest calculated at a monthly rate of 20 per thousand. After the loan matured, Mr. Wang made no payments toward either the principal or the accrued interest, prompting Mr. Chen to file a claim demanding full repayment plus interest from the loan date until actual settlement.
At the hearing held in March 2012, Mr. Chen’s legal representative presented the original promissory note as evidence of the loan agreement. Mr. Wang acknowledged borrowing the money but argued that an oral offset arrangement existed. He claimed that Mr. Chen had ordered custom furniture from his factory worth CNY 92,700, had already paid CNY 20,000, and still owed CNY 72,700. According to Mr. Wang, the parties verbally agreed to offset that furniture debt against the loan, leaving a remaining balance of only CNY 27,300, which he offered to pay immediately. However, Mr. Wang provided no documentary evidence to support this counterclaim.
The court examined the promissory note and found it met the standards of authenticity, legality, and relevance. Since Mr. Wang raised no objections to the document, the court accepted it as full proof of the loan. Regarding the alleged offset, the court noted that Mr. Wang failed to produce any evidence showing that Mr. Chen had confirmed or acknowledged a specific, matured right of setoff. The court therefore declined to treat the furniture transaction as part of the same dispute, stating that the parties could raise their contract claims in a separate proceeding.
The court held that the loan agreement represented the genuine intention of both parties, was supported by clear and sufficient evidence, and was legally valid. Mr. Wang’s failure to repay on time constituted a breach of contract, triggering civil liability. The monthly interest rate of 20 per thousand fell within the legally permissible range for private lending, so the court upheld the plaintiff’s request for interest from the loan date onward. The judgment ordered Mr. Wang to repay the full CNY 100,000 principal plus interest calculated from September 20, 2011, until the date of actual payment, with a statutory penalty for any delayed performance.
This case illustrates how courts in China handle disputes where a borrower attempts to set off unrelated debts without clear proof of mutual consent. The ruling reinforces the principle that a promissory note creates a presumptive obligation, and any offset must be supported by documented agreement or a separate, undisputed debt. For lenders, the outcome underscores the importance of obtaining a clear written loan contract and retaining it as primary evidence. For borrowers, it highlights the risk of relying on oral arrangements that cannot be verified in court.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.