Court Orders Repayment of CNY 100,000 Loan Plus Interest in Loan Dispute
A court in Eastern China City has ruled in favor of a plaintiff seeking repayment of a CNY 100,000 loan, ordering the defendant to return the principal and pay interest calculated from the date the plaintiff formally demanded repayment. The decision partially granted the plaintiff’s claims, rejecting the request for interest starting from an earlier date.
The case involved Mr. Zheng, the plaintiff, who alleged that on May 10, 2011, the defendant Mr. Chen borrowed CNY 100,000 for working capital at a construction site. According to the plaintiff, the parties did not set a fixed repayment date, but orally agreed on a monthly interest rate of 2%. The defendant issued a handwritten promissory note. After the plaintiff repeatedly sought repayment, the defendant paid CNY 4,000 in interest but failed to return the principal. Mr. Zheng then filed a lawsuit, initially demanding repayment of the principal plus interest at 2% per month from May 10, 2011. During the hearing, he adjusted the interest start date to July 11, 2011.
At the court hearing, the plaintiff presented three pieces of evidence: his own identity card, a户籍 certificate for the defendant, and the original promissory note. The defendant did not appear in court despite proper summons and did not submit any defense or evidence. The court examined the documents and deemed them lawful, objective, and relevant to the claimed facts. Because the defendant failed to attend without a valid reason, he was considered to have waived his right to challenge the evidence. The court therefore admitted the evidence.
The court found that the loan agreement between the parties was a genuine expression of intent and did not violate any legal prohibitions, making it valid and binding. However, the promissory note did not specify an interest rate. The court held that, under the applicable law, when a loan document does not set an interest rate and the oral agreement is unclear, the loan shall be considered interest-free. The defendant’s voluntary payment of two months’ interest at 2% per month (totaling CNY 4,000) was not interfered with by the court, as it was a voluntary act. The court further ruled that the plaintiff was entitled to overdue interest at the bank loan rate, but only from the date the plaintiff first asserted his claim—January 11, 2012—not from July 11, 2011.
According to the relevant law, including the Contract Law and the Civil Procedure Law, the court reasoned that while an oral interest agreement can be binding if sufficiently proved, here the evidence did not establish a clear agreement. The court emphasized that a lender may demand repayment at any time for an indefinite-term loan, but must allow a reasonable period. Since the plaintiff’s first demand was made by filing the lawsuit on January 13, 2012, the court set January 11, 2012 (a date close to the filing) as the start of the overdue interest period. The court also noted the defendant’s absence did not prejudice the proceeding.
The court ordered the defendant to repay the principal of CNY 100,000 and to pay interest at the benchmark bank loan rate from January 11, 2012 until the date of full payment. The plaintiff’s other claims, including the request for interest from July 11, 2011, were dismissed. The defendant was also ordered to bear half of the court costs (CNY 1,290). The judgment underscores the importance of clear written loan terms, especially regarding interest, and confirms that overdue interest accrues only from the date the creditor demands repayment in the absence of a fixed deadline.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.