Court Orders Repayment of 100,000 CNY Loan with Interest
A credit cooperative in Eastern China City initiated legal proceedings against a borrower and five guarantors after a loan of 100,000 CNY went unpaid. The case centered on a financial contract signed in 2008, where the borrower failed to repay the principal and accrued interest despite multiple demands. The court ruled in favor of the lender, ordering the borrower to repay the full amount plus interest, and holding the guarantors jointly liable.
In August 2007, the Eastern China City Credit Cooperative entered into a loan contract with Mr. Wang, the borrower. The contract stipulated a maximum loan amount of 100,000 CNY, with specific terms regarding the loan amount, purpose, term, interest rate, and repayment method to be recorded in the loan certificate. On the same day, the cooperative signed a maximum-amount guarantee contract with five individuals: Mr. Li, Mr. Zhao, Mr. Qian, Mr. Sun, and Mr. Zhou. They agreed to provide joint and several liability for any debts incurred by Mr. Wang between August 8, 2007, and August 8, 2009, up to a limit of 100,000 CNY, with the guarantee period ending two years after the maturity of the principal debt. Subsequently, on August 4, 2008, Mr. Wang drew the full loan amount of 100,000 CNY from the cooperative. The loan certificate set the repayment date at August 4, 2009, with a monthly interest rate of 11.8275 per thousand. Mr. Wang paid interest only until January 22, 2009, and then stopped.
At the court hearing, the plaintiff credit cooperative presented the loan contract, the guarantee contract, the loan certificate, and other documentary evidence. The borrower, Mr. Wang, appeared in court and admitted the loan was genuine but stated he lacked funds to repay. The five guarantors did not appear despite being properly summoned by the court, and they filed no defense. The court admitted all documentary evidence after examination. The facts were established based on the trial records and the plaintiff’s submissions.
The court found that both the loan contract between the cooperative and Mr. Wang and the guarantee contract between the cooperative and the five guarantors were legally valid and binding. All parties were required to strictly perform their obligations according to the agreements. The evidence clearly showed that Mr. Wang had borrowed 100,000 CNY and had defaulted after January 22, 2009. The guarantors had provided a maximum-amount joint and several guarantee, meaning they were liable for the debt up to 100,000 CNY. The court held that the plaintiff’s claims were justified and entitled to full support under the applicable law.
The legal basis for the decision rested on several key provisions. Under the General Principles of the Civil Law, debts must be repaid in full. The Contract Law requires a party that fails to perform its obligations to bear liability for breach. The Guarantee Law provides that a guarantor who offers joint and several liability is jointly responsible with the debtor, and after fulfilling the guarantee, the guarantor has the right to seek recourse from the debtor. The court also applied the contractual term allowing a 50 percent surcharge on the overdue interest rate for the period after the maturity date. Interest was calculated from January 23, 2009, to August 4, 2009, at the contractual monthly rate of 11.8275 per thousand, and from August 5, 2009, onward at 150 percent of that rate, until full payment.
This case illustrates the enforcement of standard financial loan and guarantee agreements in Eastern China City. The court ordered Mr. Wang to repay the principal of 100,000 CNY plus interest within ten days of the judgment taking effect. The five guarantors, Mr. Li, Mr. Zhao, Mr. Qian, Mr. Sun, and Mr. Zhou, were ordered to bear joint and several liability for the same debt up to the 100,000 CNY limit, with the right to recover from Mr. Wang after payment. The defendants also shared the litigation costs of 2,700 CNY. The judgment serves as a reminder that borrowers and guarantors must honor their contractual commitments, and that courts will enforce interest penalties as agreed.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.