CNY 50000 Loan Dispute – Court Rules on Guarantee
A resident of Eastern China City filed a lawsuit against a borrower and a guarantor over an unpaid loan of CNY 50000. The court ruled in favor of the lender, ordering the borrower to repay the full amount and the guarantor to assume joint liability. The borrower’s defense of usurious interest and partial payment was rejected due to lack of evidence.
The plaintiff, Mr. Li, claimed that on September 9, 2011, he lent CNY 50000 to Mr. Wang, who worked as a government official. The loan was to be repaid by December 18, 2011, and Mr. Zhao acted as a guarantor under a joint liability guarantee. After the deadline passed, Mr. Wang did not repay, and Mr. Zhao did not fulfill his guarantee obligation. Mr. Li sought repayment of the principal and enforcement of the guarantee. Mr. Wang, in his written defense, argued that he did not know Mr. Li, that an acquaintance introduced them, and that the actual loan was only CNY 45000 after a deduction of CNY 5000 as interest for the first ten days. He claimed the agreed interest rate of 10 percent per ten days exceeded the legal limit and that he had already paid CNY 15000 in interest. He also stated that Mr. Li forced him to issue an additional IOU for CNY 10000 later. Mr. Zhao did not submit any defense.
At the hearing, Mr. Li presented a single IOU as evidence. Mr. Wang and Mr. Zhao were properly summoned but did not appear in court. The court treated their absence as a waiver of the right to present evidence and cross-examine. The court reviewed the IOU and found it to be authentic, lawful, and relevant to the case. Based on this evidence and Mr. Li’s testimony, the court established that on September 9, 2011, Mr. Wang borrowed CNY 50000 from Mr. Li for business purposes, signed an IOU promising repayment by December 18, 2011, and that Mr. Zhao provided a joint liability guarantee.
The court held that the loan contract and the guarantee contract were legally valid and enforceable. Mr. Li had fulfilled his obligation to advance the funds, and Mr. Wang was required to repay the loan on time. Because Mr. Wang defaulted, he was in breach of contract. The court therefore ordered Mr. Wang to repay the full CNY 50000. The court also found that Mr. Zhao, as a joint guarantor, was liable for the same amount. Mr. Wang’s defense that the actual loan was only CNY 45000 and that the interest rate was usurious was not supported by any evidence. The court refused to accept those claims.
Under the Contract Law, a borrower must repay the principal according to the agreed term. The Guarantee Law provides that a joint guarantor is liable to the creditor when the debtor fails to perform. The absence of the defendants did not prevent the court from proceeding with a default judgment. The court emphasized that a party making factual assertions bears the burden of proof, and here the borrower offered no documentary or testimonial evidence to support his allegations of excessive interest or partial repayment. Consequently, the court upheld the plaintiff’s claims.
This case illustrates the importance of proper documentation in private lending and the enforceability of written guarantees. Borrowers who allege unfair terms must present credible evidence. Guarantors should understand that their liability can be enforced even if the borrower fails to appear. The judgment reinforces the principle that courts will enforce clear loan agreements and joint guarantees absent proof of illegality or fraud. Parties involved in such transactions should retain written records and ensure compliance with legal interest rate limits to avoid disputes.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.