Loan Dispute Over 15,000 Yuan: Court Upholds Oral Interest Agreement Over Typographical Errors in Written Contract

Loan Dispute Over 15,000 Yuan: Court Upholds Oral Interest Agreement Over Typographical Errors in Written Contract

Case Overview
A civil court in Eastern China ruled in favor of a lender seeking repayment of two loans totaling 15,000 yuan, plus interest at a monthly rate of 1.5 percent per yuan. The borrower argued that interest should be calculated based on a lower rate written in the loan receipts due to alleged typographical errors. The court found that the borrower had admitted to the higher oral interest rate in court, and witness testimony confirmed the actual agreement, rejecting the borrower’s claim.

Case Background and Facts
The plaintiff, Mr. Lin, and the defendant, Mr. Yi, are both farmers residing in Eastern China. On April 20, 2005, Mr. Yi borrowed 10,000 yuan from Mr. Lin through an intermediary named Mr. Niu. The parties agreed orally that the loan would have a 12-month term with interest at 1.5 percent per yuan per month. Mr. Yi issued a handwritten receipt stating the principal amount but containing a typographical error indicating a monthly interest rate of 0.15 percent instead of 1.5 percent. On December 19, 2005, Mr. Yi borrowed an additional 5,000 yuan from Mr. Lin under the same oral interest terms, but the second receipt contained a typographical error showing 0.015 percent. Mr. Yi failed to repay either loan despite repeated demands from Mr. Lin.

Court Proceedings and Evidence
Mr. Lin initiated legal proceedings, requesting the court to order Mr. Yi to repay both principal amounts of 10,000 yuan and 5,000 yuan, plus interest at the agreed monthly rate of 1.5 percent from the dates of each loan until full repayment. Mr. Yi admitted in court that he had borrowed the money and had not repaid any amount. However, he argued that Mr. Lin had taken sand and gravel from a business operated by Mr. Yi, and that the value of those materials should be deducted from the debt. During the trial, Mr. Yi could not provide evidence of the quantity or value of the sand and gravel he claimed Mr. Lin had taken. The intermediary, Mr. Niu, testified that the interest rate for both loans was indeed 1.5 percent per month, and that he had personally settled similar loans with Mr. Lin at that same rate. Mr. Lin explained that the lower interest rates written in the receipts were typographical errors.

Court Findings and Judgment
The court found that the two loan agreements between Mr. Lin and Mr. Yi were valid and legally binding. The court determined that the actual interest rate agreed upon by both parties was 1.5 percent per month, not the rates mistakenly written in the receipts. This finding was supported by Mr. Yi’s own admission during his initial court答辩 that the interest was 1.5 percent, as well as by the testimony of the intermediary Mr. Niu. The court rejected Mr. Yi’s argument that the interest should be calculated based on the lower written rates, stating that such an interpretation did not reflect the true agreement between the parties. Regarding Mr. Yi’s claim for deduction of sand and gravel costs, the court ruled that because Mr. Yi could not provide specific evidence of the quantity or value of materials taken, this issue could not be resolved in the current case and could be pursued in a separate lawsuit. The court ordered Mr. Yi to repay the 10,000 yuan principal with interest at 1.5 percent per month from April 20, 2005, and the 5,000 yuan principal with interest at the same rate from December 19, 2005, until full repayment. Mr. Yi was also ordered to pay court costs of 538 yuan.

Key Legal Principles
The court applied principles from the General Principles of the Civil Law of the People’s Republic of China, specifically Article 90, which recognizes the validity of lawful loan relationships, and Article 106, paragraph 1, which establishes liability for breach of contract. The case illustrates that when a written agreement contains a clear typographical error, courts may rely on oral testimony and party admissions to determine the true intent of the parties. The court also held that a borrower cannot offset an unrelated debt claim without providing specific evidence of the amount owed.

Practical Insights
This case highlights the importance of carefully reviewing loan documents for typographical errors before signing. Borrowers and lenders should ensure that written terms accurately reflect oral agreements. When a written document contains an obvious mistake, courts may look to witness testimony and party admissions to ascertain the actual agreement. Additionally, parties seeking to offset debts must present clear evidence of the amount and value of the claimed offset, or the court may require them to pursue that claim in a separate proceeding.

Legal References
General Principles of the Civil Law of the People’s Republic of China, Article 90: Lawful loan relationships are protected by law.
General Principles of the Civil Law of the People’s Republic of China, Article 106, Paragraph 1: Citizens and legal persons who breach a contract or fail to perform other obligations shall bear civil liability.

Disclaimer
This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for specific legal matters.