Agricultural Bank of China Wins 30,000 Yuan Loan Dispute Against Borrower and Guarantor

Agricultural Bank of China Wins 30,000 Yuan Loan Dispute Against Borrower and Guarantor

CASE OVERVIEW

This case involves a loan dispute in which the Agricultural Bank of China sought repayment of a 30,000 yuan loan plus accrued interest from a borrower and his guarantor. The court ruled in favor of the bank, ordering the borrower to repay the principal and interest, and holding the guarantor jointly liable.

CASE BACKGROUND AND FACTS

On June 4, 2009, the borrower, Mr. Tian, entered into a loan agreement with the Agricultural Bank of China in Eastern China. The loan amount was 30,000 yuan, with a fixed annual interest rate of 6.903% and a default rate of 12.213%. The loan was designated for agricultural purposes, specifically livestock farming, and had a term of one year, maturing on June 3, 2010.

Mr. Shi acted as the guarantor, signing a guarantee agreement that provided joint and several liability for the loan. The contract was structured as a revolving credit facility for agricultural borrowers, allowing Mr. Tian to draw and repay funds using his bank card as the settlement tool.

The bank disbursed the full 30,000 yuan to Mr. Tian’s designated account on June 4, 2009. Mr. Tian confirmed receipt. Interest payments were deducted quarterly from the account. However, after March 20, 2010, Mr. Tian stopped depositing funds to cover the interest. At the time of loan maturity, unpaid interest from March 21 to June 3, 2010, amounted to 431.44 yuan.

Despite repeated demands by the bank, both Mr. Tian and Mr. Shi failed to repay the principal or the outstanding interest. The bank initiated legal proceedings.

COURT PROCEEDINGS AND EVIDENCE

The case was heard by the court in Eastern China. The bank submitted the original loan contract, guarantee agreement, account records, and interest calculation sheets as evidence. Both defendants were properly served with court notices but failed to appear at the hearing and did not submit any defense.

The court reviewed the contract, which was titled “Agriculture-Related Personal Self-Service Revolving Maximum Guaranteed Loan Contract.” The key terms included a maximum loan amount of 30,000 yuan, a revolving period from June 4, 2009, to June 3, 2010, and a fixed interest rate. The guarantor, Mr. Shi, provided an irrevocable joint and several guarantee for the full loan amount, with a guarantee period extending two years from the maturity of each draw.

The bank’s internal records confirmed that the loan was disbursed as agreed and that interest was paid through March 20, 2010. After that date, no further payments were made. The court found the evidence clear and undisputed.

COURT FINDINGS AND JUDGMENT

The court held that the loan contract was legally valid and represented the true intentions of all parties. It did not violate any mandatory laws or regulations. The court found that Mr. Tian breached the contract by failing to repay the principal and interest as agreed. Mr. Shi, as the guarantor, was obligated to assume joint and several liability.

The court ordered Mr. Tian to repay the principal of 30,000 yuan and the overdue interest of 431.44 yuan for the period from March 21 to June 3, 2010. Additionally, Mr. Tian was required to pay interest on the principal at the default rate of 10.3545% per annum from June 4, 2010, until the date of full payment.

Mr. Shi was ordered to bear joint and several liability for all amounts due. The court also ruled that if payment was delayed, the defendants must pay double the interest on the overdue amount as stipulated by civil procedure law.

Court costs of 550 yuan, reduced to 275 yuan, were assessed jointly against both defendants.

KEY LEGAL PRINCIPLES

The court applied several key legal principles from Chinese contract and guarantee law. Under Article 60 of the Contract Law, parties must fully perform their contractual obligations. Article 107 imposes liability for breach of contract. Article 114 permits agreed-upon interest rates and penalties for default.

Under the Guarantee Law, Article 18 provides that a guarantor with joint and several liability may be sued directly by the creditor without first pursuing the borrower. Article 21 requires the guarantor to cover the full scope of the debt, including principal, interest, and costs.

PRACTICAL INSIGHTS

This case illustrates the importance of having a written contract with clear terms for repayment and default. Banks and lenders should maintain detailed records of disbursements and interest payments. Borrowers should understand that failure to repay leads to legal action and additional costs. Guarantors must be aware that their liability is immediate and can be enforced without first exhausting remedies against the primary borrower.

LEGAL REFERENCES

Contract Law of the People’s Republic of China: Article 60, Paragraph 1; Article 107; Article 114, Paragraph 1.
Guarantee Law of the People’s Republic of China: Article 18, Paragraph 1; Article 21, Paragraph 1.

DISCLAIMER

This article is for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction. Readers should consult a qualified legal professional for advice on specific legal matters.