Battery Company Wins CNY 50,132 in Debt Dispute

A court in Eastern China City has ruled in favor of a battery manufacturing company in a dispute over unpaid commercial debt. The plaintiff, Eastern China Battery Co., Ltd., sought payment of a remaining balance of 50,132 CNY plus interest from a former business partner. The defendant, Mr. Chen, had converted a prior trade debt into a formal loan but failed to repay it in full. The case was heard after the defendant failed to appear, leading to a default judgment.

The parties had an ongoing business relationship involving the sale of batteries. In March 2009, due to the defendant’s cash flow difficulties, they agreed to convert an outstanding trade debt of 75,132 CNY into a personal loan. Mr. Chen signed a promissory note for that amount, with interest at 1% per month, repayable by December 31, 2009. The defendant made two partial payments: 20,000 CNY in November 2010 and 5,000 CNY in December 2010, leaving a principal balance of 50,132 CNY. Despite repeated demands, no further payments were made. The plaintiff then filed a lawsuit to recover the balance and accrued interest.

The plaintiff submitted documentary evidence, including the original 2009 distribution agreement, a supplemental agreement, and the signed promissory note. These documents showed the conversion of the trade debt into a loan with clear interest terms. The court held a public hearing in March 2012. The defendant was served with the complaint and summons by public notice but did not appear in court or submit any defense. The plaintiff amended its claim during the hearing to seek the principal amount of 50,132 CNY plus interest from the date of the loan to the date of actual payment.

The court found that the underlying sales contract between the parties was legally valid and enforceable. It held that the conversion of the trade debt into a loan with an agreed interest rate was a legitimate modification of the parties’ obligations. Because Mr. Chen failed to pay the remaining balance, he was in breach of contract. The court ordered the defendant to pay the principal of 50,132 CNY together with interest calculated at 1% per month from March 30, 2009, up to December 6, 2010, amounting to 15,089.08 CNY, and thereafter at the same rate until full payment is made. The court also imposed a penalty for delayed payment at double the statutory rate under civil procedure law.

The court’s reasoning relied on provisions of the Contract Law of the People’s Republic of China, specifically articles governing sales contracts and the buyer’s obligation to pay. The conversion of a pre-existing debt into a loan with an interest clause was treated as a valid agreement. The interest rate of 1% per month (12% annually) was