CNY 119,000 Private Loan: Guarantor Liable for CNY 80,000 Under Joint Guarantee
A lender in an eastern Chinese port city extended three separate cash loans totaling CNY 119,000 to a friend who later vanished. A second individual had signed on as guarantor for CNY 80,000 of the total. When neither borrower nor guarantor repaid, the lender sued in district court and won a default judgment after both defendants failed to appear. The court ordered the borrower to repay the full principal and held the guarantor jointly and severally liable for CNY 80,000 with a right of reimbursement against the primary debtor.
The three loans were disbursed on October 25, 2010 (CNY 50,000), November 5, 2010 (CNY 30,000), and January 24, 2011 (CNY 39,000), each documented by a separate handwritten promissory note. The borrower, Mr. Tu, and the guarantor, Mr. Tu (a different individual sharing the same surname), were both residents of the Beilun District. The guarantor had explicitly agreed to back only the first two loans, which together totaled CNY 80,000, and declined responsibility for the third loan of CNY 39,000.
The plaintiff filed suit in November 2011. Because both defendants could not be located for personal service, the court converted the proceeding from summary to ordinary procedure and served process by public announcement. The trial hearing was held on March 21, 2012, with only the plaintiff present. Neither defendant appeared despite proper legal notice, which the court treated as a waiver of the right to cross-examine evidence. The plaintiff submitted the three original promissory notes, which the court found genuine and admissible.
Under Chinese contract law, a valid lending relationship is protected, and a borrower must timely repay the principal. The court found the promissory notes sufficient to prove the loan obligations. Regarding the guarantee, because no specific mode of guarantee was stated, the default rule of joint and several liability applied under the Guarantee Law. This meant the lender could demand full payment of the guaranteed portion from the guarantor without first exhausting remedies against the borrower. The guarantor, after satisfying the obligation, would then have the right to seek reimbursement from the borrower for whatever amount he had paid.
The judgment ordered Mr. Tu (borrower) to repay CNY 119,000 within seven days and Mr. Tu (guarantor) to be jointly liable for CNY 80,000, comprising the CNY 50,000 loan from October 2010 and the CNY 30,000 loan from November 2010. Court costs of CNY 2,680 were charged to both defendants collectively. The case acceptance fee alone was CNY 2,680 because the dispute involved only monetary repayment without complicated factual issues. Late payment interest would accrue at double the statutory rate if the defendants failed to comply within the prescribed period.
This article is provided for informational purposes only and does not constitute legal advice. Loan guarantee structures and enforcement mechanisms differ across jurisdictions. Consult a qualified attorney for guidance on your specific situation.