Court Orders Payment of CNY 92,926.10 in Construction Dispute
The court has ruled on a long-running construction payment dispute between a contractor and a technical school in Central China City. The plaintiff, Mr. Zhao, claimed that the Central China City Second Technical School failed to pay the remaining balance of a student dormitory construction contract signed in 1995. The total contract sum was CNY 300,000, but the school only issued an IOU for the outstanding amount of CNY 92,926.10 in 2005. Mr. Zhao also sought interest on the unpaid sum and asked the court to hold two additional defendants – a local vocational high school and the county government – jointly liable for the debt.
The case began in 1995 when Mr. Zhao entered into a construction contract with the school, then known as Central China County Technical School. According to Mr. Zhao, the school’s then principal, Mr. Li, assured him that government funding would arrive and encouraged him to advance the funds for the project, promising payment as work progressed. However, after the dormitory was completed, the school did not pay. Over the following years, Mr. Zhao financed wages through personal loans and bank borrowing at high interest rates. The school issued a formal IOU on August 11, 2005, acknowledging the debt of CNY 92,926.10 and affixing its financial seal. In March 2011, Mr. Li also provided a written statement confirming that any outstanding amount should carry interest at bank rates.
During the court hearing, the plaintiff presented the contract, the IOU, and Mr. Li’s written statement. The court also examined Mr. Li’s oral testimony, in which he explained that the plaintiff had borrowed from rural credit cooperatives and private individuals because banks refused to lend. Mr. Li stated that the interest rate should be based on the rural credit cooperative rate, as it was the most reasonable option to avoid loss to the contractor. The three defendants – the technical school, the vocational high school, and the county government – did not appear in court despite proper summons, and they submitted no defense or evidence.
The court found that the Central China City Second Technical School indeed owed Mr. Zhao CNY 92,926.10, as proven by the IOU. Regarding interest, the court accepted Mr. Li’s testimony as evidence of an implied agreement between the parties on interest calculation. The court determined that interest should be calculated at the loan interest rate of the rural credit cooperative, running from August 11, 2005, until full payment. However, the court rejected Mr. Zhao’s claim against the vocational high school and the county government, noting that no evidence showed any legal relationship of joint liability for the debt between those entities and the technical school.
On the legal analysis, the court emphasized the principle that each party bears the burden of proving its claims. Mr. Zhao sufficiently proved the existence of the debt and the agreement on interest through documentary evidence and witness testimony. The defendants’ failure to appear did not shift the burden; rather, it constituted a waiver of their right to defend. The court also clarified that joint liability must be established by clear legal connection or express agreement, which was absent here. The interest rate adopted was based on the factual context of the plaintiff’s borrowing sources, not on a specific contractual clause, but the court viewed Mr. Li’s statement as a binding acknowledgment.
In its final judgment, the court ordered the Central China City Second Technical School to pay Mr. Zhao CNY 92,926.10 plus interest at the rural credit cooperative loan rate from August 11, 2005, until the debt is cleared. All other claims against the vocational high school and the county government were dismissed. The school was also ordered to bear the litigation costs of CNY 2,120. The case serves as a reminder that clear documentation of debt and interest agreements is critical, and that absent express joint liability, only the contracting party may be held responsible.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.