Court Orders Repayment of 50,000 CNY Loan with Guarantor Liability
A dispute over a personal loan of 50,000 CNY resulted in a court ruling that the borrower must repay the principal plus overdue interest, with the guarantor held jointly liable. The case, heard in a court in Eastern China City, involved claims from the lender that the borrower failed to return the money despite repeated demands. The guarantor also failed to fulfill the guarantee obligation. The court sided with the lender, ordering repayment and interest calculated from the date the lawsuit was filed.
The case background shows that on 14 August 2009, Mr. Wang borrowed 50,000 CNY from Mr. Li due to cash flow difficulties. Mr. Zhao provided a guarantee for the loan. The parties did not agree on a repayment period or any interest on the loan. Similarly, no specific guarantee period or type of guarantee was stipulated between Mr. Li and Mr. Zhao. After the loan was made, Mr. Li repeatedly asked Mr. Wang to return the money, but received no payment. Mr. Zhao also did not perform the guarantee obligation. Mr. Li then filed a lawsuit on 9 December 2011, seeking repayment of the principal, interest from the loan date at the benchmark rate, and joint liability from Mr. Zhao.
During the court hearing on 19 March 2012, Mr. Li appeared in person. Mr. Wang and Mr. Zhao were properly summoned but did not attend the hearing without valid reason. The court proceeded with the trial in their absence. Mr. Li submitted several pieces of evidence, including copies of identification documents for himself and the defendants, and a written promissory note. The promissory note, dated 14 August 2009, stated that Mr. Wang borrowed 50,000 CNY in cash from Mr. Li, and bore fingerprints of both Mr. Wang as borrower and Mr. Zhao as guarantor. Because the defendants did not appear, they waived their right to challenge the evidence. The court reviewed the evidence and found no defects or inconsistencies, so it accepted all evidence as valid.
The court found that the loan relationship between Mr. Li and Mr. Wang was clearly established and supported by credible evidence. Under relevant law, Mr. Wang, as the borrower, had the obligation to repay the principal. Since no repayment period was agreed, Mr. Li was entitled to demand repayment at any reasonable time. The court held that Mr. Li’s claim for the principal of 50,000 CNY was lawful and justified. Regarding interest, because the parties did not agree on any interest, no interest was payable for the period before the lawsuit. However, under applicable law, overdue interest could be claimed from the date Mr. Li filed the lawsuit, 9 December 2011, at the benchmark interest rate for loans of the same term set by the People’s Bank of China.
On the legal analysis, the court noted that Mr. Zhao voluntarily provided a guarantee for the loan. Because no specific guarantee method was agreed, the law presumes it to be a joint and several liability guarantee. This means Mr. Zhao is liable to repay the entire principal and overdue interest together with Mr. Wang. The court also noted that the statutory interest rate for overdue payments applies from the filing date until the date the judgment is fulfilled. The court further stated that if either defendant fails to pay within the specified period, they must pay double the interest for delayed performance as required by civil procedure law.
In summary, the court ordered Mr. Wang to repay the principal of 50,000 CNY to Mr. Li within ten days of the judgment taking effect, plus overdue interest calculated from 9 December 2011 at the benchmark rate until the date of actual payment. Mr. Zhao was ordered to bear joint and several liability for the full amount, including legal costs. The court also ordered Mr. Wang to pay the case acceptance fee of 1,050 CNY. This case illustrates that even when a loan agreement is informal, a clear promissory note and a guarantor’s signature can establish enforceable obligations. The ruling reinforces the principle that guarantors who do not specify a limited liability may be held fully responsible alongside the borrower.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.