Court Orders Repayment of CNY 1.3 Million Loan Plus Interest
A court in Eastern China City has ordered a borrower to repay a loan of 1.3 million yuan (approximately CNY 1.3 million) plus interest to a former colleague, following a dispute over an unpaid debt that dated back to 2007. The judgment, delivered in March 2012, resolved the case after the defendant admitted the debt and conceded all claims. The court found that the borrower had breached the repayment agreement and must compensate the lender accordingly.
The plaintiff, Mr. Li, and the defendant, Mr. Hu, were former colleagues. In December 2007, Mr. Hu approached Mr. Li for a loan of 1.3 million yuan. At Mr. Hu’s instruction, Mr. Li transferred the full amount from a friend’s personal bank account to a company account owned by Mr. Hu’s nephew, Mr. Hu Haixiao. Mr. Hu issued a promissory note for the loan and orally agreed to pay interest at the prevailing market rate. When the loan matured, Mr. Hu failed to repay. In September 2010, he issued a new promissory note to extend the repayment deadline to May 2011. However, he did not pay by that date. Mr. Li then sued in February 2012, seeking return of the principal and interest from September 7, 2010, calculated at the benchmark lending rate set by the People’s Bank of China.
During the hearing, Mr. Li presented two key pieces of evidence. The first was the 2010 promissory note, which stated a loan amount of “130 yuan.” Mr. Hu admitted in court that this was a typographical error and that the actual amount was 1.3 million yuan. The second exhibit was a wire transfer record showing that on December 19, 2007, a sum of 1.3 million yuan was sent from an account held by a third party, Mr. Wang Tiandeng, to the account designated by Mr. Hu. Mr. Hu raised no objections to either document. He confirmed the facts alleged by Mr. Li and acknowledged the outstanding debt, asking only for more time to arrange repayment. The court accepted both exhibits as lawful, truthful, and relevant, and no further evidence was submitted by the defendant.
The court found that a valid loan relationship existed between the parties and that the facts were clearly established by the admitted evidence. The defendant’s failure to repay the principal sum constituted a breach of contract. Under the relevant provisions of the Contract Law of the People’s Republic of China, the borrower was obligated to return the loan and pay interest. The court specifically cited Articles 205, 206, and 207, which govern interest on loans, repayment obligations, and liability for default. Because Mr. Hu had acknowledged the debt in open court and had not contested the amount or the interest claim, the court had no difficulty concluding that Mr. Li was entitled to the full relief sought.
The legal reasoning turned on the enforceability of an oral interest agreement and the effect of an unambiguous admission. While the 2010 promissory note contained a scrivener’s error regarding the principal amount, the borrower’s voluntary correction and acceptance of liability removed any ambiguity. The court applied the general principle that a debtor who borrows money must repay it according to the agreed terms, and when no specific interest rate is stated in writing, the law presumes a rate based on the central bank’s benchmark lending rate. Here Mr. Hu had orally promised market-rate interest, but the court used the statutory rate from the date of the second promissory note, which was the most recent expression of the parties’ agreement. The decision also included an order for double interest on any delayed payment after the judgment deadline, as required by procedural law.
This case illustrates how courts in China handle straightforward loan disputes where the borrower admits liability. The ruling reinforces the principle that written evidence, such as promissory notes and bank transfer records, together with a party’s factual concession in court, can lead to a swift judgment. For lenders, the case serves as a reminder to verify the accuracy of loan documents and to retain proof of transfer. Borrowers should be aware that acknowledging a debt in court leaves little room for defense. The judgment was issued under a simplified procedure, reflecting the efficiency of the legal process when both sides cooperate. Mr. Hu was ordered to pay the principal, interest from September 7, 2010, litigation costs, and enforcement fees.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.