Court Orders Repayment of CNY 100,000 Loan with Interest
In a civil case concerning a private loan dispute, the court ruled that a borrower must repay CNY 100,000 together with interest at a monthly rate of 2%, and that the guarantor bears joint liability for the debt. The judgment was issued after the defendants failed to appear at trial. The dispute arose from a loan agreement made in September 2010 and involved claims for principal, interest, and enforcement costs.
The plaintiff, Mr. Chen, alleged that on September 17, 2010, defendant Mr. Lin A borrowed CNY 100,000 from him. The loan term was one year, ending on September 17, 2011, with interest set at 2% per month. The contract further stated that if litigation arose, Mr. Lin A would bear all legal costs, including court fees and attorney fees. Defendant Mr. Lin B voluntarily agreed to act as a guarantor for the loan. After the loan matured, Mr. Chen demanded repayment from both defendants, but they failed to pay either the principal or interest. Mr. Chen then filed suit, seeking repayment of the principal plus interest calculated from the loan date until the court’s judgment, and an order that Mr. Lin B assume joint and several liability.
During the court hearing, Mr. Chen submitted three pieces of evidence: copies of the parties’ identity documents, a signed promissory note, and a bank transfer record. The promissory note and transfer evidence were intended to prove the loan and guarantee. Mr. Lin A and Mr. Lin B did not file any答辩 (defense) or present evidence, nor did they appear in court despite proper legal notice. The court reviewed the evidence and found it to be lawful, relevant, and admissible. The court accepted all evidence as establishing the facts of the case.
The court found that a clear loan relationship existed between Mr. Chen and Mr. Lin A. The principal amount of CNY 100,000 remained unpaid, and the loan term had expired. The evidence was sufficient to prove the debt and the guarantee. Because the loan agreement specified a monthly interest rate of 2% (24% per annum), the court determined that this rate did not exceed the legal ceiling under applicable law. Accordingly, the court held that Mr. Chen was entitled to both the principal and interest as claimed.
Under Chinese contract law, a borrower must repay principal and interest according to the agreed terms. Since the loan period had ended, Mr. Chen’s demand for immediate repayment was justified. Regarding the guarantor, the law provides that when parties do not specify the type of guarantee, it is presumed to be a joint and several liability guarantee. Here, Mr. Lin B and Mr. Chen did not define the guarantee method, so Mr. Lin B must bear joint liability for the entire debt, including principal, interest, and associated costs. The guarantor, after performing the guarantee obligation, retains the right to seek reimbursement from the borrower, Mr. Lin A.
The court ordered Mr. Lin A to repay Mr. Chen the principal of CNY 100,000 plus interest at 2% per month from September 17, 2010 until the date of actual payment. Mr. Lin B was ordered to assume joint and several liability for the same amount, and after payment, may pursue recovery from Mr. Lin A. The court also imposed double interest on any delayed payment. The case filing fee of CNY 2,300 was reduced by half to CNY 1,150, to be borne by both defendants. This judgment underscores the importance of clear loan documentation and the legal consequences of default, particularly when a guarantor’s role is not explicitly defined.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.