Court Orders Repayment of CNY 150,000 Loan with Interest
A local court in Eastern China City has ruled in favor of a lender seeking repayment of a 150,000 yuan loan, plus interest, after the borrower defaulted and the guarantor failed to fulfill their obligations. The case involved a written loan agreement and a personal guarantee, with the court finding the borrower liable for breach of contract and the guarantor jointly responsible. The judgment was issued after a hearing where the borrower and guarantor did not appear.
In August 2011, Mr. Wang lent 150,000 yuan to Mr. Shen, who needed funds for his business operations. Mr. Shen issued a signed promissory note stating the loan term ran from August 15, 2011, to October 31, 2011. The note also specified that if repayment was overdue, interest would accrue from the loan date at a monthly rate of 30 per thousand until full repayment. Mr. Bao voluntarily signed as a guarantor, agreeing to assume joint and several liability for the debt. After the loan matured, Mr. Wang made repeated demands for repayment, but Mr. Shen paid nothing and Mr. Bao also refused to honor the guarantee.
During the court hearing, Mr. Wang’s legal representative appeared and submitted the original promissory note as evidence. The court reviewed the document and found it met the requirements for admissible evidence under relevant procedural rules. Mr. Shen and Mr. Bao, although properly served with court summons, did not attend the hearing or present any evidence or defense. The court proceeded with the trial in their absence, based on the evidence provided and the statements made by Mr. Wang’s attorney.
The court found that the facts of the loan were clearly established and supported by sufficient evidence. Mr. Shen’s failure to repay the principal on the agreed date constituted a breach of contract, triggering liability under civil law. The court also determined that Mr. Bao’s voluntary guarantee was valid and enforceable, making him jointly and severally liable for the debt. Regarding interest, the parties had originally agreed on a monthly rate of 30 per thousand after default. However, Mr. Wang requested interest calculated at four times the benchmark loan interest rate published by the People’s Bank of China for the same period, applied from the loan date until actual repayment. The court held that this request did not violate any legal provisions and did not harm the interests of the defendants, and therefore approved it.
According to relevant law, specifically the Contract Law and the Guarantee Law, a borrower must repay principal and agreed interest on time, and a guarantor who assumes joint and several liability is obliged to pay when the borrower defaults. The court emphasized that the agreed interest rate, while high, was voluntarily reduced by the plaintiff to a level within statutory limits. The court further noted that the defendants’ failure to appear in court indicated a disregard for legal proceedings and a waiver of their right to defend themselves. As a result, the court accepted Mr. Wang’s claims in full.
The court ordered Mr. Shen to repay the full principal of 150,000 yuan plus interest calculated at four times the central bank’s benchmark rate from August 15, 2011, until the date of payment as specified in the judgment. Mr. Bao was ordered to bear joint and several liability for the entire amount. The court also assigned court costs to Mr. Shen, with Mr. Bao jointly liable, and warned that any delay in payment would incur additional interest at double the statutory rate. This case illustrates the enforceability of written loan agreements and personal guarantees in Chinese courts, and the importance for both borrowers and guarantors to respond to legal proceedings.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.