Court Orders Repayment of CNY 200,000 in Private Loan Dispute
A court in Eastern China has ruled that a father must repay a 200,000 CNY loan originally taken out by his son, after the father issued a written promise to assume the debt. The plaintiff initiated legal proceedings when the defendant failed to repay the principal or interest within the agreed period. The judgment highlights the enforceability of debt assumption agreements under Chinese civil law.
The case arose from a loan made on September 18, 2009. The plaintiff, Mr. Li, lent 200,000 CNY to the defendant’s son, who needed funds for his business operations. The loan was documented in a written agreement with a repayment term of 15 days. After the son failed to repay, the defendant, Mr. Wang, stepped in. On August 26, 2010, Mr. Wang issued a promissory note to Mr. Li, formally undertaking to repay the 200,000 CNY himself, with a new repayment period of four months. Despite this promise, Mr. Wang made no payment. Mr. Li then sued, demanding the principal plus overdue interest at the bank lending rate from December 27, 2010, onward, as well as court costs.
During the trial, Mr. Li submitted two key pieces of evidence: the original loan agreement between himself and the son, and the promissory note signed by Mr. Wang. The defendant did not file a written defense and did not appear in court despite proper summons. The court examined the evidence and found it to be authentic, lawful, and relevant to the case. Because the defendant failed to attend, the court proceeded with a default judgment based on the plaintiff’s evidence and the facts as alleged.
The court found that the defendant had voluntarily assumed his son’s debt through the promissory note, creating a valid and legally binding creditor-debtor relationship between Mr. Wang and Mr. Li. By failing to repay within the agreed four-month period, Mr. Wang breached the contract. The court therefore held that Mr. Li’s claims were reasonable and lawful. It ordered Mr. Wang to return the full 200,000 CNY principal and to pay interest calculated at the benchmark bank lending rate from December 27, 2010, until the date of actual repayment.
Legally, the ruling relied on Article 84 of the General Principles of Civil Law, which defines an obligation as a specific right-duty relationship arising from contract or law, and Article 108, which requires debts to be paid. The court also applied Article 130 of the Civil Procedure Law, allowing a default judgment when a properly summoned defendant fails to appear. The interest award was based on the overdue period starting from the day after the four-month repayment window expired. The court further noted that if the defendant fails to pay on time, the amount would be subject to double interest for delayed performance under the applicable procedural rules.
This case demonstrates that a written promise to repay another person’s debt is enforceable in court, even when the original borrower is not a party to the lawsuit. The decision underscores the importance of clear documentation in private lending arrangements. Individuals who agree to assume a loan should be aware that they become fully liable for the principal and any overdue interest. The court also ordered the defendant to pay the litigation fee of 4,300 CNY, reinforcing the cost consequences of non-compliance.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.