Court Orders Repayment of CNY 30,000 Loan Plus Interest

In a recent private lending dispute, the Eastern China City court ruled in favor of a lender who sought repayment of a CNY 30,000 loan plus monthly interest at 2 percent. The court also held that the guarantor who signed the promissory note was jointly liable for the debt. The decision came after the borrower and the guarantor failed to appear at the hearing.

Mr. Chen, the plaintiff, lent CNY 30,000 to Mr. Du, one of the defendants, on June 20, 2011. Mr. Du issued a handwritten promissory note that specified a monthly interest rate of 2 percent. Mr. Jiang, the second defendant, signed the same document as a guarantor. All three parties were described as friends. After repeated requests for repayment, Mr. Du did not return the principal, and Mr. Jiang did not honor the guarantee. Mr. Chen then sued to recover the loan amount, interest from the date of filing until full payment, and a joint liability order against the guarantor.

The court accepted the case on February 20, 2012, and proceeded under a simplified procedure. Mr. Chen attended the hearing and presented three pieces of evidence: a copy of his ID to establish standing, identity documents for both defendants, and the original promissory note. The note confirmed the loan, the 2 percent interest term, and Mr. Jiang’s signature as guarantor. Mr. Du and Mr. Jiang were properly served with the complaint and evidence but did not appear in court or provide any explanation. The court ruled that their absence constituted a waiver of the right to challenge the evidence and therefore accepted the documents as proven.

The court found that the private lending contract between Mr. Chen and Mr. Du was legally valid, and that Mr. Jiang’s guarantee was a genuine expression of intent. The agreed monthly interest rate of 2 percent fell within lawful limits. Because the parties did not set a fixed repayment date, Mr. Chen had the right to demand repayment at any time. Mr. Du’s failure to return the money within a reasonable period after being asked amounted to a breach. Mr. Jiang had not fulfilled the guarantee obligation.

In its legal reasoning, the court cited relevant provisions of Chinese contract law. Under those rules, a borrower must repay the loan on the agreed date, or on demand if no date is specified. Failure to do so triggers an obligation to pay overdue interest at the agreed rate. The court also applied the guarantee law, which holds that a joint liability guarantor is responsible for the full debt, including principal and interest, unless the contract states otherwise. Because Mr. Du and Mr. Jiang did not attend, the court proceeded under civil procedure rules that allow a default judgment.

The court ordered Mr. Du to repay the principal of CNY 30,000 together with interest at 2 percent per month calculated from June 20, 2011, until the date of full payment, within ten days of the judgment taking effect. Mr. Jiang was ordered to bear joint liability for the entire amount. Court costs of CNY 330 were also assessed against Mr. Du, with Mr. Jiang jointly responsible. The ruling reinforces that in China, a signed promissory note with clear interest terms is enforceable, and a guarantor who signs as a joint liability party may be held directly accountable when the borrower defaults.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.