Court Orders Repayment of CNY 30,000 Loan with Interest
A rural credit cooperative in Eastern China City obtained a court judgment ordering a borrower and two guarantors to repay a loan of CNY 30,000 plus interest after the borrower defaulted. The court also ruled that the guarantors bear joint and several liability for the debt. The case highlights the enforcement of loan contracts and the obligations of guarantors under Chinese law.
The plaintiff, a rural credit cooperative based in Eastern China City, filed a lawsuit against Ms. Miao, the borrower, and two guarantors, Mr. Liu and Mr. Li. According to the complaint, Ms. Miao signed a joint guarantee loan contract with the cooperative’s branch on January 8, 2010. The contract provided for a loan of CNY 30,000 at a monthly interest rate of 8.85 per thousand, with repayment due by November 20, 2010. Mr. Liu and Mr. Li agreed to act as joint and several guarantors, with the guarantee period extending two years after the loan maturity date. The cooperative disbursed the loan as agreed, but Ms. Miao only paid interest through June 24, 2010, and failed to repay the principal and remaining interest when due. The cooperative sought repayment of the principal plus accrued interest from Ms. Miao and demanded that Mr. Liu and Mr. Li fulfill their guarantee obligations.
The case was accepted by the court on December 16, 2011, and a single judge presided over a public hearing on March 12, 2012. The plaintiff’s representative attended the hearing, but all three defendants failed to appear despite being properly served with summons. The court noted that the defendants had no valid reason for their absence. The plaintiff submitted key evidence to support its claims, including the joint guarantee loan contract, a loan receipt, and the plaintiff’s written statement. The court examined these documents during the hearing and admitted them into the record.
The court held that under the Civil Procedure Law, defendants have the right to respond and cross-examine evidence, but by failing to appear without justification, Ms. Miao, Mr. Liu, and Mr. Li forfeited those rights. Therefore, the court accepted the facts as presented by the plaintiff based on the documentary evidence. The court found that the loan contract was a genuine expression of the parties’ intent, did not violate any laws, and was legally valid. Consequently, the court ruled that Ms. Miao must repay the principal of CNY 30,000 and interest calculated at the contractual rate of 8.85 per thousand per month from June 24, 2010, until the date of full payment.
As for the guarantors, the court applied the Guarantee Law, which provides that a creditor may demand performance from either the debtor or the guarantor when the debtor fails to meet its obligations under a joint and several guarantee. The court determined that Mr. Liu and Mr. Li were jointly and severally liable for the debt and interest, meaning the cooperative could seek full or partial repayment from any of them. The court also ordered the three defendants to bear the litigation costs of CNY 275, and warned that any delay in payment would incur double the statutory interest for the delayed period.
This case underscores the importance of honoring loan agreements and the serious consequences of default. For lenders, it demonstrates that proper documentation such as contracts and receipts can secure a favorable judgment even when borrowers fail to appear. For borrowers and guarantors, the ruling serves as a reminder that signing as a guarantor entails real financial risk, and that courts will enforce joint and several liability to protect creditors’ rights. The decision also illustrates the procedural rule that absence from court does not prevent a judgment based on the evidence presented.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.