Court Orders Repayment of CNY 50,000 in Loan Dispute
A court in Eastern China City has ruled that a borrower must repay a loan of 50,000 yuan (CNY) to a lender, while rejecting the lender’s claim for agreed interest due to the absence of a written interest rate. The defendant failed to appear at the hearing, leading to a default judgment that also awarded statutory interest from the date the lawsuit was filed.
The dispute arose from a loan made on 5 December 2010, when the defendant, Mr. Wang, borrowed 50,000 yuan from the plaintiff, Mr. Li. The parties agreed that repayment would be due within ten days. When the deadline passed, Mr. Wang did not repay the amount. Mr. Li then initiated legal proceedings, seeking recovery of the principal sum plus interest of 4,000 yuan, which he claimed was orally agreed upon.
During the court hearing, Mr. Li presented two pieces of evidence: copies of identity documents to establish the parties’ identities, and a written IOU that confirmed the loan and the repayment terms. Mr. Wang did not file a written defense, attend the hearing, or submit any evidence. The court treated his absence as a waiver of his rights to contest the claims and to cross-examine the evidence. After reviewing the materials, the court found the IOU to be authentic, lawful, and relevant, and accepted it as proof of the debt.
The court held that the loan agreement between the parties was valid and legally binding. Mr. Wang borrowed the money for his own business needs, and Mr. Li was entitled to demand repayment. However, because the IOU did not mention any interest, and Mr. Li could not provide evidence of an oral interest agreement, the court rejected the claim for 4,000 yuan in interest. Instead, the court ruled that Mr. Wang had breached the contract by failing to repay on time. Accordingly, Mr. Li was entitled to interest on the principal from the date he filed the lawsuit, calculated at the benchmark loan rate published by the People’s Bank of China.
According to relevant law, the court applied Article 107 of the Contract Law, which provides for liability for breach of contract, and Article 206, which governs repayment of loans. The court also relied on the Civil Procedure Law to issue a default judgment. The decision underscores the principle that, in the absence of a written interest clause, a lender cannot recover contractual interest but may claim statutory damages for delayed payment. The court ordered Mr. Wang to pay the full principal of 50,000 yuan plus interest calculated from 20 February 2012 until the date of actual payment, and to bear most of the litigation costs. Mr. Li was required to pay a small portion of the costs.
This case serves as a practical reminder for lenders to document all terms of a loan in writing, especially any agreement on interest. Without a clear written record, courts will generally enforce only the principal and the statutory interest rate applicable from the date of the lawsuit. Borrowers who fail to respond to legal proceedings risk a default judgment that may include additional costs and penalties. The judgment is subject to appeal within fifteen days of service.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.