Court Orders Repayment of CNY 8,000,000 Loan Dispute
A court in Eastern China City has ruled that a borrower must repay a loan of CNY 8,000,000 plus interest to a lender, after the borrower failed to appear at trial. The case involved a private lending dispute between two individuals, with the plaintiff seeking repayment of the principal and interest at a monthly rate of 2%. The court reduced the interest rate to 1.87% per month, finding the original rate exceeded the legal limit.
The plaintiff, Mr. Li, filed a lawsuit on December 23, 2011, claiming that on March 1, 2011, the defendant, Mr. Wang, borrowed CNY 8,380,000 for working capital needs. The parties agreed on a monthly interest rate of 2%, and Mr. Wang issued a promissory note to Mr. Li. Later, Mr. Wang repaid CNY 380,000 of the principal and all interest due up to September 1, 2011. However, the remaining principal of CNY 8,000,000 and subsequent interest remained unpaid despite repeated demands. Mr. Li asked the court to order repayment of the principal plus interest from September 1, 2011, at the agreed monthly rate of 2%.
The court held a hearing on March 15, 2012, under a simplified procedure. Mr. Li and his legal representative, Mr. Huang, appeared. Mr. Wang was properly served with summons but did not attend the hearing without justification. During the case’s preliminary stage, when the court delivered the complaint to Mr. Wang, he acknowledged in a written record that he owed CNY 8,000,000 and that interest had been calculated up to September 1, 2011. The court admitted the evidence submitted by Mr. Li, including a loan contract, the promissory note, and a letter of commitment, finding them authentic, relevant, and lawful.
The court found that the facts as claimed by Mr. Li were clearly established by the evidence. Mr. Wang’s absence meant he waived his rights to cross-examine evidence and to present a defense. The court determined that the lending relationship between the parties did not violate any mandatory provisions of law or administrative regulations, and was therefore protected by law. However, the agreed monthly interest rate of 2% exceeded the cap set by the Supreme People’s Court, which limits private loan interest to four times the benchmark lending rate of the People’s Bank of China.
Applying relevant law, the court adjusted the interest rate to 1.87% per month, which corresponds to four times the then-prevailing benchmark rate. Under the Contract Law of the People’s Republic of China, the borrower is obligated to repay principal and interest, and the lender is entitled to claim overdue interest. The court also cited the Civil Procedure Law, noting that a defaulting party who fails to appear may still be bound by the court’s decision. The defendant’s acknowledgment of the debt in the pre-trial record further supported the plaintiff’s case.
The court ordered Mr. Wang to pay Mr. Li CNY 8,000,000 in principal plus interest calculated from September 1, 2011, at 1.87% per month until the date of full payment, within ten days of the judgment taking effect. If payment is delayed, the defendant must pay double the interest for the period of delay as stipulated by law. Mr. Wang was also ordered to bear the court costs, which were reduced to CNY 36,350 due to the simplified procedure. Both parties have the right to appeal within fifteen days of receiving the judgment. This case illustrates how Chinese courts enforce private lending agreements while capping interest rates to prevent usury.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.