Court Orders Repayment of CNY 9.7 Million in Loan Dispute
A court in Eastern China City has ruled that a husband and wife must repay a loan principal of CNY 9.7 million plus interest to a plaintiff lender. The dispute arose from a series of 10 borrowings totaling CNY 12.2 million, of which the plaintiff claimed only CNY 2 million had been repaid. After reviewing the evidence, the court found that nine loans amounting to CNY 11.7 million were valid, and ordered repayment of the outstanding balance. The court also adjusted the agreed monthly interest rate from 2 percent to 1.8 percent, citing that the original rate was excessive under applicable law.
The plaintiff, Mr. Zhou, filed the lawsuit against the defendants, Mr. Zhang and his wife, Ms. Chen, who are married. According to Mr. Zhou, Mr. Zhang borrowed money in 10 separate transactions between October 2010 and May 2011. The loans were documented with agreements, payment receipts, and bank transfer records. Most loans carried a monthly interest rate of 2 percent and a repayment deadline of September 1, 2011. Mr. Zhou alleged that the defendants repaid only CNY 2 million in principal and paid interest only up to August 31, 2011, leaving a balance of CNY 10.2 million plus ongoing interest. The defendants did not respond to the lawsuit.
The court held a hearing on December 12, 2011, under a simplified procedure. The defendants were properly served with court notices but failed to appear without justification. Mr. Zhou attended with his attorney, Mr. Cai, and presented documentary evidence including loan agreements, confirmation receipts, bank account transaction records, and transfer slips. A witness, Mr. Ye, also testified in court. The court examined all evidence and heard the plaintiff’s arguments. Because the defendants did not participate, the court proceeded with a default judgment.
The court found that nine of the ten claimed loans existed, totaling CNY 11.7 million. The evidence showed that the first eight loans, amounting to CNY 10.7 million, had agreed terms of 2 percent monthly interest and a repayment date of September 1, 2011. The ninth loan of CNY 1 million, made on November 17, 2010, had no written interest or maturity date. The court rejected the plaintiff’s claim for a tenth loan of CNY 500,000 made on January 20, 2010, because the plaintiff provided only a loan slip without proof that the money was actually transferred to the defendant. The court also noted that the defendants had repaid CNY 2 million in principal and all interest up to August 31, 2011, leaving an outstanding principal of CNY 9.7 million.
According to relevant law, the court determined that the loan agreements were legally valid and reflected the true intentions of both sides. Mr. Zhang was therefore obligated to repay the principal and interest. Because the defendants are married, the court applied the judicial interpretation of the Marriage Law, holding that debts incurred during the marriage are joint obligations. The court then considered the interest rate. Although the parties agreed on 2 percent monthly, the court found this rate too high and reduced it to 1.8 percent per month, in line with judicial guidance on limiting excessive interest rates. The court also ordered interest to run from September 1, 2011, until full payment.
In this case, the court ordered the defendants to jointly repay CNY 9.7 million in principal, plus interest at 1.8 percent per month from September 1, 2011, until the judgment is satisfied. The plaintiff’s other claims were dismissed. The court apportioned litigation costs, with the plaintiff bearing CNY 2,453 and the defendants bearing CNY 40,883. The judgment underscores that lenders must provide clear evidence of both the loan agreement and the actual transfer of funds to succeed on disputed claims. It also illustrates that courts will adjust excessively high interest rates to reasonable levels, even if the borrower does not appear to object.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.