Court Rules Borrower Must Repay 600,000 Yuan Loan Despite Dispute Over Second Loan Amount

Court Rules Borrower Must Repay 600,000 Yuan Loan Despite Dispute Over Second Loan Amount

CASE OVERVIEW
A civil court in Northern China ruled in favor of a lender in a loan dispute, ordering the borrower to repay 600,000 yuan. The borrower admitted receiving an initial loan of 200,000 yuan but disputed a second loan of 530,000 yuan, claiming he never received the funds. The court found the borrower’s signed IOU constituted valid evidence of receipt, and the borrower failed to provide contrary proof.

CASE BACKGROUND AND FACTS
The plaintiff, Mr. Lv, filed a lawsuit against the defendant, Mr. Jiang, on December 24, 2010. Mr. Lv alleged that Mr. Jiang borrowed 200,000 yuan on July 5, 2010, and an additional 530,000 yuan on July 24, 2010, due to financial difficulties. On July 25, 2010, Mr. Jiang repaid 130,000 yuan, leaving an outstanding balance of 600,000 yuan. Despite repeated demands, Mr. Jiang failed to repay the remaining amount. Mr. Lv sought an order from the court compelling Mr. Jiang to return the full 600,000 yuan and to bear the litigation costs.

COURT PROCEEDINGS AND EVIDENCE
The court held a public hearing on January 5, 2011, under a simplified procedure. Mr. Lv appeared in person, while Mr. Jiang was represented by his attorney, Mr. Tian. Mr. Lv submitted two key pieces of evidence: a promissory note for the 200,000 yuan loan and an IOU for the 530,000 yuan loan, both in original form. Mr. Jiang admitted receiving the first loan of 200,000 yuan but argued that the second IOU was signed under Mr. Lv’s request on November 5, 2010, and that he never actually received the 530,000 yuan. Mr. Jiang offered no evidence to support his denial. The court accepted the promissory note without objection. Regarding the IOU, the court noted that Mr. Jiang did not challenge its authenticity but only disputed the receipt of funds. Since the IOU was a standard document evidencing both the existence of a loan and the delivery of funds, and Mr. Jiang failed to produce any counter-evidence, the court found his objection unsubstantiated and admitted the IOU as valid evidence.

COURT FINDINGS AND JUDGMENT
Based on the evidence and party statements, the court established the following facts: On July 5, 2010, Mr. Jiang borrowed 200,000 yuan from Mr. Lv and issued a promissory note. On July 24, 2010, Mr. Jiang borrowed an additional 530,000 yuan and issued an IOU stating a repayment period from July 24 to July 30, 2010, with a monthly interest rate of 2 percent. On July 25, 2010, Mr. Jiang repaid 130,000 yuan, leaving 600,000 yuan unpaid. The court held that the loan relationship between the parties was clear and lawful, supported by the promissory note and IOU. Mr. Jiang’s failure to repay the outstanding amount violated the law. The court rejected Mr. Jiang’s defense that he only owed 70,000 yuan (the remainder after accounting for the alleged non-receipt of the second loan) due to lack of evidence. The court ordered Mr. Jiang to repay the full 600,000 yuan within ten days of the judgment’s effective date. If payment was delayed, Mr. Jiang would be liable for double interest on the debt during the period of delay. Litigation costs of 9,800 yuan, reduced to 4,900 yuan, were also imposed on Mr. Jiang.

KEY LEGAL PRINCIPLES
The court applied Article 206 of the Contract Law of the People’s Republic of China, which governs the borrower’s obligation to repay loans according to the agreed terms. A key principle reaffirmed in this case is that a signed IOU serves as prima facie evidence of both the existence of a loan and the actual delivery of funds. A borrower who disputes receipt of funds bears the burden of proof. Without counter-evidence, the court will treat the IOU as conclusive.

PRACTICAL INSIGHTS
This case highlights the importance of written loan documentation. Lenders should always obtain a signed IOU or promissory note from the borrower. Borrowers should be aware that signing such a document creates a strong presumption of receipt of funds. If a borrower signs an IOU without actually receiving the money, they must gather and present evidence to challenge the document in court. Oral denials alone are insufficient.

LEGAL REFERENCES
Contract Law of the People’s Republic of China, Article 206.

DISCLAIMER
This article is for informational purposes only and does not constitute legal advice. Readers should consult a qualified attorney for advice on specific legal matters.