Loan Dispute Resolved – Court Reduces Debt to CNY 70,000
A retrial in Eastern China City has corrected a previous judgment in a private lending dispute between Mr. Zheng and Ms. Wang. The original court had ordered Mr. Zheng to repay a loan of CNY 100,000 with interest at four times the central bank benchmark rate. However, new evidence showed that Mr. Zheng had already repaid CNY 30,000 and that the interest rate was a typographical error. The retrial court reduced the principal to CNY 70,000 and adjusted the interest rate to 1.5% per month.
The case began in August 2008 when Ms. Wang sued Mr. Zheng, claiming that he had borrowed CNY 100,000 from her on March 1, 2007. According to the original loan note, the monthly interest was 15%. Ms. Wang later reduced the claimed interest to four times the central bank base rate. Mr. Zheng did not respond to the original lawsuit, and the court entered a default judgment requiring him to repay the full amount plus interest from the loan date until full payment. After the judgment, Mr. Zheng learned of the case while overseas and challenged the decision through the procuratorate.
During the retrial hearing, the procuratorate presented two key pieces of evidence. First, Mr. Zheng provided a receipt dated July 23, 2007, signed by Ms. Wang, stating that CNY 30,000 had been repaid and that the remaining balance was CNY 70,000. The receipt also noted that all previous loan notes were void, and interest had not been paid. Second, the procuratorate showed immigration records indicating Mr. Zheng was abroad from October 2008 to October 2009, which explained why he could not receive the original court summons. Ms. Wang confirmed in a procuratorial interview that she had written the receipt and that CNY 30,000 had indeed been repaid.
The court found that the original judgment was based on incorrect facts. The evidence clearly showed that the loan principal was only CNY 70,000 after the partial repayment, and that the earlier loan note had been superseded by the receipt. The court also examined the disputed interest rate. The original note stated 15% per month, but Mr. Zheng argued that this was a mistake and that the actual rate was 15‰ (1.5%) per month. The court agreed, noting that 15% per month was unusually high and inconsistent with common practice. Therefore, the correct monthly interest rate was set at 1.5%.
In its legal analysis, the court emphasized that the receipt signed by Ms. Wang had legal effect and confirmed the partial repayment and the continuation of interest on the remaining balance. The phrase interest not paid in the receipt indicated that interest was still owed for the period from March 1, 2007, to July 23, 2007, on the full CNY 100,000, and thereafter on the CNY 70,000 balance. The court applied the corrected monthly interest rate of 1.5% for both periods. The original default judgment was set aside, and a new judgment was entered requiring Mr. Zheng to pay CNY 70,000 plus interest calculated accordingly.
This case underscores the importance of accurate documentation and the possibility of revisiting default judgments when new evidence emerges. The retrial process allowed the court to correct an error that would have resulted in an overpayment. Borrowers and lenders should ensure that loan agreements clearly state the interest rate and keep records of all repayments. The court’s decision also highlights that extremely high interest rates are unlikely to be enforced.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.