Three Misconceptions about Private Lending
Case 1: Zhao borrowed 100,000 yuan from Lin and issued an IOU. Because Zhao failed to repay in time, Lin sued him in court. Zhao argued in court that the loan was true, but the money was used by Du, and Lin knew this, so Du should be asked for repayment. The court found that the loan was indeed used by Du, but because the lender Lin did not trust Du, he required Zhao to issue the IOU.
Analysis: In private lending practice, an IOU is a certificate issued by the borrower to the lender upon receiving the loan, reflecting the nature of the loan contract as a practical contract. Article 5 of the Provincial High Court's "Guiding Opinions on Several Issues in Hearing Private Lending Disputes" clearly states: "The borrower named on the IOU is presumed to be the debtor and has the qualification as a defendant." Therefore, issuing an IOU indicates two facts: the lender has delivered the loan, and the person issuing the IOU is the borrower. In this case, Zhao's defense that the loan was actually used by someone else does not change Zhao's identity as the borrower; he must still repay the loan to Lin. As for the money used by others, he can claim repayment from the actual user based on other legal relationships.
Case 2: Yang borrowed 50,000 yuan from Xu and issued an IOU, but failed to repay in time. Xu sued Yang in court. Yang argued in court that Xu was not the actual lender, the format of the IOU was provided by a third party Li, the lender column on the IOU was left blank, and part of the loan had already been repaid to Li. Xu stated that he did not know Li and had not received any repayment from Yang.
Analysis: In private lending, there are often cases where the IOU does not specify the lender. This case involves the identification of the lender. Article 4 of the Provincial High Court's "Guiding Opinions on Several Issues in the Trial of Private Lending Dispute Cases" clearly states: "The party holding the creditor's document, such as an IOU, is presumed to be the creditor and has the standing as the plaintiff."
In this case, because Yang had no evidence to prove that Li was the actual lender, the court ultimately confirmed that the loan contract between Xu and Yang was established and ordered Yang to repay Xu the loan of 50,000 yuan. As for the money Yang paid to Li, he could demand its return from Li based on the legal relationship of unjust enrichment.
Case Three: Qian borrowed 20,000 yuan from Wu. In May of this year, Wu sued with the IOU, demanding that Qian repay the 20,000 yuan loan. Qian argued that he had already repaid 10,000 yuan in cash to the intermediary Zhu and now owed only 10,000 yuan. The court found that the loan was indeed facilitated through the intermediary Zhu, but Zhu denied receiving the 10,000 yuan repayment, and Wu also denied authorizing Zhu to collect the money.
Analysis: In this case, Qian had no evidence to prove that he had repaid the 10,000 yuan, nor any evidence that Wu had authorized Zhu to collect the money. Therefore, Qian's repayment could not be considered as repayment of Wu's loan. Ultimately, the court ruled that Qian should repay Wu the 20,000 yuan loan.
Advice: To avoid such disputes, the following principles should be adhered to in private lending:
First, the IOU should be written in detail and standardly, including the lender, borrower, and time of borrowing. If there is interest or a guarantor, it should be noted on the IOU. Never sign a blank IOU lightly.
2. Repay loans via bank transfer or request a receipt. If the lender requires repayment through a third party, written authorization is necessary.
3. Stay away from usury. Usurers often evade legal regulations by deducting interest in advance, failing to issue receipts for interest payments, or falsely listing interest rates within legal limits. Therefore, without evidence proving the borrower has paid excessive interest, the borrower must still repay the principal and interest as stipulated in the IOU.
4. If a loan agreement has been signed, the lender should, after delivering the funds, require the borrower to issue a new IOU or provide a supplementary receipt. Otherwise, the loan agreement alone only indicates mutual consent to borrow, not actual disbursement.
5. If the defendant believes the facts differ from those in the lawsuit, they should actively respond and cooperate with the court’s investigation to help the judge uncover discrepancies during the trial.
[5] (FindLaw.cn)
