[3] An IOU trimmed of its date makes it hard to recover debts due to inability to provide evidence.

[5] An IOU altered without a date makes it difficult to recover due to inability to provide evidence.

Compiled from: Shandong High Court

In private lending, complex financial transactions may be involved, and an IOU becomes important evidence in such activities. When an IOU shows signs of trimming, it may result in incomplete or distorted information, making it difficult to determine key details such as the time and amount of the loan. In such cases, how should the court conduct the trial?

Case Review

Liu and Han had been friends and business partners for many years. On March 2, 2023, Liu filed a lawsuit with the court, claiming that Han borrowed 200,000 yuan from him on July 24, 2014 and had not repaid it to date, and requesting the court to order Han to repay the principal and interest of the loan. Liu submitted to the court an IOU issued by Han, which stated, “Today I borrow cash in the amount of two hundred thousand yuan only (¥200000), for business turnover. Han.”

Han argued that the IOU had been dated at the time it was written, namely 2011, and that following settlement between the parties, the IOU had become void. Han submitted to the court an IOU issued to him by Liu, which stated: “I hereby owe Han a total of RMB 220,000 (Note: all accounts between the parties arising from their cooperation are hereby settled in full, and all previous IOUs and receipts between the parties shall automatically become void, with this document being controlling). Liu, July 5, 2011.”

To prove the formation time of the Loan Note involved in the case, Liu submitted a bank transaction statement dated July 24, 2014, showing a withdrawal of 400,000 yuan, and claimed that he delivered 200,000 yuan in cash to Han on that day. It was also ascertained that the Loan Note involved in the case bears obvious traces of trimming.

The court, upon trial, held that Article 67 of the Civil Procedure Law of the People's Republic of China provides that a party shall bear the burden of proof for the claims it asserts. In this case, Liu filed a lawsuit with the court seeking an order requiring Han to repay the loan principal of 200,000 yuan and interest, and therefore Liu bore the burden of providing evidence to prove his claim. During the litigation, Liu submitted an IOU issued by Han, but the IOU clearly bore traces of trimming and had no execution date. Given that Han submitted a debt acknowledgment containing the parties' settlement details and date in rebuttal, Liu should bear the burden of further evidence to prove the continued existence of the loan relationship at issue. Although Liu submitted a withdrawal voucher dated July 24, 2014, that withdrawal voucher alone was insufficient to prove a connection between that withdrawal and the loan in this case. In summary, since the formation date of the IOU at issue could not be ascertained, the plaintiff in this case, as the holder of the IOU, should bear the consequences of failure of proof. In light of the debt acknowledgment issued by Liu to Han, Liu's claim that Han should repay the loan of 200,000 yuan and interest lacked sufficient evidence, and the court ultimately ruled to dismiss Liu's claims. After the judgment, Liu was dissatisfied and filed an appeal, and the appellate court dismissed the appeal and upheld the original judgment.

Civil Procedure Law of the People's Republic of China

Article 67

The parties have the responsibility to provide evidence in support of their own claims. If a party or its litigation representative is unable to collect evidence due to objective reasons, or if the people's court deems certain evidence necessary for the trial of the case, the people's court shall investigate and collect such evidence. The people's court shall examine and verify evidence comprehensively and objectively in accordance with statutory procedures.

[4] Author's Opinion

IOUs, IOUs, and other private documents are important debt credentials in private lending relationships, and their holders should properly safekeep them. Specifically, the following points can be observed: First, comprehensive recording. When writing an IOU, important information such as the borrower, lender, loan amount, purpose of the loan, delivery method, loan term, loan date, and interest should be recorded as comprehensively as possible, and a relatively complete sheet of paper should be chosen for writing to avoid later disputes; second, confirmation of changes. Try to avoid modifying an existing IOU. If modification is truly necessary, then the added, deleted, or altered portions must be confirmed by fingerprint; third, cross-verification. Pay attention to preserving transaction details, WeChat chat records, call records, and other evidence formed during the lending process, so that they corroborate the relevant IOUs, IOUs, and other lending credentials, thereby forming a complete chain of evidence; fourth, timely destruction. If the lender has not delivered the funds or the loan has already been repaid, then it should be ensured that the relevant IOUs, IOUs, and other debt credentials are destroyed in a timely manner.