Private Lending – What Shall We Do When We Interchange “Lender” and “Borrower” in Loan Receipt?

By:Shanghai Ganus LawDate:2017-08-23

I Key Points

In a loan receipt, due to short forms and errors, in a situation whereby the Lender’s name is different from the Plaintiff, the Court can use a holistic approach under specific circumstances to determine that the Plaintiff is indeed the Lender.

II Facts

On 1st April 2008, the Borrower Mr Ying borrowed RMB 100,000 from the Lender Mr Yu. Till today, Mr Ying still has not returned the money. From the period of 1st April 2008 to 20th June 2010, Ms Wang had six withdrawal actions made on Mr Ying’s account totaling RMB 64,500. Mr Ying and Ms Wang were married on 7th February 2009. On the 9th of July 2010, Mr Ying died from accident, on 2nd September 2010. Mr Yu applied to Court for Ms Wang to return the RMB 100,000 plus interest from that day till the day the money is returned.

The Defendant believed that the original judgment was wrong. In the original judgment, the Applicant was Mr Yu. However on the loan receipt, the Creditor was Mr Yuu. Mr Yu could not prove validity of the loan receipt in that trial.

III The Court Decision

On 1st April 2008, My Ying’s Loan Receipt stated the Borrower as Mr Yuu, it has the same pronunciation as the Applicant Mr Yu but different characterization. Since Mr Yu kept the Loan Receipt, we can infer that Mr Yu was indeed the Borrower in this case and has the ability to be the Plaintiff for this case. The Appellant Ms Wang’s case was difficult to stand on its own, and the Court will not favour the argument.

When Mr Yu lent out the money, Mr Ying and Ms Wang had since separated, additionally Mr Yu knew that Mr Ying borrowed the money in order to return some other debts. Although the money was lent during the intermediate period before a couple divorces, but we cannot be sure that Ms Wang had the intention to borrow. Mr Yu now states that the amount of money was borrowed for the purpose of life for Mr Ying and Ms Wang, which differentiated from his initial statement of borrowing for the sake of returning other debts. Additionally during the first and second trial, there was no enough evidence to show that the money was borrowed for the life purposes of Mr Ying and Ms Wang. However Ms Wang had taken RMB 31,000 in reality, although she claims that the reason for taking the money was to return Mr Ye’s debts, but the Court could not contact Mr Ye to verify her statements, and hence decide that Ms Wang should return the full amount of RMB 31,000.

As above, Ms Wang’s appeal was established, and for most logical parts, the Court supported her. As for the omitted sections during the initial trial, the results were inappropriate and should be corrected.

IV The Law

The High Court stated that when the Borrower wants to apply to Court for settlement of private lending issues, they should provide the Court with evidences of loan receipts, other receipts, loan documents etc. In the event that the Borrower has all these evidences even if there was no mention of the Borrower’s name, the Court has jurisdiction to look into the matter. The Defendant questioned about the validity of the Plaintiff’s evidences indicating him as the Borrower, the Court decided for that and rejected the appeal.

V Lawyer’s Analysis 

In private lending cases, due to names being different, complicated, and sometimes uncommon, the name of the Lender and Borrower can sometimes be mixed up or written wrongly. In such situations, the party with holding the loan receipt can apply for to the Court to settle the matter, and the Court will accept and hear the case.

The Court will judge according to the real situation the lending took place, and with a holistic approach can decide that the Applicant is in fact the Borrower and the Defendant the Lender.

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Ganus’Value:Lawyers are guardian angels rather than business partners.

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