How to distinguish between "no agreed interest" and "unclear agreement on interest".
For private loans where one or both parties are non-financial institutions, legal persons or other organizations, the rules for calculating interest are different in the different circumstances of "no agreed interest" and "unclear agreement on interest". Therefore, in practice, it is important to distinguish between the two situations.
In practice, the borrower and the borrower may not have an explicit agreement on interest and interest rate in the written evidence, but after the parties have a dispute and file a lawsuit with the court, the lender will often have an oral agreement on the interest rate and interest. According to Article 669 of the Civil Code, the loan contract shall be in written form, unless otherwise agreed upon by natural persons. That is, for private loans where one or both parties are non-financial institutions, legal persons or unincorporated organizations, in principle, it is required to be concluded in writing.
How to determine the validity of an agreement on oral interest? On the one hand, Article 669 of the Civil Code is not a mandatory provision of validity, but should be regarded as a regulatory provision with a guiding nature. On the other hand, according to Article 490 of the Civil Code, if a contract is concluded in writing as provided by laws or administrative regulations or agreed by the parties, and the parties do not use the written form but one party has performed its main obligations and the other party accepts it, the contract shall be established. Therefore, in a private loan contract, if there is an oral agreement between the borrower and the borrower on the interest, the law should also recognize its legality.
Related Cases
Third, the applicant for the retrial claimed that no interest was agreed in the loan, and that the loan in this case was a loan between natural persons, and no interest should be paid. In this regard, this court held that, judging from the content of the IOU in this case, the borrower of the IOU was signed by Zhao Yajun, the legal representative of Yajun Company, and the official seal of Yajun Company was affixed to it, and the third retrial applicant claimed that the loan was a loan between natural persons and was inconsistent with the IOU record, and the third retrial applicant claimed that it did not recognize the evidentiary form and probative force of the conversation recording in the original trial, which was inconsistent with the facts ascertained by this court. Third, the retrial applicant had no objection to the authenticity, legality, or relevance of the recording of the conversation submitted by Tu Gang at the first-instance trial. In the recording of the conversation between Zhao Yajun and Tu Gang on February 17, 2018, Zhao Yajun said, "If you can get 30 million this time, I will give you 3 million", and in the recording of the conversation between the two parties on February 16, 2018, Zhao Yajun said, "I will give you the principal to pay back your principal first, and the idea of not giving more is gone, I will give you this 3 million, which is 3 million yuan", and there was only 2.45 million yuan of loan principal between the third retrial applicant and Tu Gang during the conversation. In the recording of Zhao Yajun's conversation, he promised to pay Tu Gang 3 million yuan, which shows that the loan involved in the case has an interest agreement, and the reason why the applicant for the third retrial applied for a retrial that the interest on the loan was not agreed upon cannot be established.
According to Article 25 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases, "if the borrower and the borrower have not agreed on interest, and the lender claims to pay the interest during the loan period, the people's court shall not support it." Where the agreement on interest in loans between natural persons is unclear, and the lender claims to pay interest, the people's court will not support it. Except for loans between natural persons, where the agreement between the borrower and the borrower on the loan interest is unclear, and the lender claims interest, the people's court shall determine the interest based on the content of the private loan contract and based on factors such as the local or the parties' transaction methods, trading habits, and market interest rates". Zhao Yajun did not record the interest on the loan receipts of the two loans borrowed from Tu Gang before the occurrence of the loan in this case, but actually paid the interest at a monthly interest rate of 4%, a fact that Zhao Yajun also recognized in the second-instance trial of this case. According to Article 7 of the Interpretation (II) of the Supreme People's Court on Several Issues Concerning the Application of the Contract Law of the People's Republic of China, the original judgment found that there was a factual basis for the parties to pay interest on the above-mentioned loan as a transaction custom, and it was not improper. In this case, the IOU was stamped with the official seal of Yajun Company and the loan was paid to Zhao Yajun's account, and the original judgment was not improper in determining the interest on the loan in this case in accordance with the above-mentioned Article 25 in combination with the transaction habits of borrowing between Zhao Yajun and Tu Gang. (2019) Supreme Law Min Shen No. 3082**: Understanding and Application of the Supreme People's Court's New Judicial Interpretation on Private Lending (edited by the First Division of Civil Trial of the Supreme People's Court, published by the People's Court Press), Civil Law Reference.