【Summary of the Case】

The plaintiff Liu filed a lawsuit alleging that he borrowed 21.7 million yuan from Dongsheng Company and Xu (the legal representative of Dongsheng Company). There were 122 promissory notes signed and confirmed by the borrower, all of which stated: "Today, I borrowed cash from Liu × Yuan; When the agreed loan term expires, interest shall be paid on the day of repayment of the principal, calculated at four times the bank's commercial operating loan interest rate (or the bank's loan interest rate for the same period). The borrower shall regularly issue a "Commitment Letter to Ensure Timely Repayment" to Liu during the loan period; Afterwards, both parties signed a Settlement Agreement, agreeing that the borrower should repay the loan before July 19th of the same year. Dongsheng Company and Xu issued a separate commitment letter, promising to pay an additional 2.53 million yuan in compensation for the investment losses caused to Liu due to the occupation of funds. On July 19, 2010, when the agreed repayment deadline expired, Liu reported to the public security organs that he had withdrawn funds from the borrower's company. While copying the original loan slip, Xu threw the archive bag that had sealed the original loan slip out of the window and was unable to find it. Liu filed a lawsuit to the court due to his unsuccessful request for payment, requesting the borrower Dongsheng Company and Xu to repay the principal and interest.

Defendants Dongsheng Company and Xu jointly defended that the fact of the loan involved in the case did not actually occur, and Liu claimed that the loan amount was the high interest calculated by rolling other loans (which had formed a separate lawsuit). Due to the closure of Dongsheng Company's land and equipment in the separate lawsuit, he was forced to sign a series of written documents and request the rejection of Liu's lawsuit request.

【Summary of Judgment】

After trial, the Intermediate People's Court of Nanjing City, Jiangsu Province found that Liu only made an oral statement on this fact and did not submit any other evidence to prove it in the borrower's defense of not actually receiving the payment. According to his statement, he lent 21.7 million yuan to Dongsheng Company and Xu even though the loan was not repaid in another case. The amount involved in the case was relatively large and all were delivered in cash, which is not consistent with common sense. Liu sued Zhang Ye, claiming that there were reasonable suspicions that could not be ruled out regarding the fact that the loan had already occurred. The basis for claiming rights was insufficient solely based on the Settlement Agreement, Commitment Letter to Ensure Timely Repayment, Commitment Letter, and inquiry records from public security organs. The court ruled that Liu's lawsuit request was rejected.

Liu appealed to the Jiangsu Provincial Higher People's Court against the first instance judgment. According to the second instance court's interpretation, the lender submitted evidence such as the source of the funds to supplement the evidence that they delivered the loan in cash. The court of second instance held that:

Firstly, private lending contracts have practical characteristics. If the lender exercises the right to claim creditor's rights and demands the borrower to repay the principal and interest of the loan, they should bear the burden of proof for whether a loan agreement has been formed, the loan content, and whether the funds have been delivered to the borrower. The promissory note is a voucher for the formation of a loan agreement between the borrower and the borrower, and has the preliminary evidence effect of presuming that the loan fact has actually occurred. However, when the borrower raises a defense that the loan fact has not actually occurred and the people's court has reasonable doubts about the loan fact that cannot be ruled out, the lender should also submit other evidence to confirm the actual occurrence of the loan fact. In this case, all 122 promissory notes, except for their signatures, were printed and provided by the lender in advance. Large loans were all delivered in cash without bank transfer vouchers, and the payment method was inconsistent with the transaction habit of transferring large loans through banks in another case. In addition, Liu admitted that there was also a situation where interest was pre recorded as principal in the amount of the promissory notes. Therefore, relying solely on the promissory note or the borrower's behavior of discarding the promissory note, it cannot be determined that the lender has actually delivered the loan principal of 21.7 million yuan to the borrower. At the same time, Liu continued to lend a large amount of money while Dongsheng Company and Xu did not repay the loan in another case, which is unreasonable and cannot rule out the possibility of high interest included in the principal amount stated in the promissory note. Although the "Settlement Agreement" and "Commitment Letter to Ensure Timely Repayment" submitted by Liu are complete in form, the settlement amount in these two pieces of evidence is calculated based on the amount of the loan receipt, and cannot prove the fact that the loan principal has been delivered. Therefore, the lender should provide additional evidence to prove the source of the loan funds and their ability to pay large loans, in order to confirm the actual occurrence of the loan.

Secondly, in the case where the lender submits additional evidence such as the source of funds in the second instance, a comprehensive judgment should be made on whether there is a lending relationship and the amount of loan principal from the degree of correlation between the recorded evidence and the facts of the case, as well as the logical connection between the various evidence. Firstly, the bank withdrawal voucher submitted by Liu can prove his ability to lend large amounts of money. Secondly, after examination, it was found that the evidence submitted by Liu in another case was two loan agreements, and the loans in this case were both formed through promissory notes. Therefore, it should be determined that the legal relationships between the loans involved in the two cases are independent of each other. Once again, the bank withdrawal voucher cannot directly prove that Liu delivered the loan to Dongsheng Company and Xu, but can only prove that Liu withdrew cash on the same day. For the whereabouts of the funds after withdrawal, there should also be a debit note issued by the borrower to confirm it. At this point, the nature of a promissory note is similar to a "receipt". If the time and amount of the lender's withdrawal match the time and amount of the borrower's issuance of the promissory note, and the amount stated in the promissory note, it can form a chain of evidence to prove the formation of a debt relationship between the borrower and the borrower, proving that the lender Liu delivered the payment to the borrower after withdrawing cash.

Thirdly, the interest rate agreed upon in the 122 loan notes involved in the case did not violate the relevant national regulations on limiting loan interest rates and should be protected. The agreed interest rate is the interest rate during the borrowing period, and the parties only agree on the interest rate during the borrowing period. If the lender claims overdue repayment interest at the interest rate during the borrowing period, it shall be supported in accordance with the law. The loan repayment period agreed upon by both parties is July 19, 2010, so the interest calculation should start on the day after the loan repayment period expires, which is July 20, 2010.

Fourthly, the "Commitment Letter" does not record the calculation basis for the compensation of 2.53 million yuan. For the nature of the agreed compensation of 2.53 million yuan, it should be recognized as the breach of contract penalty promised by the borrower Dongsheng Company and Xu for overdue repayment of the loan. In this case, Liu's claim for overdue repayment interest has reached four times the interest rate of similar loans of the People's Bank of China during the same period, and the excess should not be protected.

The second instance court revised the judgment based on the identified facts: firstly, revoke the first instance civil judgment; 2、 Dongsheng Company and Xu shall repay Liu's loan principal of 8.7154 million yuan and corresponding interest within 15 days from the effective date of the judgment (the interest shall be calculated and paid at four times the interest rate of similar loans in the same period as stipulated by the People's Bank of China from July 20, 2010 to the date of repayment); 3、 Reject Liu's other litigation requests.

【Evaluation and Analysis】

At present, there are two main forms of private lending in China. One is unorganized private lending, including private lending, inter enterprise lending, and lending between enterprises and individuals; The second is organized lending, including cooperatives, standard clubs, underground banks, pawnshops, guarantee companies, private equity funds, etc. In recent years, the total amount of private lending and financing has been continuously increasing, and the amount of individual transactions has been continuously expanding, becoming an important channel for private capital investment, especially an important source of funds for small and medium-sized enterprises. Subsequently, a large number of private lending cases have flooded into courts in various regions, and the relatively lagging legislation has led to a large number of difficult issues that need further clarification and resolution, especially in response to the strong concealment characteristics of such cases, which require court review and screening. The main manifestation is: the subject is concealed, that is, the litigation is brought by natural persons, and organized lending is covered up in the form of private lending; The content of the agreement is hidden, there are a large number of implicit interest rates, interest is pre recorded in the principal, and there are situations where fake buying and selling are used to cover up real borrowing and lending. Due to the involvement of professional legal personnel in drafting agreements, the format of written documents is complete, and the agreed content is standardized, making it difficult to review.

1、 Questions and confusion arising from the case

In terms of the trial of this case, at least the following considerations are brought.

Question 1: To what extent does a promissory note have evidential validity. Generally speaking, if the borrower and the lender reach a loan agreement and have confirmed receipt of the payment in writing, such as a promissory note, it shall be deemed that the loan has actually occurred. The borrower shall be responsible for the content confirmed by their signature, and shall repay the principal and interest as promised. According to Article 5 of the Several Provisions on Evidence in Civil Litigation of the Supreme People's Court, In contract dispute cases, the party claiming the establishment and effectiveness of the contract relationship bears the burden of proof for the fact that the contract is formed and effective; the party claiming the change, termination, or revocation of the contract relationship bears the burden of proof for the fact that caused the change in the contract relationship. If there is a dispute over whether the contract is fulfilled, the party responsible for fulfilling the obligation shall bear the burden of proof. In this case, the lender not only submitted a promissory note, but also submitted a large amount of written evidence such as a settlement agreement, guarantee repayment commitment letter, and settlement agreement. Why did the court not directly judge the borrower to repay the principal and interest as agreed?

Question 2: Is it necessary to review and confirm the fact of loan delivery when the lender claims that all loan items are delivered in cash and cannot submit remittance vouchers?

Question 3: Should the court support both parties in agreeing to pay compensation, legal fees, comprehensive management fees, and other additional penalties for overdue repayment calculated at four times the same period loan interest rate?

Question 4: How to solve the problem of criminal and civil interweaving in cases involving illegal fundraising. In 2010, the Supreme People's Court's Interpretation on Several Issues Concerning the Specific Application of Laws in the Trial of Criminal Cases of Illegal Fundraising stipulated that activities such as absorbing funds from unspecified objects in society, issuing vouchers, and promising to repay principal and interest within a certain period of time without the approval of the People's Bank of China can constitute illegal fundraising. In the trial of private lending cases, if it is found that it conforms to the characteristics of illegal collective capital crimes and is suspected of committing crimes, how should it be handled?

2、 Thoughts and steps for reviewing the borrowing facts in private lending cases

According to Article 7 of the Notice of the Supreme People's Court on Promoting Economic Development and Maintaining Social Stability through the Proper Trial of Private Loan Dispute Cases in accordance with the Law, the people's court shall comprehensively and objectively review all the evidence submitted by both parties in the process of trying private loan dispute cases in accordance with the law, and conduct a comprehensive review and judgment from the degree of correlation between each evidence and the facts of the case, as well as the connection between each evidence.

（1） In suspected cases, promissory notes only have constructive evidence validity

The subjects of traditional folk lending are individuals who are usually familiar with each other, and the borrowing habit is to deliver small amounts of cash on the spot. Therefore, the transaction is completed when the money is received. In the trial of such cases, it is generally determined that the fact of borrowing has actually occurred based on the loan receipt issued by the borrower.

In private lending where the borrower is an enterprise, it usually involves the delivery of large amounts of funds. In this case, in accordance with the requirements of Article 7 of the Supreme People's Court's "Notice on the Proper Trial of Private Lending Disputes in accordance with the Law to Promote Economic Development and Maintain Social Stability," for loans that claim cash delivery, the delivery voucher, payment ability, transaction habits, and the size of the loan amount can be determined based on A comprehensive judgment is made based on factors such as the relationship between the parties and the transaction details stated by the parties. Due to the lack of provisions similar to foreign cash transaction laws in China, which do not mandate the payment of large amounts to be made through bank transfer, it is difficult to examine whether the loan fact actually occurred when the lender advocates for the delivery of large amounts of cash. In a large number of private lending cases, there are also standardized promissory notes, which are uniformly printed and provided by the lender to the borrower in advance. The borrower cannot change the content of the promissory note at will, only sign and confirm on the promissory note. The wording and sentence construction of standard IOUs are generally very rigorous, and the expressions of principal and interest are strictly in accordance with legal regulations. In addition, the lender also regularly settles accounts with the borrower, signing settlement agreements, repayment agreements, and other written documents to prove the authenticity of the loan terms. Therefore, once the lender requests repayment based on the IOU, and the borrower defends that the IOU principal includes implicit high interest, it is difficult for the court to verify the actual amount of the borrowed principal. In this case, it should be preliminarily determined whether the loan facts claimed by the lender have reasonable doubts that cannot be ruled out. In the case of reasonable doubts, the lender should be required to provide further evidence.

Taking this case as an example, there are at least the following facts that raise reasonable suspicion:

Firstly, all the contents of the 122 promissory notes, except for the signature, were printed and provided by the lender in advance. Large amounts of loans were delivered in cash without bank transfer vouchers, and the payment method was not consistent with the transaction habit of transferring large amounts of loans through banks. In addition, Liu also admitted that there was a situation where interest was pre recorded as principal in the amount of the promissory notes.

Secondly, if the lender continues to lend a large amount of money to the same borrower without the borrower repaying the loan in another case, its behavior is unreasonable and cannot rule out the possibility that the borrower claims that the principal amount contained in the promissory note contains high interest.

Therefore, when there are reasonable doubts that cannot be ruled out, it should be determined that the promissory note has only constructive evidence effect at this time. The lender should also submit other evidence to confirm the actual occurrence of the loan.

（2） The lender has the burden of proof to reinforce the source of the funds and eliminate reasonable suspicion

A promissory note is a voucher for both parties to reach a loan agreement. When there is reasonable doubt about the fact of the loan, the lender should first provide evidence to prove the fact of the loan delivery. In this case, the second instance court clarified that the lender was required to provide additional evidence such as the source of the funds to reasonably explain the aforementioned suspicious facts. In this case, the evidence submitted by the lender for supplementary purposes can be divided into two categories:

Firstly, evidence that can prove the cash delivery of the loan. This includes the bank card withdrawal voucher retrieved from the bank, as well as a description of the bank withdrawal identification, to prove the time and method of extracting the loan item. Due to the lender claiming that they delivered large amounts of cash on their own and had separate contact with the borrower, there is no direct evidence to prove the fact of cash delivery. The aforementioned withdrawal evidence is indirect evidence. After review, it was found that: 1. 107 bank card withdrawal vouchers were retrieved from the bank, all of which were stamped and confirmed by the withdrawal bank. There are a total of 66 transactions with a total amount of 8.3954 million yuan that completely match the time and amount of the debit note; There are a total of 11 cases with slight errors in time and amount, totaling 2.5377 million yuan; The total amount of the withdrawal vouchers mentioned above is 10.9331 million yuan. There are a total of 7 cases where the time matches and the withdrawal amount is less than the debit amount, with a total amount of 909100 yuan; There are a total of 6 transactions with matching amounts and mismatched dates, totaling 1.07 million yuan. There are also 17 withdrawal vouchers, with a total amount of 1.7964 million yuan that cannot correspond to the debit note. 2. A bank withdrawal identification statement confirming that the source of the funds is all cash withdrawals. For example, the "Bank of Communications Transaction Receipt" records "paid cash", the "China Merchants Bank Transaction Details" records "CWD1: withdrawal from our bank's ATM", "WDCS: withdrawal from the counter is withdrawal of cash", the "Agricultural Bank of China Bank Card Withdrawal Business Receipt" records "cash withdrawal", the "Shanghai Pudong Development Bank Business Receipt" records "cash cleared", and the "Shenzhen Development Bank Customer Receipt" records "cash withdrawal", The "Bank of China Withdrawal Receipt" records "Loan 701", and the "Jiangsu Bank Private Current Details Historical Data Query Form" records "withdrawal" and so on.

After verification, there are a total of 66 transactions with a total amount of 8.3954 million yuan that fully correspond to the date and amount of the debit note and the bank withdrawal date and amount. In addition, there are three cases where the withdrawal date of the bank matches the date of the debit note, and the withdrawal amount is greater than the amount of the debit note, totaling 320000 yuan. The aforementioned 69 payments, totaling 8.7154 million yuan, should be recognized as the actual amount of loan principal paid by Liu to Dongsheng Company and Xu.

Secondly, it can provide a reasonable explanation for the evidence of borrowing new debt while the previous debt has not been repaid. In the case of a rolling loan between the lender and the borrower, where the previous debt has not been fully repaid and a separate lawsuit has been initiated, it is obviously against common sense for the lender to lend a large amount of money again. Therefore, the lender should provide a reasonable explanation, such as proving that the borrower provides reliable loan guarantees and providing guarantees for both the previous debt and the new debt loans. The lender has reason to believe that all loans have repayment guarantees. In this case, the evidence submitted by the lender includes: 1. Dongsheng Company's industrial and commercial change registration application materials, and the "Equity Transfer Agreement" signed between Liu and Dongsheng Company's shareholders, proving that the two shareholders of Dongsheng Company have transferred all their equity in Dongsheng Company to Liu as a loan guarantee, requesting Liu to continue providing the loan. 2. The partial SMS communication records between Xu and Liu prove that Xu requested a loan from Liu, and Liu lent it to Xu. Before Xu destroyed the original loan slip on July 19, 2010, the relationship between the two parties was relatively friendly and the loan was not interrupted due to a separate lawsuit.

In the case where the lender fulfills the obligation of evidence reinforcement, in accordance with the spirit of the judicial interpretation of the Supreme People's Court, a comprehensive judgment should be made on whether there is a lending relationship and the amount of loan principal from the degree of correlation between the recorded evidence and the facts of the case, as well as the logical connection between each evidence. Firstly, the bank withdrawal voucher can prove that Liu has the payment ability to lend large amounts of money. Secondly, the bank withdrawal voucher can prove that Liu withdrew cash on the same day. For the whereabouts of the funds after withdrawal, there is a debit note issued by the borrower to confirm it. At this time, the nature of the debit note is similar to the "receipt". In the case where the time and amount of the lender withdrawing the funds can correspond one by one with the time and amount of the borrower issuing the debit note, and the amount stated in the debit note, a chain of evidence has been formed to prove the formation of a debt relationship between the borrower and the borrower, Proof that the lender Liu delivered the amount to the borrower Dongsheng Company and Xu after withdrawing cash. Therefore, the portion of the bank withdrawal voucher submitted by Liu that matches the time and amount of the debit note should be confirmed. On the contrary, for the other bank withdrawal vouchers submitted by Liu, as the time and amount cannot correspond to the debit note, there is no evidence chain to prove that the purpose of withdrawing cash is the loan involved in the case. Therefore, the correlation between this part of the bank withdrawal vouchers and this case should not be confirmed.

It should be mentioned that this identification method may still have certain risks, that is, in the case where the standard debit note is printed and provided by the lender, it cannot be absolutely ruled out that the lender withdraws cash for other purposes, but the borrower is required to sign and confirm the preparation of the debit note according to the cash withdrawal record. Especially in some private lending cases, although the lenders participating in the litigation are natural persons, there are organized lending groups hidden behind them, so the connection of each process is arranged very rigorously. However, considering the limited scrutiny of civil cases and the fact that the evidence of the source of cash payments is supplementary and reinforcing evidence of the borrowing facts represented by existing written documents such as promissory notes, the borrower has issued a series of written documents to the lender clearly acknowledging that the borrower has received the loan and made a voluntary declaration of willingness to repay the principal and interest according to the agreed terms, In the case where the lender has provided supplementary evidence to prove the fact of cash delivery, it should be deemed that the lender's evidence has met the high probability standard for determining the facts in civil cases. If the borrower still insists on an absolutely negative defense claim and proposes that the fact of the loan did not actually occur, a reasonable explanation should be given for their confirmation of the entire content of the loan on the loan slip. In other words, the burden of proof has shifted to the borrower. If the borrower cannot submit sufficient rebuttal evidence, they should bear the corresponding adverse legal consequences.

（3） Pay attention to identifying hidden interest rates that exist in the form of liquidated damages

For the issue of interest, first of all, it is necessary to examine whether the agreed interest violates the relevant national regulations on limiting loan interest rates. According to Article 6 of the "Opinions of the Supreme People's Court on the Trial of Loan Cases by the People's Court", the maximum interest rate for private lending shall not exceed four times the interest rate of similar loans by banks (including the principal interest rate). If the limit is exceeded, the excess interest shall not be protected. Secondly, it is necessary to examine whether the agreed interest is interest within the period or interest outside the period. Article 6 of the Notice of the Supreme People's Court on Properly Handling Private Loan Dispute Cases in accordance with the Law to Promote Economic Development and Maintain Social Stability stipulates that the parties only agree on the interest rate during the borrowing period, and do not agree on the overdue interest rate. If the lender claims overdue repayment interest at the interest rate during the borrowing period, it shall be supported in accordance with the law. From this, it can be seen that if the parties have not agreed on regular interest payments, they can refer to the standard for interest payments during the period.

It should be noted that in private lending cases, parties often cover up high interest beyond the legal limit through forms such as lawyer fees, service fees, and liquidated damages. The views of courts in various regions are currently inconsistent on whether to support this portion of fees. Some courts believe that as long as the cumulative amount of fees exceeds four times the interest, the excess should not be supported. Some courts believe that it is necessary to distinguish whether the fees are necessary expenses. If the lawyer's fees claimed by the lender are necessary expenses, they should be supported. The nature of the compensation agreed upon in this case is actually the liquidated damages for overdue payment. Considering that the nature of the liquidated damages for overdue payment is the same as the interest, in order to prevent the lender from evading the law and obtaining high interest rates through liquidated damages, in the case of both interest and liquidated damages for overdue payment agreed upon between the lender and the borrower in the private lending contract, It should be recognized that the total amount of interest and liquidated damages ultimately collected should not exceed four times the interest rate of similar loans of the People's Bank of China during the same period.

3、 Preliminary Construction and Legal Analysis of Trial Rules for Private Loan Cases

（1） Clarify the Definition of Private Lending

Private lending refers to the borrowing and lending of securities such as Renminbi, Hong Kong dollars, Australian dollars, Taiwan dollars, foreign currencies, and Treasury bills between natural persons, legal persons engaged in non-financial business, and other organizations. The legal sources of this definition include two aspects. On the one hand, it comes from the provisions of the Supreme People's Court's Several Opinions on the Trial of Loan Cases by the People's Court, 1. Loan disputes between citizens, loan disputes between citizens and legal persons, and loan disputes between citizens and other organizations should be accepted as loan cases The content of "lending between citizens and non-financial enterprises belongs to private lending" as stipulated in.

The above definition limits that one party in the private lending entity must be a natural person, and two issues need to be noted. One is to exclude financial institutions as the subject of private lending. Since the issuance of the Notice on Adjusting the Deposit and Loan Interest Rates of Financial Institutions (Yin Fa [2004] No. 251) by the People's Bank of China, the loan interest rates of financial institutions (excluding urban and rural credit cooperatives) have no longer been capped. Commercial bank loans and policy banks' loans managed according to commercialization will no longer have upper limit management on their interest rates. Afterwards, the central bank lifted the lower limit of loan interest rates this year, and the loan interest rate space of commercial banks has been fully opened up. Therefore, loans issued by financial institutions do not involve a review of the legality of loan interest rates, and the provisions of judicial interpretations on the upper limit of private lending interest rates cannot be applied. Secondly, when enterprises are the main borrowers, their handling methods are unique, and the court's attitude towards enterprise lending has never changed. Article 74 of the General Provisions on Loans stipulates that "if enterprises engage in unauthorized or disguised lending between themselves, the People's Bank of China shall collect the interest already obtained or agreed upon by the lender, and impose a fine equivalent to the bank loan interest on the borrower. According to the provisions of the Supreme People's Court's Reply on How to Deal with Borrowers of Enterprise Loan Contracts Who Do Not Repay Loans on Time, enterprise loan contracts are invalid due to their violation of relevant financial regulations. The court used this judicial interpretation to render the participation of non-financial institutions in inter enterprise lending invalid. However, in practice, the principle for handling cases where enterprises use their own funds for lending is: generally, not only does the borrower be judged to repay the loan principal, but the agreed interest is neither pursued nor punished.

（2） The Legal Nature of Private Lending and the Allocation of Burden of Proof

Private lending contracts have practical characteristics, and payment delivery is a necessary prerequisite for repayment. Therefore, in addition to the responsibility of proving the formation of a loan agreement between the two parties, the lender still needs to prove that the payment has been actually delivered.

1. As mentioned earlier, if the lender requests repayment of the loan based on the legal relationship of private lending, the first step is to provide evidence to prove that both parties have reached a loan agreement, such as submitting evidence such as loan contracts and receipts, as well as evidence that the funds have actually been delivered, such as remittance vouchers and receipts. In simple cases, promissory notes can simultaneously serve as proof of the aforementioned two essential facts. If there are no doubtful facts, it can be determined that the lender has fulfilled its burden of proof. If the borrower claims to have fully or partially repaid the principal and interest of the loan, they shall bear the burden of proof of the repayment fact.

2. If the lender fails to provide evidence to prove that the payment has actually been made, the borrower defends that the loan did not actually occur, and there are reasonable doubts that cannot be ruled out regarding the fact of the loan claimed by the lender, similar situations such as large amounts of money (or frequent and significant cumulative payments between the two parties although small amounts of money are exchanged) are all delivered in cash without any other evidence to prove; If the previous debt has not been repaid and a new loan has been borrowed, and the borrower is not required to provide reliable guarantees, the people's court shall require the lender to provide additional evidence to rule out reasonable suspicion. If the lender cannot prove the fact of payment, their litigation request shall be rejected.

（3） Clarify the relationship between liquidated damages, fees, and interest

Interest is the fruits and benefits of the principal during the performance of the loan contract, and overdue interest should be considered as the fruits and benefits of the principal during the period of delayed payment. Considering that the direct and main loss caused by the breach of a loan contract is that the borrower is unable to use the principal to seek profits, and also considering the fact that in private lending practice, parties often seek high interest loans through clever naming to evade the law, The approval of the Supreme People's Court on February 12, 1999 on the calculation standard of liquidated damages for overdue payments and on November 15, 2000 on the revision of the approval of the Supreme People's Court on the calculation standard of liquidated damages for overdue payments can refer to the standard of overdue interest to determine the calculation standard of liquidated damages for overdue payments. Therefore, if both parties agree on interest and liquidated damages, the interest during the loan term shall not exceed four times the bank's loan interest rate for the same period. The total amount of interest and liquidated damages after the loan is overdue shall not exceed four times the People's Bank of China's loan interest rate for the same period.

In addition, in accordance with the spirit of the minutes of the meeting of the Jiangsu Provincial High People's Court to hear private lending cases, in private lending dispute cases, if both parties have an agreement on the lawyer's fees to achieve creditor's rights, they shall handle it according to the agreement; But if one party requests to deduct the lawyer's fees beyond a reasonable amount, the people's court shall support it.

4、 Conclusion

The value of the second instance judgment lies in the establishment of the following trial criteria: private lending contracts have practical characteristics, and if the lender exercises the right to claim creditor's rights to demand the borrower to repay the principal and interest of the loan, they should bear the burden of proof for whether a loan agreement has been formed, the loan content, and whether the payment has been delivered to the borrower. The promissory note is a voucher for the formation of a loan agreement between the borrower and the borrower, and has the preliminary evidence effect of presuming that the loan fact has actually occurred. However, when the borrower raises a defense that the loan fact has not actually occurred and the people's court has reasonable doubts about the loan fact that cannot be ruled out, the lender should also submit other evidence to confirm the actual occurrence of the loan fact.

With the increasing contradiction between supply and demand in private financing, private lending cases will inevitably present a development trend of diversified lending subjects, diverse lending forms, and complex case facts. Compared to the current legal regulation of private lending, the trial difficulties in private lending cases will continue to emerge one after another. We look forward to more judicial responses.

Original publication: "Interpretation Research", Volume 1, 2013. (Annotations have been removed during editing)