029. Q: After the annual interest rate of the loan reaches more than 4 times the one-year loan market prime interest rate at the time of the conclusion of the contract, can the litigation claims of the parties such as lawyer's fees and litigation costs stipulated in the loan contract still be supported by the people's court?
Answer: In judicial practice, when a party to a private lending dispute files a lawsuit with the people's court, in addition to requiring the other party to bear the overdue interest, liquidated damages and other claims, it may also claim the lawyer's fees and litigation costs agreed in the loan contract. Although the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (Second Amendment in 2020) clarifies how to deal with overdue interest, liquidated damages and other expenses of private lending, that is, Article 29 of the Interpretation stipulates that "if the lender and the borrower have agreed on both the overdue interest rate and the liquidated damages or other fees, the lender may choose to claim the overdue interest, liquidated damages or other expenses, or they may claim both. However, the people's court will not support the portion of the total amount exceeding four times the one-year loan prime interest rate at the time of the conclusion of the contract. "However, after the annual interest rate of the loan reaches four times that exceeds the one-year loan market prime interest rate at the time of the conclusion of the contract, can the parties' claims for lawyer's fees and litigation costs stipulated in the loan contract still be supported? In the absence of specific and clear provisions, there are differences of understanding on this issue.
One view is that attorney's fees and litigation costs should not be included in the calculation of the annual interest rate cap on borrowing. On the contrary, attorney's fees and litigation costs are the costs of realizing the claim and should be supported.
Another view is that attorney's fees and litigation costs are already included in the "other expenses" in the above-mentioned judicial interpretation, and lawyer's fees and litigation costs should no longer be supported.
In this regard, we tend to agree with the first point of view above for the following reasons:
First of all, according to the legislative intent of Article 29 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (Second Amendment in 2020), this article is a provision on the coexistence of overdue interest, liquidated damages and other expenses, and the main purpose is to protect the rights and interests of the parties in a balanced manner when the borrower and the borrower agree on the overdue interest rate, liquidated damages and other fees. According to the above-mentioned judicial interpretation, when the borrower is late in repayment, the lender has the right to require the borrower to pay the overdue interest, liquidated damages and other expenses at the same time. From a practical point of view, "other expenses" mainly involve service fees, consulting fees, management fees, etc., agreed between the lender and the borrower.
The above-mentioned expenses are still necessary costs paid by the borrower to obtain the loan. The overdue interest, liquidated damages, and such fees agreed upon by the parties at the same time are no different in nature from the interest rate, and the separate agreement is only to circumvent the upper limit of the interest rate. It is precisely in order to prevent the parties from raising the borrowing interest rate in a disguised way that the judicial interpretation limits the protection standard for other expenses incurred including service fees, consulting fees, management fees, etc., to less than four times the one-year loan prime interest rate at the time of the conclusion of the contract.
Second, the nature of the expenses incurred by the obligee to protect its legitimate rights and interests, such as attorney's fees and litigation costs, is completely different from the costs paid by the borrower to obtain the loan, and the lawyer's fees and litigation preservation fees should not be classified as "other expenses".
Finally, the costs of litigation are not necessarily borne by the lender claiming repayment. When the dispute is adjudicated by the people's court, according to the principle that the litigation costs shall be borne by the losing party, if the dispute arises due to the borrower's reasons, it is more fair and reasonable for the borrower to bear this part of the costs. In this case, it is reasonable that the costs of the proceedings are not included in the "other costs".
030. Q: Article 27 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (2020 Second Amendment) stipulates that if there is an agreement between the borrower and the borrower to include interest in the principal, can the interest be included in the principal of the loan and the overdue interest calculated if the contract does not stipulate it?
Answer: The answer is no, the calculation base of overdue interest is still the principal of the loan, and the interest cannot be included in the principal to calculate the overdue interest. On the one hand, Article 676 of the Civil Code (formerly Article 207 of the Contract Law) stipulates that "if the borrower fails to repay the loan within the agreed time limit, it shall pay overdue interest in accordance with the agreement or relevant provisions of the state." However, this article does not provide that when paying overdue interest, the original interest needs to be calculated into the principal amount to calculate the interest. On the other hand, if the principal and interest of the loan are used as the basis for calculating the overdue interest, it is tantamount to calculating compound interest for the parties by the court in the absence of an agreement between the parties.
Of course, it should be noted that the background of the above-mentioned treatment is that the parties have not made relevant agreements. If the parties expressly agree that the calculation base of overdue interest includes the sum of principal and interest, the agreement of the parties shall be valid within the scope of Article 27 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (Second Amendment in 2020). This article specifically stipulates that: "If the interest rate of the previous period does not exceed four times the one-year loan market prime interest rate at the time of the conclusion of the contract, the amount stated in the re-issued credit certificate may be recognized as the principal of the later loan after the settlement of the principal and interest of the previous loan. The interest on the excess part shall not be recognized as the principal of the later loan.
Where, calculated in accordance with the preceding paragraph, the sum of the principal and interest payable by the borrower after the expiration of the loan period exceeds the sum of the principal of the initial loan and the interest for the entire loan period calculated based on the principal of the initial loan and four times the one-year loan market prime interest rate at the time of the conclusion of the contract, the people's court shall not support it. This means that, on the one hand, the original interest agreed upon by the parties can only be included in the principal base for the calculation of overdue interest to the extent that the original principal is calculated at four times the one-year loan market prime interest rate at the time of the conclusion of the contract; On the other hand, the sum of the principal and interest payable by the borrower after the expiration of the loan period shall not exceed the sum of the principal of the initial loan and the interest for the entire loan period calculated based on the initial loan principal and four times the one-year loan prime interest rate at the time of the conclusion of the contract.
031. Question: Is a non-financial legal person or other organization that raises funds from employees in the form of loans within the unit for the production and operation of the unit be protected by law?
Answer: This kind of internal fund-raising method from employees is a form of private lending. Article 1 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases (Second Amendment in 2020) stipulates that the term "private lending" as used in these Provisions refers to the act of financing between natural persons, legal persons and unincorporated organizations. These Provisions do not apply to disputes arising from the issuance of loans and other related financial businesses of financial institutions and their branches established with the approval of the financial regulatory authorities to engage in loan business.
Article 11 stipulates: "Where a legal person or unincorporated organization raises funds from employees in the form of loans within the unit for the production and operation of the unit, and there are no circumstances provided for in Articles 144, 146, 153, 154 of the Civil Code or Article 13 of these Provisions, and the parties claim that the private lending contract is valid, the people's court shall support it." This fully shows that such financing by non-financial legal persons or other organizations is not prohibited by law, but whether the specific financing acts are effective and protected by law should be subject to a two-tier review.
First, it should be examined whether there are circumstances in which the contract provided for in Articles 144, 146, 153 and 154 of the Civil Code is invalid. Article 144 of the Civil Code stipulates that: "Civil juristic acts carried out by persons without capacity for civil conduct are invalid. Article 146 stipulates: "Civil juristic acts carried out by the actor and the counterpart with false expressions of intent are invalid. The effectiveness of civil juristic acts concealed by false expressions of intent is to be handled in accordance with the relevant legal provisions. Article 153 stipulates: "Civil juristic acts that violate the mandatory provisions of laws and administrative regulations are invalid. However, the mandatory provisions do not lead to the invalidity of the civil juristic act. Civil juristic acts that are contrary to public order and good customs are invalid. Article 154 stipulates: "Civil juristic acts in which the perpetrator maliciously colludes with the counterpart to harm the lawful rights and interests of others are invalid." ”
Second, it should also examine whether there are any of the circumstances provided for in Article 13 of the above-mentioned judicial interpretation: "In any of the following circumstances, the people's court shall find that the private lending contract is invalid: (1) taking loans from financial institutions for re-lending; (2) Relending funds obtained by means such as borrowing money from other for-profit legal persons, raising funds from employees of that unit, or illegally absorbing deposits from the public; (3) Lenders who have not obtained lending qualifications in accordance with law provide loans to unspecified targets of society for the purpose of making profits; (4) The lender knew or should have known in advance that the borrower was borrowing money for illegal or criminal activities, but still provided the loan; (5) Violating mandatory provisions of laws or administrative regulations; (6) Violating public order and good customs. ”
If the circumstances in these two articles do not exist, the contract is valid and protected by law.
032. Q: If there is no interest stipulated in the private loan contract, and the borrower voluntarily pays it, but the borrower asks the lender to return the interest paid on the grounds of unjust enrichment, does the people's court support it?
A: The people's courts generally do not support such cases. Article 122 of the Civil Code stipulates that: "If another person obtains improper benefits without legal basis, the person who has suffered losses has the right to request the return of the improper benefits." According to this rule, there are four elements of unjust enrichment: one party receives an advantage; the other party suffers losses; There is a causal relationship between the gain and the loss; There is no legal basis for profiting, i.e. there is no "legal cause", which is the key to unjust enrichment. In this issue, the borrower's voluntary payment of interest is based on the establishment and effective performance of the loan contract, and is not without "legal reasons".
Specifically, there are two situations in which the loan contract does not stipulate interest: one is that the two parties may have agreed orally, which is not uncommon in practice, and the borrower pays the interest according to the agreement, which is a normal performance of the loan contract and cannot be refunded; On the other hand, if the two parties have indeed not agreed on the interest in writing or orally, in this case, the borrower's initiative to pay the interest can be regarded as a new offer to revise the loan contract and increase the relevant content of the interest payment, and the lender has no objection and accepts it, then it is an expression of intention to commit to the offer, and the parties have thus completed the revision of the loan contract, and the new contract has been fulfilled by the completion of the payment of interest (and principal) by the borrower, and the borrower's request for a refund of interest should not be supported.
033. Q: In many private lending practices, in order to ensure that the loan can be repaid, the lender agrees to repay the loan in a certain amount when repaying the loan; At the time of repayment, due to the increase in the price of these goods, the annual interest rate of the repaid goods in accordance with the agreement is converted into money, and its annual interest rate has exceeded the one-year loan market prime interest rate at the time of the conclusion of the contract by 4 times, what should I do?
A: For a loan contract, it is the lender's obligation to provide the money agreed in the contract, and it is the lender's obligation to repay the loan and the corresponding interest according to the contract. 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 (Second Amendment in 2020) stipulates the upper limit: "If the lender requests the borrower to pay interest at the interest rate agreed in the contract, the people's court shall support it, except where the interest rate agreed upon by both parties exceeds four times the one-year loan market prime interest rate at the time of the conclusion of the contract." The term 'one-year loan market quotation rate' referred to in the preceding paragraph refers to the one-year loan market quotation rate authorized by the People's Bank of China to be released monthly by the National Interbank Lending Center from August 20, 2019. ”
Where the parties agree in practice to repay the corresponding loan with a certain amount of goods, the essence of which is to replace the principal and interest payable by the lender with the value embodied in the thing, so when repaying the loan, the annual interest rate of the value embodied in the thing after deducting the principal exceeds four times the one-year loan market prime interest rate at the time of the conclusion of the contract, the people's court will not support the lender's request for the excess interest according to the foregoing provisions. Therefore, if the parties agree to repay the debt in kind, if the annual interest rate of the amount of money converted at the time of repayment of the loan exceeds four times the one-year loan market prime interest rate at the time of the conclusion of the contract, the people's court will not support the lender's claim for the excess interest.
