Case of the Week: Is a loan between spouses during marriage valid?

Lawyer Feng Li, Member of the Family and Marriage Committee of Zhejiang Provincial Lawyers Association, Member of the Xin Yi Party Branch of the Firm, and Vice Director of the Family and Marriage Committee of the Firm.

Since her admission to the bar, Lawyer Feng Li has served many consulting units and handled numerous litigation cases, involving disputes related to marriage, family affairs, inheritance, various contract disputes, company-related disputes, and criminal cases. She has accumulated rich litigation experience and possesses solid and proficient litigation skills in the process of handling cases. Adhering to the professional philosophy of "trustworthy service," she provides clients with satisfactory legal services.

Contact Information:
 

Phone: 15158028105 Email: fengli@htxls.com

Is a loan between spouses during marriage valid?

Case Summary

Tang and Chen registered their marriage in 2007, agreed to divorce in June 2008, remarried in April 2009, and divorced again in April 2015.

In June 2018, Chen filed a lawsuit with a promissory note stating: “On July 1, 2010, Tang borrowed RMB 350,000 from Chen. The repayment date is X year X month X day. For overdue payments, the borrower shall bear 15% of the total loan amount as liquidated damages. The court of jurisdiction is XXX Court.” Tang signed at the bottom of the note, with the date of 2010.07.01. Chen claimed that Tang should repay the loan and bear the corresponding liquidated damages.

Agency Strategy

After receiving the litigation materials, Tang found Lawyer Feng. After organizing and analyzing the case materials, they responded to the lawsuit. Lawyer Feng provided evidence and presented a defense from the aspects of the continuation of the marriage, the process of the promissory note formation, the delivery of the loan, the provisions of the divorce agreement, and the assumption of other external debts during the marriage.

Judgment Result

The court ultimately dismissed all of Chen's claims. Chen appealed to the Hangzhou Intermediate People's Court, which dismissed the appeal and upheld the original judgment.

Analysis

So, are all loans between spouses during marriage invalid? This should be considered from the following four levels:

First, it is necessary to determine whether the loan represents the true intentions of both parties and whether the loan actually occurred.

Firstly, current Chinese law does not prohibit spouses from borrowing money from each other during the subsistence of a marriage, therefore, intra-marital loans between spouses are valid.

Secondly, loan contracts between natural persons must meet two conditions:

(1) Agreement to lend; (2) Actual delivery.

Therefore, if a couple jokingly writes a promissory note for an exorbitant amount or a promissory note is obtained through coercion or inducement, and the loan is not actually delivered, then the loan contract is not established.

Second, it is necessary to confirm whether the spouses in question have agreed to a separate property system.

China implements a system of jointly owned marital property; however, the parties can make their own agreements regarding the property, and such agreement must be in writing. If the spouses have agreed in writing that the personal property belongs to each individual, then for such intra-marital loans, the borrower should repay the lender according to the relevant provisions of the Contract Law.

Third, if the intra-marital loan is under the system of jointly owned marital property, it is necessary to consider whether the source of the loan is the individual's pre-marital property or the jointly owned marital property.

If there is evidence to prove that the loan is the individual's pre-marital property, then the pre-marital property belongs to the individual, and the agreement between the parties is valid.

Fourth, if a loan is made during the marriage using jointly owned property and lent to one party for personal use, it is considered that the couple has agreed to dispose of the jointly owned marital property, and it can be dealt with according to the agreement during the divorce.

If the jointly owned marital property is lent to the other party, the purpose of the loan must be for personal business activities or personal affairs.

Therefore, whether a loan between spouses during marriage is valid cannot be generalized; it needs to be determined based on the evidence of both parties. Lawyer Feng reminds everyone that when encountering legal issues, they should communicate with a lawyer in a timely manner and know how to preserve evidence to avoid detours in the process of safeguarding their rights.

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