Main tasks and practical skills:
The Judge should determine, in a prompt manner, whether the lending or borrowing arrangement is based on an interest or non-interest basis, in order to define the type of the contract. The Judge shall determine the scope of evidence and the applicable laws.
- With respect to a contract for a loan for an indefinite term, the lender may reclaim the loan and the borrower may repay the debt at any time (Article 474 of the Civil Code 1995). The time when the lender reclaims the loan but the borrower is unable to repay the debt shall be used for determining that the debt has become overdue.
- With respect to a contract for a loan for a definite term, the date when the deadline for repaying the debt is expired and the borrower is unable to repay the debt to the lender, shall be used for determining that the debt has become overdue.
- Even though the loan is free of interest, the borrower must pay the lender interest on the overdue debt. Such interest shall be calculated according to the interest rate announced by the State Bank on the date when the hearing of first instance is conducted and for the period from the date when the debt is overdue to the date when the hearing of first instance is conducted.
- With respect to a contract for a loan without interest, the Judge shall not have to collect evidence on the payment of interest but should still note the burden of proof by the party who initiates the case. For example, if A wants to request repayment of the loan from B, A shall have to prove that A has lent to B. If B states that B has paid the loan to A, it is B’s obligation to prove that B has paid the loan..
- Documents which can be served as evidence and are often collected shall be: receipt for the loan; verification of the debt (written after the borrowing but there is an event verifying it, etc.); a book of loans with some writing by the borrower, showing its contents, etc.
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