[Case Summary]This case involves a contract dispute. On November 17, 2021, Xiao Zhou signed a "Product Investment Cooperation Agreement" with XX Company, investing 500,000 yuan and promising an annualized return with a guaranteed minimum. After the expiration of the one-year term, XX Company failed to fulfill its obligations, and Xiao Zhou entrusted Beijing Henglu Law Firm to handle the case.Feng NaThe lawyer's representation focused on the legal nature of the relationship between the so-called "investment" and the actual loan, and whether the guarantor, Xiao Chen, should bear joint and several liability. The applicable legal provisions are the relevant provisions of the Civil Code of the People's Republic of China and Article 177, Paragraph 1, Item 1 of the Civil Procedure Law of the People's Republic of China. The first-instance court determined that it was actually a private loan, and ordered XX Company to repay 500,000 yuan and interest of 72,000 yuan, with Xiao Chen bearing joint and several liability. Xiao Chen's appeal was rejected, and the original judgment was upheld.

I. Review of the case

Investment turns into borrowing. People often search for terms like "Is the guaranteed minimum return in an investment agreement considered borrowing?", "How to determine if something labeled as investment is actually borrowing?", and "When is a guarantor not liable?". On November 17, 2021, Party A Xiao Zhou and Party B XX Company signed a "Product Investment Cooperation Agreement", which stipulated that Xiao Zhou would invest 500,000 yuan, with an investment profit rate of 14.4% and a term of one year. It also promised an annualized return of no less than 7% and a 7:3 split of the excess. On the same day, Xiao Zhou paid 500,000 yuan. On November 17, 2022, Xiao Chen issued a "Guarantee Agreement", voluntarily providing joint and several liability guarantees for Xiao Zhou and promising to repay the unpaid amount unconditionally before May 1, 2023. A year later, XX Company failed to fulfill its obligations, and Xiao Zhou filed a lawsuit, entrusting Beijing Henglu Law Firm to handle the case.Feng NaThe lawyer represents the client to protect their rights and interests.

II. The focus of the case

  • Focus 1: The legal relationship of the "Product Investment Cooperation Agreement" involved in the case is an investment or a loan.The lawyer argued that Xiao Zhou received fixed returns and did not bear any operational risks, so the so-called investment was actually a loan.
  • Focus 2: Whether the guarantor, Xiao Chen, should bear joint and several liability for the guarantee.Xiao Chen claimed that he did not know the content of the main contract and was deceived into signing it. The lawyer countered that he was the head of the branch company and that the guarantee agreement clearly stated that he was aware of the content.
  • Focus 3: Was it appropriate to handle the case as a loan in the first-instance trial?The second-instance court's determination that the name and reality do not match and that the loan relationship should be treated as a hidden one is not unreasonable. The guarantee agreement is not invalidated.

III. The professional intervention of Hengluo Law Firm

The original plaintiff (Xiao Zhou) claimed that:Xiao Zhou alleges that XX Company failed to pay the principal and interest as agreed, and requests repayment of the loan of 500,000 yuan and interest of 72,000 yuan, with Xiao Chen assuming joint and several liability for the guarantee.

The defendant argued (in response to Xiao Chen's appeal):Xiao Chen disagreed with the first-instance judgment, arguing that the first-instance court failed to establish the facts clearly and applied the law incorrectly. He claimed that the Guarantee Agreement only listed the main contract number without specifying its content, that he did not understand the essence of the main contract and was deceived into signing it, and that the guarantee period exceeded the statutory limit and the 500,000 yuan principal, including the previous year's benefits, constituted a refinancing of an existing debt.

Legal Opinion by Hengluo Law Firm:Feng NaAfter accepting the case, the lawyer studied the agreement and pointed out that although the contract was named "investment agreement", it was actually a transaction in which Xiao Zhou paid money, received fixed income regularly within one year, and recovered the money after the expiration. Xiao Zhou did not bear the operating risk, and the two parties were actually in a lending relationship. XX Company should pay the principal and interest; Xiao Chen issued a "Guarantee Agreement" to assume joint and several guarantee liability. In response to the appeal, the lawyer pointed out that the "Guarantee Agreement" signed by Xiao Chen clearly stated that she was the person in charge of XX Company's Linquan branch, fully aware of the content of the main contract and voluntarily providing joint and several liability guarantee, which was obviously inconsistent with her claim that she "did not know the content". Although the first-instance court determined that the name and content did not match, it was not improper to handle it as a hidden lending relationship. The existing evidence was insufficient to prove that the loan was invalid, so the guarantee agreement should not be deemed invalid, and Xiao Chen should assume responsibility according to the agreement.

IV. Outcome of the case

The court of first instance adopted the lawyer's opinion and ruled that XX Company should repay Xiao Zhou's loan of 500,000 yuan and interest of 72,000 yuan within ten days, and Xiao Chen should bear joint and several guarantee liability. After Xiao Chen appealed, the court of second instance held that the judgment of the court of first instance had clear facts and correct application of law, and should be maintained. In accordance with Article 177, Paragraph 1, Item 1 of the Civil Procedure Law of the People's Republic of China, the court ruled to dismiss the appeal and maintain the original judgment. Xiao Zhou successfully recovered the 500,000 yuan and interest.

5. Henglu Law Firm's Reminder

This case is represented by Attorney Feng Na of Beijing Henglu Law Firm (practice license number: 11101202211562923, subject to the documents issued by the judicial administrative organ). In judicial practice, "investment agreements" that stipulate fixed returns and do not assume operational risks are often identified as private lending and handled according to the lending relationship. If the guarantor, as the head of the branch, signs the guarantee agreement and confirms that he/she is aware of its contents, it will be difficult for him/her to use the defense of "not knowing about it and being deceived" against the creditor. He/she shall bear the guarantee liability in accordance with the agreement.

VI. Common Questions and Answers (FAQ) for Enterprise Commercial Cases

  1. Q: Is the guaranteed minimum return in an investment agreement considered a loan?
    A:If it is agreed that the investor will receive a fixed income, bear no operational risks, and recover the principal at maturity, but the actual situation does not match the agreement, it will generally be regarded as a private lending transaction and handled in accordance with the lending relationship.
  2. Q: How to provide evidence that what's called an investment is actually a loan?
    A:The key point is to see whether the agreement stipulates a fixed return, whether the parties share the risks, and the flow of funds and the term. This should be determined based on the transfer records and communication records.
  3. Q: Can a guarantor avoid responsibility if they claim they were unaware of the situation?
    A:No. If the guarantee agreement clearly states the guarantor's identity and his/her voluntary assumption of joint and several liability, and the guarantor repudiates the agreement on the grounds that he/she is the person in charge and is aware of the content, his/her claim will generally not be supported.
  4. Q: How can I recover my principal in an investment dispute?
    A:You can request the return of the principal and interest according to the lending relationship, and require the guarantor to bear joint and several liability. Please pay attention to the statute of limitations for the main creditor's lawsuit and the guarantee period.
  5. Q: What does it mean that the second-instance court upheld the original verdict?
    A:This means that the first-instance judgment has taken effect, and the debtor should fulfill his repayment obligation according to the judgment, and the guarantor shall bear joint and several liability for repayment.