Simon Says: Any repayment obligation if an IOU does not bear lender’s name?

This is the seventeenth in a weekly series of legal advice provided in a short and entertaining story format.


This week's areas of Interest: Debt Obligations


This week's keywords: IOU, Lender and Borrower, Repayment Obligation



Any repayment obligation if an IOU does not bear lender’s name?



After engaging in business for more than a decade, Alex learns the goods and bads and becomes a cunning businessman. Failing to meet the ends, Alex wanted to borrow 1 million from Jack, his old classmate one day. Jack felt that Alex was somewhat slippery and with hesitation. Alex pretended to be angry and said, "Hey, we are all old good classmates, and you won’t trust me any more?"


Jack wanted to save his face and said, "OK, brother is still brother, but you still have to write me an IOU."


With a flash across his mind, Alex said with a smile, "Well, it is for sure." Alex wrote to Jack an IOU, “Borrowing one million yuan for a period of three months with an interest rate of 5% p.a. Dated 1st April, 2016. Signed Alex.” On the same day, Jack transferred Alex 1 million yuan from his bank account.


Three months passed, Jack found Alex's delay in repaying the money, so he visited Alex’s office and said, “June has gone. Why don't you repay the money as agreed in the IOU?"


Alex said, "Hey, I can’t remember I have borrowed money from you, Jack."


Jack pulled out the IOU from his pocket and said in an angry tone, "I know you want to deny, but have a look! This is what you wrote to me the last time an IOU with your name and signature on it. Don't you want to lie?"


“What an IOU it is?”, cunningly said Alex, “but it did not specify in the IOU that who the lender is."


Jack felt bad, but still pretending to be clam saying, "I have the bank transfer records with me. After all, honesty is more important, Alex!”


Is Alex obligated to repay? 




Prof Simon Says:


Yes, Alex is obligated to repay.


First, from the point of honesty and creditability, Alex should honour his promise in accordance with the IOU, a form of contract.


Second, from a legal point of view, although the IOU did not specify the lender’s name, but Jack is bearer of the IOU and has the bank transfer records to prove himself the lender and there is no contrary evidence to counter prove that Jack is not the lender.


In order to protect one’s own interests, it is recommended that the lender request the borrower to write the name of the lender on the IOU to avoid any dispute due to the identity of lender. Moreover, a borrower has to imprint his right index finger print with red ink on his signature too, a Chinese practice. In addition, relevant documents such as loan documents and payment records should be kept in order.


Simon Says - Episode 17: Any repayment obligation if an IOU does not bear lender’s name?



For more about this or to contact Professor Simon Choi at, +86 13823677853 or by WeChat: simonhkchoi. 


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"This article was originally written in Chinese by Mr Huanyu Li and rewritten into English by Simon Choi."


Simon Choi

About the Author: Professor Simon Choi

Prof Simon Choi, solicitor and linguist, is an international lawyer, qualified to practise law in England & Wales and in Hong Kong, China. Simon graduated from law schools of the Peking University, the University of London and the University of Hong Kong respectively, with an in-depth knowledge of Chinese laws and common laws and with more than 20 years experience in China practice and international trade, investment, finance, merger & acquisition. He is an adjunct professor of laws at the Zhongnan University of Economics and Law. Simon is the founding partner of Acme Ardent and can be reached at or +86 13823677853.

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21 Jun 2017

By Simon Choi

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