Re-trial Case | What Appears as “Debt Assignment” Is Actually Debt Collection—The Claim for Debt Assignment Payment Is Not Admissible
Published:
2025-11-26
Zhen Moumou filed a lawsuit with the court of first instance requesting: 1. That Jia Moumou be ordered to pay him the debt transfer payment of 1 million yuan, together with interest (calculated at four times the one-year Loan Market Quote Rate published by the National Interbank Funding Center, based on a principal of 1 million yuan, from September 8, 2022, until the date of full repayment); 2. That the defendant Jia Moumou bear the litigation costs of this case.
I. Basic Facts of the Case
Zhen Moumou filed a lawsuit with the court of first instance requesting: 1. That Jia Moumou be ordered to pay him the debt transfer payment of 1 million yuan plus interest (calculated at four times the one-year Loan Market Quote Rate published by the National Interbank Funding Center, based on a principal of 1 million yuan, from September 8, 2022, until the date of full repayment); 2. That the defendant Jia Moumou bear the litigation costs of this case.
The court of first instance found that on March 21, 2017, Zhen Moumou, as Party A, Jia Moumou, as Party B, and a certain company, as Party C, signed a “Debt Transfer Agreement” stipulating the following: Since Party C had borrowed money from Party A, Party A transferred RMB 1 million to Yang Mou, whom Party C designated. After receiving the funds, Party C issued a loan receipt in Yang Mou’s personal name to Party A. Party C provided joint and several guarantee liability for this RMB 1 million loan and affixed its official seal to confirm the arrangement. The principal amount of the loan was agreed upon to have a term of two years, with an annual interest rate of 20%. Party C was required to pay the monthly interest to Party A (via bank transfer) on the 20th of each month. As of July 20, 2015, Party C had fully paid all accrued interest on the loan to Party A. However, after July 20, 2015, Party C failed to pay any further interest or repay the principal. To facilitate collection, the three parties—Party A, Party B, and Party C—reached a consensus through negotiation and agreed to transfer the principal amount of the aforementioned debt to Party B. Accordingly, they have now reached the following agreement regarding the transfer: 1.1 Party A agrees to transfer its claim against Party C to Party B, and Party B agrees to assume such claim. 1.2 The amount of the debt transfer is RMB 1 million; any outstanding interest accrued prior to the transfer shall continue to be collected directly by Party A from Party C in the future. 2.1 Both Party A and Party B agree that the transfer price for the above-mentioned claim is RMB 1 million. 2.3 The payment of the transfer price shall be agreed upon through mutual negotiation between the two parties. Zhen Moumou sent a notice of payment for the debt transfer to Jia Moumou via registered mail, but the letter was returned.
The court of first instance held that the parties shall provide evidence to substantiate the facts upon which their claims are based or to refute the facts upon which the opposing party’s claims are based. The debt transfer agreement signed between Zhen Moumou and Jia Moumou genuinely reflects the true intentions of both parties, does not violate any mandatory provisions of Chinese laws and administrative regulations, and is therefore lawful and valid. Both parties should fully perform their respective obligations. Consequently, the court upheld Zhen Moumou’s request that Jia Moumou pay the debt transfer price of 1 million yuan.
The court of first instance was unable to contact Jia Moumou, so the judgment was served by public notice.
Subsequently, Jia Moumou had his bank account frozen during the enforcement proceedings and, upon learning of the first-instance judgment, entrusted the author to file an application for retrial.
II. Key Points of the Re-trial Court’s Ruling
(1) The focal point of the retrial dispute
Whether a contractual relationship for the assignment of credit exists between Zhen Moumou and Jia Moumou, and whether Jia Moumou should pay the assignment fee.
(2) The court in the retrial believes that
The genuineness of the expression of intent is a necessary condition for the establishment of a civil legal act and the subsequent creation of legal effects. If the expression of intent is not genuine, the conduct between the parties cannot constitute a civil legal act. Therefore, the key to determining whether a contractual relationship for the assignment of credit exists between the two parties lies in whether both parties genuinely intended to assign the credit. First, looking at the background of the signing of the “Credit Assignment Agreement,” after borrowing money from Zhen Moumou, a certain company failed to repay the principal and interest to Zhen Moumou and other creditors starting from July 2015. Under these circumstances, nine creditors of the company, including Zhen Moumou, signed a Credit Assignment Agreement with Jia Moumou. Second, examining the content of the contract and the manner in which it was executed and performed: As explicitly stated in the agreement—such as “for the convenience of debt collection” and “the payment of the transfer price shall be agreed upon through negotiation between Party A and Party B”—it is clear that the purpose of signing the Credit Assignment Agreement was to facilitate the recovery of outstanding debts. The agreement did not specify the method or timing of payment of the transfer price nor the corresponding liability for breach of contract; rather, these matters were left to be separately negotiated and determined by the parties. Combined with relevant chat records and statements made by the parties and witnesses, it can be seen that the agreement was first signed by Zhen Moumou, who then mailed the agreement to an outside party, Zhao Mou, after which Jia Moumou and the company affixed their seals. After the agreement was signed, Zhen Moumou did not deliver the original loan documents to Jia Moumou as stipulated in the agreement, and Jia Moumou likewise did not deliver the original Credit Assignment Agreement to Zhen Moumou. Third, considering trading practices, when the parties signed the Credit Assignment Agreement, the company was already facing substantial unpaid debts that it could not repay. Under such circumstances, Jia Moumou accepted the assignment of Zhen Moumou’s claim for the principal amount of 1 million yuan at a price of 1 million yuan without any discount, which does not conform to typical trading practices. Comprehensively considering the above circumstances, along with evidence such as the Credit Assignment Agreements and supplementary agreements signed between other creditors and Jia Moumou, as well as the statements of the parties and witness testimonies, this court finds that the evidence provided by Jia Moumou carries greater probative force. The true purpose of the Credit Assignment Agreement signed between Jia Moumou and Zhen Moumou was to facilitate the company’s collection of its claims; there was no genuine intention to assign the credit between the two parties. Therefore, Zhen Moumou’s claim against Jia Moumou for payment of the credit assignment consideration based on the legal relationship of credit assignment lacks sufficient basis.
III. The Author’s Representational Opinion
(1) Clarify the agency approach.
The author believes that this case, though nominally a transfer of credit rights, is in reality... Entrust collection legal relationship. Therefore, when outlining the approach for filing a request for retrial, we should place particular emphasis on this pivotal issue and clearly set forth the grounds for the request around this focal point. The retrial court adopted the arguments presented by our counsel, reversed the first-instance judgment, and dismissed Zhen Moumou’s claim. Article 53 of the “Several Provisions of the Supreme People’s Court on Civil Litigation Evidence (Revised in 2019)” stipulates: “During the course of litigation, if the nature of the legal relationship or the validity of the civil act claimed by the parties is inconsistent with the determination made by the people’s court based on the facts of the case, the people’s court shall treat the nature of the legal relationship or the validity of the civil act as the central issue for trial. However, this does not apply if the nature of the legal relationship has no bearing on the reasoning or outcome of the judgment, or if the relevant issue has already been fully debated by the parties.” Thus, in this case, as the lawyers representing the applicant for retrial, we identified that the actual legal relationship at issue differed from the legal relationship alleged by the parties in their initial lawsuit. Accordingly, we should express our views clearly in the petition for retrial and in our advocacy briefs, thereby guiding the judge’s line of reasoning and maximizing the protection of the client’s legitimate rights and interests.
(2) Based on the factual circumstances of this case, argue that the “Debt Assignment Agreement” is a debt collection agreement.
1. The content of the “Debt Assignment Agreement” indicates that it is a debt collection agreement.
First, the “Debt Assignment Agreement” clearly states the purpose of the signing: to facilitate debt collection. After unanimous agreement among Parties A, B, and C, it is agreed that the principal amount of the aforementioned debt will be transferred to Party B.
Second, the amount of debt transfer stipulated in Article 1 of the “Debt Transfer Agreement”—1 million yuan principal—is the subject matter of the agreement, not the consideration paid for the transfer. It is important to emphasize that the applicant for retrial has not received the 1 million yuan, and therefore does not meet the requirement for consideration in a debt transfer.
Finally, Article 2, Paragraph 3 of the “Debt Assignment Agreement” explicitly stipulates that the payment of the assignment price shall be agreed upon through negotiation between Party A and Party B. Judging from the agreement itself, this provision covers both the amount of the price and the timing and method of payment. Since the parties have not agreed on the consideration, they are therefore not obligated to pay any consideration.
2. In conjunction with the submission by the applicant for retrial, Jia Moumou, of nine “Debt Assignment Agreements” and seven “Supplementary Agreements,” it is further confirmed that the nature of the transaction is indeed debt collection.
First, Article 1 of the Supplementary Agreement explicitly stipulates that the transfer of this debt claim is in fact a debt collection effort.
Second, Article 4 of the Supplementary Agreement explicitly stipulates that if the recovery efforts yield zero results, Party B (Jia Moumou) shall not bear any liability for compensation.
3. Although the applicant for retrial and the respondent did not directly sign a “Supplementary Agreement,” the “Debt Assignment Agreement” explicitly stated that it was intended for debt collection purposes; therefore, this agreement cannot alter the fact that the relationship between the two parties, while nominally a debt assignment, is in reality a mandate for debt collection.
First, after a third-party company paid interest for eight months—from November 2014 to July 2015—its funding chain broke down, leaving it unable to meet its repayment obligations. Consequently, in order to recover the debt, the two parties entered into a “Debt Assignment Agreement” without stipulating any consideration for the transfer. Therefore, the subject matter cannot be regarded as consideration.
Second, ten individuals—including the applicant for retrial and the respondent—borrowed a total of 14.5 million yuan from a third party, a certain company (of which 1.5 million yuan was borrowed by the applicant for retrial). With the exception of the applicant for retrial, who resides locally, the other nine individuals are all from outside the region. To facilitate the recovery of debts, after consultation, all the other creditors agreed to entrust the applicant for retrial with debt collection. The respondent in this case also did so; therefore, both parties reached a genuine expression of intent to enter into an agency agreement for debt collection.
4. Combined with the facts of the retrial hearing and the testimony given by witnesses in court, this also confirms that the nature of the “Debt Assignment Agreement” is a debt-collection agreement.
1. Witness Zhao has objectively testified to the court regarding the factual and true circumstances of the “Debt Assignment Agreement” and the “Supplementary Agreement,” confirming that the agreement was a proxy collection agreement.
2. Witness Liu [Last Name] has objectively testified to the court regarding the chronological order of the “Debt Assignment Agreement” and the “Supplementary Agreement,” and has acknowledged that the nature of these agreements is agency for debt collection.
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