Question from a Reader:
I’m having trouble with borrowing and lending money. My friend A (17 years old) lent 300,000 yen to friend B (17 years old) and is asking to have it back by November, but it seems like they won’t pay it back. According to friend A, they have been charging interest and have done this a few times,
lending 9,000 yen and getting back 10,000 yen. As a result, it seems that the pace of lending has become greater than the pace of repayment. Friend A is not using a promissory note and is relying only on a verbal agreement, with LINE notes (I lent X yen on X date) as the only evidence. Friend B has been accepted into a specialized university through the AO selection process, so if friend A doesn’t get paid back, they are considering informing the school or family about the money around March to try to cancel friend B’s enrollment (since in January or February, there’s a possibility of applying to other specialized schools). Here are the questions from friend A: – The interest on borrowing and lending money is capped at 18 percent per year, but does this apply to the total amount lent or to each individual loan? – I’ve heard that minors have no obligation to repay money borrowed from each other, but can a claim be made in a summary court? – If borrowing and lending money becomes a problem at school, will friend B’s enrollment be canceled? – Even though repayments have been made a few times, does borrowing more without the intention to repay constitute fraud? – If repayment is delayed, can interest be demanded for that amount? I apologize for the lengthy message, but thank you for your help. I can answer any questions about friends A and B.

Legal Perspectives on Issues Related to Borrowing and Lending Money

The question from the reader is quite interesting. Borrowing and lending money among friends, especially between minors, can lead to very complex issues. This time, I would like to consider this problem from a legal perspective while taking into account the situation of friends A and B.

Regarding Interest Agreements

First, let’s address the question about interest. “The interest on borrowing and lending money is capped at 18 percent per year” is a limit based on Japanese law. However, this applies to the total amount lent and not to each individual loan. In other words, friend A cannot charge interest exceeding 18% per year on the entire 300,000 yen lent to friend B. It is very important to understand this point. If friend A has an agreement to “lend 9,000 yen and receive 10,000 yen back,” this constitutes borrowing and lending that includes interest. However, from a legal standpoint, this is somewhat risky. This is because a verbal agreement leaves no evidence, making it difficult to prove in case of trouble. Considering the possibility of future issues among friends, I recommend creating a written promissory note going forward.

Borrowing and Lending Between Minors

Next, regarding the laws on borrowing and lending between minors. You may have heard that “minors have no obligation to repay borrowed money,” but this is actually a misunderstanding. Minors have restrictions on entering into contracts, but it does not mean they are not required to repay borrowed money. For example, if friend A lent 300,000 yen to friend B, this could potentially constitute a valid contract. However, whether that contract is legally enforceable depends on various factors. As for claims in a summary court, it is not guaranteed that a claim will be successful between minors. Even if the claim is recognized, it is difficult for friend A to exercise legal enforcement against friend B because they are a minor. Ultimately, issues among friends often affect their relationships, so it is advisable to consider legal action as a last resort.

Impact on School Issues and Enrollment

Next, regarding friend A’s consideration of “informing the school or family about the money.” This is a very delicate issue. If the school becomes aware of this problem, whether friend B’s enrollment will be canceled will depend on the school’s policies and the specific circumstances. However, generally speaking, if friend B has passed the AO selection for enrollment, it is unlikely that the school would cancel their enrollment solely for this reason. Still, taking such measures could have devastating effects on their friendship. I hope friend A will first communicate thoroughly with friend B and consider ways to resolve the issue.

Considering Fraud

Regarding friend A’s concern about “fraud,” careful judgment is necessary. If friend B has no intention of repaying the borrowed money, it does not necessarily constitute fraud. Fraud refers to the act of deceiving someone to unlawfully obtain property, but if friend B intends to repay the borrowed money, their actions are unlikely to be considered fraudulent. Of course, if friend B intentionally refuses to repay, that is a problem, but it is important to calmly assess the situation first.

Interest on Delayed Repayment

Finally, regarding whether interest can be demanded if repayment is delayed. Generally, interest can be claimed based on the contract, but since friend A is engaging in borrowing and lending based on a verbal agreement, proving this accurately is difficult. Going forward, it is crucial to create a written promissory note and clarify the terms.

Conclusion

Borrowing and lending money, especially among minors, is a very delicate issue. It is important for friend A to find a way to resolve the problem while valuing their relationship with friend B and considering legal perspectives. By establishing a written contract instead of relying on verbal agreements, future troubles can be prevented. When faced with such issues, it is essential to remain calm and assess the situation without becoming overly emotional. As friends, valuing communication and understanding each other can lead to resolving problems. While having legal knowledge is certainly important, ultimately, it is the relationships that will influence everything.