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Tel-Law Scheme > Commercial, baning
and sales of goods
The following can only be a brief introduction of the legal subject concerned.
Before you take any action which may have legal consequence, you should
first seek advice from your own lawyer or make an appointment at any District
Office to see a volunteer lawyer of the Free Legal Advice Scheme.
(501) LENDING MONEY IN HONG KONG A loan agreement whereby a creditor lends money to a debtor in return for a promise to return the money with interest will normally be enforceable at law. Such agreement to lend money may be orally and need not be in writing. However, it is a criminal offence for a person who lends or offers to lend money to do so at a true annual percentage rate of interest in excess of 48% per year. No agreement for the repayment of such a loan and no security given in respect of such a loan is enforceable. Further, where there is evidence that a loan transaction is or has been extortionate, the Court may reopen the transaction so as to do justice between the parties concerned. (1) A loan is extortionate:- Any person who carries on a business of making loans or who holds himself out as carrying on such business must be licensed by the Government to operate as a money lender. He may only carry on his business at the premises and on the conditions specified in his licence, and in addition he must comply with the provisions of the Money Lenders Ordinance. In general, it is illegal for a person who carries on business as a money lender to make an agreement which directly or indirectly:- (1) provides for payment of compound interest; A money lending agreement which has been entered into in contravention of the Money Lenders Ordinance may be unenforceable as an illegal agreement. Date of amendment: 11th October 2023
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