Posted by
HKLEV
15 yrs ago
I am considering lending a small amount of money to a friend, who needs it to bridge a short period. As the sum is small I do not want to go to a lawyer to sort out a contract also it is not a sum I would lose sleep over.
My only concern is whether this would be legal in Hong Kong. I have just been reading the money lending ordinace and it appears that lending money between friends is illegal.
Is there anyone out there who happens to know?
Thanks
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says who it's illegal?! It's perfectly legal if you are not charging your friend an interest over and above the rate as stipulated in the law in HK for lending. Best to have your friend sign a simple IOU.
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Yes, I would write up a formal letter, stating the amount you are lending to your friend, the date, and how the money will be returned to you (ie. in instalments, and when these should be made etc). I'm sure a letter like this would stand up in the small-claims tribunal as a contract between the two of you, for lending the money.
I imagine the money-lending ordinance is to counteract the operations of illegal loan sharks but if you're not charging your friend interest, then it's just a deal between friends. If you're charging interest... then that's something I know nothing about!
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and by the way, read up on all the stories here on people who loaned money to their best friends and never saw it again. mu suggestion: only do it if you can write it off
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Yes, it's true, I always say there's no such thing as "lending" money to a friend. You are giving them the money.
If they give it back, that's great!
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A one-off loan will not be impacted by the Ordinance; get your friend to sign a promise to repay stating all the details of the loan.
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HKLEV - the answer to your question is pretty straightforward.
1. Para 5, Part 2 of Schedule 1 of the Money Lender Ordinance (MLO) exempts loans so long as it is made by an individual whose ordinary business does not primarily or mainly involve the lending of money, in the ordinary course of that business. In short, what this means is that so long as you are not in the business of lending money, then you do not need to apply for a money lenders license or comply with the requirements of the MLO.
http://www.hklii.org/hk/legis/en/ord/163/sch1.html
Basically, you do not necessarily need to enter into a written contract to document the loan. However, for evidentiary purpose, in case you subsequently want to enforce the loan, it would help if your 'friend' signed a promissory note (IOU) confirming he or she owes you 'x' amount on 'date' at a set interest rate. You should probably document the repayment period and interest (even if it is nominal). Without the interest element, it might not be seen as a proper contract as there needs to be some consideration, which might make it difficult for you to enforce. Whether you want to do it is a separate matter.
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HKLEV
15 yrs ago
Thanks, I think that solves my problem. Cheers
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Slammy is right.
If the friend is in trouble and you want to help them you have to be prepared to give the money to them and tell them so.
If it really is a short term thing then you will get the cash back.
Both ways you get to keep your friendship
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