Carlos Felipe B.Managing partner and founder
It is a contract that consists of a loan for use , in which one party allows another to use something non -consumable, with the sole condition that it be returned within the agreed time.
What are the characteristics of a loan agreement?
The characteristics of this type of contract include the following:
- El legislator It states that this loan is essentially Free.
- The provider retains the property of the borrowed item.
- Everything that is in the trade and which is not consumed by use, may be the object of this agreement.
- The obligations arising from a loan for use are transmitted to the heirs of the lender and to those who received the loan. But if there has been no borrowed but in consideration, and personally to the one who takes the loan, his heirs cannot continue enjoying the borrowed item.
Which assets can be subject to a loan for use agreement?
The borrowed item must be returned in its original condition, without deterioration. For this reason , things that are consumed through use, or over time, cannot be the object of a loan for use, but rather a loan, since, although they can be returned as a specific item, they cannot be returned in their original form.
Are there differences between the lender and the borrower?
Lender : is the one who lends to another, free of charge, a movable or immovable non-fungible thing so that he may use it for a certain time and for the use for which it is intended, and then return the same thing.
Borrower : This is the person to whom the item is loaned by the lender. From the moment they receive the item, they are obligated to cover the ordinary expenses necessary for its use and preservation.
The essential difference arises with the loss of the loaned item, even if due to unforeseen circumstances, which will imply the responsibility of the borrower whenever any of these circumstances occur: that the borrower intended the item for a use other than that agreed; that the recipient kept the item in their possession for longer than agreed; that the loaned item had been delivered with an appraisal of its value.
What obligation does the borrower have towards the loaned item?
He is obligated, like a good head of household, to safeguard and preserve the borrowed item. He may only use it for the purpose determined by its nature or by the agreement; all this under penalty of damages, if applicable.
Does the lender have an obligation regarding the loaned item?
These obligations are contingent and arise after the contract is signed. For this reason, this type of contract is often described as "imperfectly synallagmatic," since during its execution, obligations will arise for the party that initially had no obligations.
Does the borrower receive any benefits?
Yes, the borrower has the right of retention, meaning they can keep the loaned item if the lender fails to fulfill their obligations under the contract. This right is not available if the lender has provided a guarantee against any potential damages.
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