A loan for use is a loan for use. The loan agreement establishes that one party delivers some type of asset to the other for their use. The loan is established for a specific period of time, at the end of which the asset must be returned in the same condition as when it was delivered.
- Lender. This is the party that delivers the property.
- Borrower. The party that receives the asset.
Ownership of the property remains with the lender . The borrower only has possession of the property.
The loan agreement is designated , meaning that it is drafted in accordance with the laws that govern each country. It cannot be drafted freely but only in accordance with current regulations.
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Example of a loan agreement
“Between Juan Pérez, Argentine, of legal age, with document no. 35,678,954, single as owner of the property located at: Calle 54, number 375, city of La Plata, and hereinafter referred to as COMODANTE , and on the other hand Mr. Alberto Ruiz, with document no. 30,556,782, single, hereinafter the COMODATARIO , they agree as follows:
FIRST : The owner, LENDER, hereby delivers to the LENDERS, who accept it with their full consent, on loan, a property located at Calle 54, number 375, city of La Plata, the LENDERS agreeing to return it in the same manner as they receive it herein.
SECOND : This loan agreement is intended to be used by the BORROWERS as their own residence, and they are prohibited from introducing other persons and changing the aforementioned purpose.
THIRD : It is established by mutual agreement that the term of this loan agreement is for a period of TWENTY-FOUR consecutive and consecutive months, counting from May 5, 2017, expiring without fail on May 4, 2019. This period is considered non-extendable and no reminder of its expiration date is necessary. The owner LENDER, or whoever represents his rights, may judicially request the restitution of the property the day after the established term has expired, plus any damages that may correspond for the undue retention of the property.
FOURTH : The BORROWERS are expressly obligated and committed to: a) not assign all or part of this contract or the property, whether for free or for a fee, not sublease the same, b) not introduce improvements to the property without the express written consent of the LENDER, and in the event that they are made, they may be restored to their previous state at the expense of the BORROWERS, or they will remain for the benefit of the property at no charge to the LENDER, nor may it be used by the BORROWERS to continue in the property upon expiration of the contract; c) not modify the purpose indicated in the second clause of this contract. In the event of non-compliance by the BORROWERS with any of the paragraphs of this clause and with any of the other obligations they assume hereby, it will give the LENDER the right to terminate this contract.
FIFTH : The LENDERS are obliged and committed to allow the LENDER and their family group to enter the property as often as they deem appropriate. They must also allow them to stay in the property for any length of time and for any reason. They also agree to provide all facilities and will allow them to make any modifications or improvements they deem appropriate. In the event of opposition by the LENDERS, the LENDER or whoever represents their rights may request the termination of this loan agreement and any damages that may apply.
SIXTH : It is hereby mutually agreed that the BORROWERS shall be responsible for the consumption of electricity, gas, water and telephone, and shall demonstrate that they are up to date at the time of signing the contract. They shall also provide proof that they are up to date with their payment of the service as often as the LENDER requires. They shall also provide proof, upon expiration of this contract, that there is no debt of any kind for the use of said service. Likewise, the BORROWERS shall be responsible for the disconnection of any of the supplies, and shall be responsible for the resumption of the service.
SEVENTH : It is expressly stated that the BORROWERS do not have any type of employment relationship with the LENDER and/or her family nor are they dependent on her.
EIGHTH : This contract is governed by articles 2255, 2271, concordant and correlative of the Civil Code.
For any lawsuit arising from this contract and all actions arising from it, both parties choose and accept only the ordinary courts of the Province of Buenos Aires, waiving any other jurisdiction, especially the Federal courts.
As proof of compliance with the agreement, two copies of the same content and for a single purpose are signed in the City of La Plata on April 30, 2017.”
This contract will vary in each country. For example, in Section EIGHT, articles from the Argentine Civil Code are cited, so this passage will differ in other countries.
Characteristics of the loan
The loan agreement , in addition to being nominated (regulated by law) is:
- Commutative. It creates obligations for both parties to the contract.
- Free of charge. Unlike rental contracts, a loan for use is the delivery of an asset without receiving any payment in return.
- Real. The delivery of the goods must be made effective.
- Deferred execution. Delivery of the goods and their return occur after the contract is signed.
It is important to note that a loan agreement is not a usufruct agreement, meaning that if the asset delivered produces economic benefits, the recipient has no right to those benefits.
Examples of loan for use
- When a modem is used to access television or Internet services, the modem is provided to the user on loan. This means it is provided free of charge and must be returned once the service contract expires.
- Real estate: A house can be granted as a loan. This brings benefits to the borrower, as they have a home at their disposal without paying rent. However, it can also be beneficial to the lender. For example, if the property, for whatever reason, cannot be rented, the fact that it is held as a loan ensures that the borrower will cover the costs of its maintenance and use.
- Returnable beverage containers: Many beverages use recyclable containers. The consumer takes the container free of charge and returns it after finishing the beverage. Retailers receive a specified number of bottles from the manufacturer, which they then return.
