Part Ⅱ Obligations
Chapter II Particular Kinds Of Obligations
Section 6 - Loan
Sub-section 1 Loan for Use
A contract of loan for use is a contract whereby one of parties shall deliver a thing to the other, and agrees that the latter shall return the thing after gratuitously using it.
After an agreement on constituting a contract of a loan for use, the lender of the agreement may revoke such agreement. Unless otherwise the borrower of the agreement has demanded to perform the agreement and the lender of the agreement hasn't revoked immediately.
If the lender intentionally conceals a defect in the thing lent, he is responsible to the borrower for any injury resulting therefrom.
The borrower shall use the thing lent in the ways as are agreed upon, if in the absence of such agreement, in the ways as are in accordance with the nature of the thing lent. The borrower shall not allow a third party to use the thing lent without the consent of the lender.
The borrower shall preserve the thing lent with the care of a good administrator.
If the borrower violates the provision of the preceding paragraph whereby damage or destruction has been caused to the thing lent, he is bound to compensate therefrom. However, he is not responsible for any change or damage brought about through use of the thing lent in the ways as are agreed upon or as are in accordance with the nature of the thing.
The borrower is bound to bear the ordinary expenses for the maintenance of the thing lent. The same rule shall apply to the cost of provender in the case of a loan of animals.
If the borrower incurs any beneficial outlays for the thing lent in consequence of increasing the value of the thing lent, the provisions of the first paragraph of Article 431 shall be mutatis mutandis applied.
The borrower may remove any additions to the thing lent which he has made, unless he shall restore the thing lent to its status quo ante.
The borrower shall return the thing lent at the end of the agreed period. If no such period is agreed upon, the thing shall be returned after the borrower has made use of it for the purposes of the loan. However, the lender may also demand the return of the thing lent when a reasonable period has elapsed and it may be presumed that the borrower did make use of it.
If an indefinite period of a loan and cannot be inferred from the purposes of the loan, the lender may demand the return of the thing lent at any time.
When several persons have borrowed a thing together, they are jointly responsible to the lender.
The lender may terminate the loan in either of the following circumstances:
(1) If he needs the thing lent in consequence of an unforeseen circumstances.
(2) If the borrower uses the thing lent otherwise than for the agreed use or for the ordinary uses in accordance with the nature of the thing, or allows a third party to use it without the consent of the lender.
(3) If the borrower causes damage or danger of damage to the thing lent by neglecting to take care of it.
(4) If the borrower died.
A claim for damages by the lender for injury caused to the thing lent, a claim for damages by the borrower in accordance with the provisions of Article 466, a claim for the return of beneficial outlays specified provisions of Article 469 and the borrower's right to remove any addition from the thing lent, are extinguished by prescription if it is not exercised within six months.
The period specified under the preceding paragraph commences for the lender from the date when he accepts the return of the thing lent and for the borrowers from the date of the termination of the contract.
Sub-section 2 LOANS FOR CONSUMPTION
A contract of loan for consumption is a contract whereby one of the parties shall transfer to the other the ownership of money or other fungible things, and the parties agree that the latter shall return things of the same kind, quality and quantity.
If one of the parties is responsibility to the other for the payment of money or other fungible things and the parties agree that it is to be the object of loan for consumption, a contract of loan for consumption is also constituted.
An agreement on constituting a contract of a loan for consumption, if interest or other remuneration has been agreed upon for a loan for consumption, one of the parties becomes incapability to pay after the agreement on constituting a contract of a loan for consumption constituted, the lender of the agreement may revoke such agreement.
An agreement on constituting a contract of a loan for consumption, if without remuneration has been agreed upon for a loan for consumption, the provisions of Article 465-1 shall be mutatis mutandis applied,
When interest or other remuneration has been agreed upon for a loan for consumption and if the thing lent is defective, the lender shall exchange it for another free from defect. However, the borrower may still demand for the injury.
When the loan for consumption is gratuitous and if the thing lent is defective, the borrower may return to the lender the value which the defective thing had.
In the case of the preceding paragraph, the borrower may still demand for the injury if the lender has intentionally concealed the defect.
Interest or other remuneration shall be paid within the agreed deadline. If no such deadline has been specified, it shall be paid at the end of the loan; unless, the duration of the loan is for over one year, it shall be paid at the end of each year.
The borrower shall return things of the same kind, quality and quantity as lent, within the agreed deadline. If no such deadline for return has been agreed upon, the borrower may return them at any time; the lender may also fix a reasonable deadline, not less than one month later, and notify the borrower to return.
If the borrower cannot return things of the same kind, quality and quantity as lent, he shall return their value at the time and place where the return ought to have taken place.
If no date or place of return has been agreed upon, such things are returned according to the value of the things at the time when, or place where they were when the contract was constituted.
Unless otherwise provided by contract, the following rules shall apply for the return of money loaned:
(1) When the money loaned is a currency which is no longer in vogue at the time of return, it shall be returned in a currency which is in vogue at the time of return.
(2) A loan which is agreed to be calculated in a currency in vogue shall be returned in a currency in vogue at the time of return, irrespective of the fluctuation in the value of the currency which the borrower may have received.
(3) If a loan is agreed to be calculated in a particular kind of currency, it shall be returned in the particular kind of currency or in a currency in vogue according to the market price at the time and place of return.
Notwithstanding any agreement to the contrary, if a loan of money is converted from goods or valuable securities, a sum of the loan shall be in accordance with the market value of the goods or valuable securities at the time and place of delivery.