Loan for consumption
LOAN FOR CONSUMPTION, or, MUTUUM. (q.v.) A contract by which the owner of
a personal chattel, called the lender, delivers it to another, known as the
borrower, by which it is agreed that the borrower shall consume the chattel
loaned, and return at the time agreed upon, another chattel, of the same
quality, kind, and number, to the lender, either gratuitously or for a
consideration; as, if Peter lends to Paul one bushel of wheat, to be used by
the latter, so that it shall not be returned to Peter, but instead of which
Paul will return to Peter another bushel of wheat of the same kind and
quality, at a time agreed upon.
2. It is evident that this contract differs essentially from a loan for use. In the latter, the property of the thing lent remains with the lender, and, if it be destroyed without the fault or negligence of the borrower, it is his loss, and the thing to be returned is the identical thing lent; but in the loan for consumption, the property passes to the borrower, and in case of its destruction, he must bear the loss, and the identical property is never to be returned, but other property of the like kind, quality, and number. This contract bears a nearer resemblance to a barter or exchange; in a loan for consumption the borrower agrees to exchange with the lender a bushel of wheat, which he has not, but expects to obtain, for another bushel of wheat which the lender now has, and with which he is willing to part; or a more familiar example may be given: Debtor borrows from Creditor, one hundred dollars to use as he shall deem best, and he promises to return to Creditor another hundred dollars at a future time.
3. In cases of loan for consumption, the lender may charge for the use of the thing loaned or not; as, if I lend one thousand dollars to a friend for a month, I may charge interest or not but a loan for use is always gratuitous when anything is charged for the use, it becomes a hiring. See Hire; and also Mutuum.