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.

A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
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An unconvincing addition to the objection is the following: The objection should not be applied in case someone imposes upon himself the duty to pay a certain amount with the explicit intention to sell this duty immediately afterward as a right (annual rents are an exception), for this mode of contracting is not received, as it is more obvious indeed to enter into a loan for consumption. Consequently, this behavior is rightly considered to be usurious.
Since the landlord may subsidize production credit and charge a higher rate of interest for consumption credit, the tenant might be tempted to use part of the production loan for consumption. Should this be the case, the landlord has in effect a single interest rate instrument and i = p.