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What Is Gratuitous Loan Agreement

Given the similarity of leasing and loan agreements with the loan agreement, many rules are applied to the leasing agreement (Article 689(2) of the Civil Code). The form of the loan agreement must comply with the general rules governing the form of transactions. For the purposes of Paragraph 131(1) of the GK, the transfer by the State of the registration of immovable property for free use is required. The borrower is obliged to use free of charge the article provided to him in accordance with the terms of the contract, and if these conditions are not specified in the contract, then in accordance with the purpose of the article. In the event of a breach of this obligation, the lender has the right to claim the termination of the contract and damages (clauses 1, 3, Article 615, paragraph 2, Article 689 of the Civil Code). A loan agreement can be either consensual or real. An amicable credit agreement occurs when, in accordance with the contractual trend, the creditor`s obligation to make irresistible use arises from the moment of its conclusion. In the absence of such a condition, the loan agreement is deemed to have been concluded from the moment the article is returned to free use, that is, it is a real contract. Since the use of real estate under a loan agreement is free, the fruits and proceeds of the item transferred to the loan belong to the lender as the owner of the property. However, the contract of the parties may provide otherwise. The parties to the loan agreement are the lender and the borrower. In accordance with Paragraph 690(1) of the GK, the creditor may be the owner or any other person or owner authorised by law. For the reasons set out in Article 698 of the CRC, early termination of the loan agreement concluded is possible for a certain period.

A loan agreement may be concluded for a certain period of time, and if the period is not specified in the contract, it is considered to be concluded for an indefinite period (§ 1 para. 1 para. 2, § 610 GK). In the latter case, the duration of the contract is limited to the time of the claim of ownership by the person who provided it. As for the composition of the subject, consensual credit agreements are bilateral, but have no sign of reciprocity, since the lender`s obligations to transfer something for free use do not correspond to the borrower`s right to request such a transfer. .