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A PRELIMINARY CLARIFICATION OF TERMS:
LOAN CONTRACTS (MUTUUM AND COMMODATUM)
AND DEPOSIT CONTRACTS
A
ccording to the Shorter Oxford English Dictionary, a loan is
“a thing lent; esp. a sum of money lent for a time, to be
returned in money or money’s worth, and usually at
interest.”1Traditionally there have been two types of loans:
the loan for use, in which case only the use of the lent item is
transferred and the borrower is obliged to return it once it has
been used; and the loan for consumption, where the property of
the lent item is transferred. In the latter case, the article is
handed over to be consumed, and the borrower is obliged to
return something of the same quantity and quality as the
thing initially received and consumed.2
1
1The Shorter Oxford English Dictionary, 3rd ed. (Oxford: Oxford Univer-
sity Press, 1973), vol. 1, p. 1227.
2Manuel Albaladejo, Derecho civil II, Derecho de obligaciones, vol. 2: Los
contratos en particular y las obligaciones no contractuales (Barcelona: Librería
Bosch, 1975), p. 304.
THE COMMODATUM CONTRACT
Commodatum (from Latin) refers to a real contract made in
good faith, by which one person—the lender—entrusts to
another—the borrower or commodatary—a specific item to be
used for free for a certain period of time, at the end of which
the item must be restored to its owner; that is, the very thing
that was loaned must be returned.3The contract is called
“real” because the article must be given over. An example
would be the loan of a car to a friend so he can take a trip. It
is clear that in this case the lender continues to own the lent
item, and the person receiving it is obliged to use it appropri-
ately and return it (the car) at the end of the arranged period
(when the trip is over). The obligations of the friend, the bor-
rower, are to remain in possession of the article (the car or
vehicle), to use it properly (following traffic rules and taking
care of it as if it were his own), and to return it when the com-
modatum is finished (the trip is over).
THE MUTUUM CONTRACT
Though the commodatum contract is of some practical
importance, of greater economic significance is the lending of
fungible4and consumable goods, such as oil, wheat, and espe-
cially, money. Mutuum (also from Latin) refers to the contract
by which one person—the lender—entrusts to another—the
borrower or mutuary—a certain quantity of fungible goods,
and the borrower is obliged, at the end of a specified term, to
return an equal quantity of goods of the same type and quality
(tantundem in Latin). A typical example of a mutuum contract
is the monetary loan contract, money being the quintessential
2
Money, Bank Credit, and Economic Cycles
3Juan Iglesias, Derecho romano: Instituciones de derecho privado, 6th rev.
updated ed. (Barcelona: Ediciones Ariel, 1972), pp. 408–09.
4Fungible goods are those for which others of the same sort may be sub-
stituted. In other words, they are goods which are not treated separately,
but rather in terms of quantity, weight, or measure. The Romans said
that things quae in genere suo functionem in solutione recipiunt were fungi-
ble; that is, things quae pondere numero mensurave constant. Consumables
are often fungible.
fungible good. By this contract, a certain quantity of monetary
units are handed over today from one person to another and
the ownership and availability of the money are transferred
from the one granting the loan to the one receiving it. The per-
son who receives the loan is authorized to use the money as his
own, while promising to return, at the end of a set term, the
same number of monetary units lent. The mutuum contract,
since it constitutes a loan of fungible goods, entails an exchange
of “present” goods for “future” goods. Hence, unlike the commo-
datum contract, in the case of the mutuum contract the estab-
lishment of an interest agreement is normal, since, by virtue of
the time preference (according to which, under equal circum-
stances, present goods are always preferable to future goods),
human beings are only willing to relinquish a set quantity of
units of a fungible good in exchange for a greater number of
units of a fungible good in the future (at the end of the term).
Thus, the difference between the number of units initially deliv-
ered and the number received from the borrower at the end of
the term is, precisely, the interest. To sum up, in the case of the
mutuum contract, the lender assumes the obligation to hand
over the predetermined units to the borrower or mutuary. The
borrower or mutuary who receives the loan assumes the obli-
gation to return the same number of units of the same sort and
quality as those received (tantundem) at the end of the term set
for the contract. Plus, he is obliged to pay interest, as long as an
agreement has been made to that effect, as is usually the case.
The essential obligation involved in a mutuum contract, or loan
of a fungible good, is to return at the end of the specified term
the same number of units of the same type and quality as those
received, even if the good undergoes a change in price. This
means that since the borrower only has to return the tantundem
once the predetermined time period has ended, he receives the
benefit of temporary ownership of the thing and therefore enjoys
its complete availability. In addition, a fixed term is an essential
element in the loan or mutuum contract, since it establishes the
time period during which the availability and ownership of the
good corresponds to the borrower, as well as the moment at
which he is obliged to return the tantundem. Without the explicit
The Legal Nature of the Monetary Irregular-Deposit Contract 3
or implicit establishment of a fixed term, the mutuum contract or
loan cannot exist.
THE DEPOSIT CONTRACT
Whereas loan contracts (commodatum and mutuum)
entail the transfer of the availability of the good, which shifts
from the lender to the borrower for the duration of the term,
another type of contract, the deposit contract, requires that the
availability of the good not be transferred. Indeed, the contract of
deposit (depositum in Latin) is a contract made in good faith by
which one person—the depositor—entrusts to another—the
depositary—a movable good for that person to guard, protect,
and return at any moment the depositor should ask for it.
Consequently, the deposit is always carried out in the interest
of the depositor. Its fundamental purpose is the custody or safe-
keeping of the good and it implies, for the duration of the con-
tract, that the complete availability of the good remain in
favor of the depositor, who may request its return at any
moment. The obligation of the depositor, apart from delivering
the good, is to compensate the depositary for the costs of the
deposit (if such compensation has been agreed upon; if not,
the deposit is free of charge). The obligation of the depositary
is to guard and protect the good with the extreme diligence
typical of a good parent, and to return it immediately to the
depositor as soon as he asks for it. It is clear that, while each
loan has a term of duration during which the availability of
the good is transferred, in the case of a deposit this is not so.
Rather a deposit is always held and available to the depositor,
and it terminates as soon as he demands the return of the good
from the depositary.
THE DEPOSIT OF FUNGIBLE GOODS
OR “IRREGULAR” DEPOSIT CONTRACT
Many times in life we wish to deposit not specific things
(such as a painting, a piece of jewelry, or a sealed chest full of
coins), but fungible goods (like barrels of oil, cubic meters of
gas, bushels of wheat, or thousands of dollars). The deposit of
fungible goods is definitely also a deposit, inasmuch as its
4
Money, Bank Credit, and Economic Cycles
main element is the complete availability of the deposited
goods in favor of the depositor, as well as the obligation on the
part of the depositary to conscientiously guard and protect the
goods. The only difference between the deposit of fungible
goods and the regular deposit, or deposit of specific goods, is
that when the former takes place, the goods deposited become
indiscernibly mixed with others of the same type and quality
(as is the case, for example, in a warehouse holding grain or
wheat, in an oil tank or oil refinery, or in the banker’s safe).
Due to this indistinguishable mixture of different deposited
units of the same type and quality, one might consider that the
“ownership” of the deposited good is transferred in the case
of the deposit of fungible goods. Indeed, when the depositor
goes to withdraw his deposit, he will have to settle, as is logi-
cal, for receiving the exact equivalent in terms of quantity and
quality of what he originally deposited. In no case will he
receive the same specific units he handed over, since the
goods’ fungible nature makes them impossible to treat indi-
vidually, because they have become indistinguishably mixed
with the rest of the goods held by the depositary. The deposit
of fungible goods, which possesses the fundamental ingredi-
ents of the deposit contract, is called an “irregular deposit,”5
as one of its characteristic elements is different. (In the case of
the contract of regular deposit, or deposit of a specific good,
5Our student César Martínez Meseguer argues convincingly that
another adequate solution to our problem is to consider that in the irreg-
ular deposit there is no true transference of ownership, but rather that
the concept of ownership refers abstractly to the tantundem or quantity
of goods deposited and as such always remains in favor of the deposi-
tor and is not transferred. This solution is the one offered, for example,
in the case of commixture covered in article 381 of the Spanish Civil
Code, which admits that “each owner will acquire rights in proportion
to the part corresponding to him.” Though the irregular deposit has tra-
ditionally been viewed differently (as involving the actual transfer of
ownership of physical units), it appears more correct to define owner-
ship in the more abstract terms of article 381 of the Spanish Civil Code,
in which case we may consider there to be no transference of ownership
in an irregular deposit. Moreover, this seems to be the view of Luis Díez-
Picazo and Antonio Gullón, Sistema de derecho civil, 6th ed. (Madrid: Edi-
torial Tecnos, 1989), vol. 2, pp. 469–70.
The Legal Nature of the Monetary Irregular-Deposit Contract 5
ownership is not transferred, but rather the depositor contin-
ues to own the good, while in the case of the deposit of fungi-
ble goods, one might suppose that ownership is transferred to
the depositary). Nevertheless, we must emphasize that the
essence of the deposit remains unchanged and that the irregu-
lar deposit fully shares the same fundamental nature of all
deposits: the custody and safekeeping obligation. Indeed, in the
irregular deposit there is always an immediate availability in
favor of the depositor, who at any moment can go to the grain
warehouse, oil tank, or bank safe and withdraw the equiva-
lent of the units he originally turned over. The goods with-
drawn will be the exact equivalent, in terms of quantity and
quality, of the ones handed over; or, as the Romans said, the
tantundem iusdem generis, qualitatis et bonetatis.
LOAN CONTRACTS (MUTUUM AND COMMODATUM)
AND DEPOSIT CONTRACTS
A
ccording to the Shorter Oxford English Dictionary, a loan is
“a thing lent; esp. a sum of money lent for a time, to be
returned in money or money’s worth, and usually at
interest.”1Traditionally there have been two types of loans:
the loan for use, in which case only the use of the lent item is
transferred and the borrower is obliged to return it once it has
been used; and the loan for consumption, where the property of
the lent item is transferred. In the latter case, the article is
handed over to be consumed, and the borrower is obliged to
return something of the same quantity and quality as the
thing initially received and consumed.2
1
1The Shorter Oxford English Dictionary, 3rd ed. (Oxford: Oxford Univer-
sity Press, 1973), vol. 1, p. 1227.
2Manuel Albaladejo, Derecho civil II, Derecho de obligaciones, vol. 2: Los
contratos en particular y las obligaciones no contractuales (Barcelona: Librería
Bosch, 1975), p. 304.
THE COMMODATUM CONTRACT
Commodatum (from Latin) refers to a real contract made in
good faith, by which one person—the lender—entrusts to
another—the borrower or commodatary—a specific item to be
used for free for a certain period of time, at the end of which
the item must be restored to its owner; that is, the very thing
that was loaned must be returned.3The contract is called
“real” because the article must be given over. An example
would be the loan of a car to a friend so he can take a trip. It
is clear that in this case the lender continues to own the lent
item, and the person receiving it is obliged to use it appropri-
ately and return it (the car) at the end of the arranged period
(when the trip is over). The obligations of the friend, the bor-
rower, are to remain in possession of the article (the car or
vehicle), to use it properly (following traffic rules and taking
care of it as if it were his own), and to return it when the com-
modatum is finished (the trip is over).
THE MUTUUM CONTRACT
Though the commodatum contract is of some practical
importance, of greater economic significance is the lending of
fungible4and consumable goods, such as oil, wheat, and espe-
cially, money. Mutuum (also from Latin) refers to the contract
by which one person—the lender—entrusts to another—the
borrower or mutuary—a certain quantity of fungible goods,
and the borrower is obliged, at the end of a specified term, to
return an equal quantity of goods of the same type and quality
(tantundem in Latin). A typical example of a mutuum contract
is the monetary loan contract, money being the quintessential
2
Money, Bank Credit, and Economic Cycles
3Juan Iglesias, Derecho romano: Instituciones de derecho privado, 6th rev.
updated ed. (Barcelona: Ediciones Ariel, 1972), pp. 408–09.
4Fungible goods are those for which others of the same sort may be sub-
stituted. In other words, they are goods which are not treated separately,
but rather in terms of quantity, weight, or measure. The Romans said
that things quae in genere suo functionem in solutione recipiunt were fungi-
ble; that is, things quae pondere numero mensurave constant. Consumables
are often fungible.
fungible good. By this contract, a certain quantity of monetary
units are handed over today from one person to another and
the ownership and availability of the money are transferred
from the one granting the loan to the one receiving it. The per-
son who receives the loan is authorized to use the money as his
own, while promising to return, at the end of a set term, the
same number of monetary units lent. The mutuum contract,
since it constitutes a loan of fungible goods, entails an exchange
of “present” goods for “future” goods. Hence, unlike the commo-
datum contract, in the case of the mutuum contract the estab-
lishment of an interest agreement is normal, since, by virtue of
the time preference (according to which, under equal circum-
stances, present goods are always preferable to future goods),
human beings are only willing to relinquish a set quantity of
units of a fungible good in exchange for a greater number of
units of a fungible good in the future (at the end of the term).
Thus, the difference between the number of units initially deliv-
ered and the number received from the borrower at the end of
the term is, precisely, the interest. To sum up, in the case of the
mutuum contract, the lender assumes the obligation to hand
over the predetermined units to the borrower or mutuary. The
borrower or mutuary who receives the loan assumes the obli-
gation to return the same number of units of the same sort and
quality as those received (tantundem) at the end of the term set
for the contract. Plus, he is obliged to pay interest, as long as an
agreement has been made to that effect, as is usually the case.
The essential obligation involved in a mutuum contract, or loan
of a fungible good, is to return at the end of the specified term
the same number of units of the same type and quality as those
received, even if the good undergoes a change in price. This
means that since the borrower only has to return the tantundem
once the predetermined time period has ended, he receives the
benefit of temporary ownership of the thing and therefore enjoys
its complete availability. In addition, a fixed term is an essential
element in the loan or mutuum contract, since it establishes the
time period during which the availability and ownership of the
good corresponds to the borrower, as well as the moment at
which he is obliged to return the tantundem. Without the explicit
The Legal Nature of the Monetary Irregular-Deposit Contract 3
or implicit establishment of a fixed term, the mutuum contract or
loan cannot exist.
THE DEPOSIT CONTRACT
Whereas loan contracts (commodatum and mutuum)
entail the transfer of the availability of the good, which shifts
from the lender to the borrower for the duration of the term,
another type of contract, the deposit contract, requires that the
availability of the good not be transferred. Indeed, the contract of
deposit (depositum in Latin) is a contract made in good faith by
which one person—the depositor—entrusts to another—the
depositary—a movable good for that person to guard, protect,
and return at any moment the depositor should ask for it.
Consequently, the deposit is always carried out in the interest
of the depositor. Its fundamental purpose is the custody or safe-
keeping of the good and it implies, for the duration of the con-
tract, that the complete availability of the good remain in
favor of the depositor, who may request its return at any
moment. The obligation of the depositor, apart from delivering
the good, is to compensate the depositary for the costs of the
deposit (if such compensation has been agreed upon; if not,
the deposit is free of charge). The obligation of the depositary
is to guard and protect the good with the extreme diligence
typical of a good parent, and to return it immediately to the
depositor as soon as he asks for it. It is clear that, while each
loan has a term of duration during which the availability of
the good is transferred, in the case of a deposit this is not so.
Rather a deposit is always held and available to the depositor,
and it terminates as soon as he demands the return of the good
from the depositary.
THE DEPOSIT OF FUNGIBLE GOODS
OR “IRREGULAR” DEPOSIT CONTRACT
Many times in life we wish to deposit not specific things
(such as a painting, a piece of jewelry, or a sealed chest full of
coins), but fungible goods (like barrels of oil, cubic meters of
gas, bushels of wheat, or thousands of dollars). The deposit of
fungible goods is definitely also a deposit, inasmuch as its
4
Money, Bank Credit, and Economic Cycles
main element is the complete availability of the deposited
goods in favor of the depositor, as well as the obligation on the
part of the depositary to conscientiously guard and protect the
goods. The only difference between the deposit of fungible
goods and the regular deposit, or deposit of specific goods, is
that when the former takes place, the goods deposited become
indiscernibly mixed with others of the same type and quality
(as is the case, for example, in a warehouse holding grain or
wheat, in an oil tank or oil refinery, or in the banker’s safe).
Due to this indistinguishable mixture of different deposited
units of the same type and quality, one might consider that the
“ownership” of the deposited good is transferred in the case
of the deposit of fungible goods. Indeed, when the depositor
goes to withdraw his deposit, he will have to settle, as is logi-
cal, for receiving the exact equivalent in terms of quantity and
quality of what he originally deposited. In no case will he
receive the same specific units he handed over, since the
goods’ fungible nature makes them impossible to treat indi-
vidually, because they have become indistinguishably mixed
with the rest of the goods held by the depositary. The deposit
of fungible goods, which possesses the fundamental ingredi-
ents of the deposit contract, is called an “irregular deposit,”5
as one of its characteristic elements is different. (In the case of
the contract of regular deposit, or deposit of a specific good,
5Our student César Martínez Meseguer argues convincingly that
another adequate solution to our problem is to consider that in the irreg-
ular deposit there is no true transference of ownership, but rather that
the concept of ownership refers abstractly to the tantundem or quantity
of goods deposited and as such always remains in favor of the deposi-
tor and is not transferred. This solution is the one offered, for example,
in the case of commixture covered in article 381 of the Spanish Civil
Code, which admits that “each owner will acquire rights in proportion
to the part corresponding to him.” Though the irregular deposit has tra-
ditionally been viewed differently (as involving the actual transfer of
ownership of physical units), it appears more correct to define owner-
ship in the more abstract terms of article 381 of the Spanish Civil Code,
in which case we may consider there to be no transference of ownership
in an irregular deposit. Moreover, this seems to be the view of Luis Díez-
Picazo and Antonio Gullón, Sistema de derecho civil, 6th ed. (Madrid: Edi-
torial Tecnos, 1989), vol. 2, pp. 469–70.
The Legal Nature of the Monetary Irregular-Deposit Contract 5
ownership is not transferred, but rather the depositor contin-
ues to own the good, while in the case of the deposit of fungi-
ble goods, one might suppose that ownership is transferred to
the depositary). Nevertheless, we must emphasize that the
essence of the deposit remains unchanged and that the irregu-
lar deposit fully shares the same fundamental nature of all
deposits: the custody and safekeeping obligation. Indeed, in the
irregular deposit there is always an immediate availability in
favor of the depositor, who at any moment can go to the grain
warehouse, oil tank, or bank safe and withdraw the equiva-
lent of the units he originally turned over. The goods with-
drawn will be the exact equivalent, in terms of quantity and
quality, of the ones handed over; or, as the Romans said, the
tantundem iusdem generis, qualitatis et bonetatis.
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