Loan agreement in kind

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In addition to the money loan, the property loan agreement is a form of the loan agreement . The property loan agreement obliges the lender to leave the borrower with an agreed defensible item . The borrower is obliged to pay a loan fee as well as to reimburse an item similar to the one received. The loan fee can - depending on the agreement - also be waived. Section 607 (2) of the German Civil Code ( BGB) makes it clear that the provisions on loans in kind do not apply to the provision of money. In this case, the provisions of §§ 488 ff. BGB (money loans) apply.

Before the reform of the law of obligations , loan law in Germany was uniformly regulated in Sections 607 to 610 of the German Civil Code (BGB) and encompassed both monetary and material loan contracts. The law on the modernization of the law of obligations, which came into force on January 1, 2002, introduced the loan in kind as an independent type of contract. The legal regulation of the loan in kind took place in §§ 607 ff. BGB. The differentiation became necessary because business transactions developed in such a way that the regulations of the old §§ 607 ff. BGB were no longer sufficient for the monetary loan and the integration of consumer protection in the BGB required special provisions for the consumer loan contract, which with the peculiarities of the property loan had nothing in common.

To distinguish the free loan from the (free) loan or the paid loan contract from the rental contract , it must be determined whether the item is to be returned (then loan or rental contract) or whether (other) items of the same type, quality and quantity are to be returned ( then in-kind loans). Loans in kind are usually given when the thing is to be consumed (food) or processed. Accordingly, the loaned item is also transferred to the recipient , but not the loaned item. The lender's claim for restitution depends, if a time has not been specified, on the termination of the loan in kind, Section 608 of the German Civil Code. With the reimbursement, the entitlement to payment of the loan fee is due at the latest.

In practice, loans in kind occur rarely , except as securities lending .