Loan or Borrow? How to Understand Correctly?

In daily life, we often encounter simple civil transactions such as borrowing or lending money or rice. In common parlance, people are more accustomed to using the term "borrow." Legally, "borrow" and "lend" are two entirely different concepts.

According to the provisions in the Civil Code 2005:

A property loan contract is an agreement between the parties, whereby the lender transfers property to the borrower; when due, the borrower must return to the lender the property of the same type in the correct quantity and quality, and only pay interest if there is an agreement or if the law stipulates.

Regarding a property loan contract, upon establishment, it transfers all ownership rights of the property (including the right to possess, use, and dispose) from the lender to the borrower. Subsequently, when due, the borrower will return to the lender the property of the same type in the correct quantity and quality.

A property borrowing contract is an agreement between the parties, whereby the lender transfers the property to the borrower to use for a certain period without payment, and the borrower must return that property when the borrowing period expires or the purpose of borrowing is achieved.

As for a property borrowing contract, upon establishment, it does not transfer ownership of the property from the lender to the borrower but only transfers the right to use the property. Subsequently, the borrower must return the exact borrowed property to the lender.

Thus, for assets such as money or rice, when establishing the transaction, it will be a property loan contract since the return will be property of the same type and value, not the exact property borrowed earlier.

Therefore, we must clearly distinguish the form of the transaction to avoid confusion.

Related documents:

Civil Code 2015

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