Loan, Leasing, and Custodian Agreements: Legal Contracts

Posted on Jan 15, 2025 in Law & Jurisprudence

Loan Contract

Concept: A loan, or “mutuo,” is a contract in which one of the parties (the lender, “prestamista”) delivers to the other (the borrower, “prestatario”) money or another fungible thing, under the condition to return the same amount of the thing, and of the same kind and quality.

Object of the contract: Money or another fungible thing. We can interpret the word “fungible” as “exchangeable” and as “consumable” in this context.

  • Comodatum: This is another kind of contract in which one of the parties delivers to the other a non-fungible thing so that the other may use it for a certain time and return it. (E.g., a bicycle or an apartment, which has to be returned after being used for a period of time).
  • Interest-bearing loan: Article 1755 of the Civil Code states that no interest shall be owed save as expressly agreed. However, in practice, parties usually agree on interest-bearing loans. The Act for preventing and combating usury of July 23, 1908, establishes interest rate limits to fight against usurious usages, and when the contract imposes a higher interest rate, it will be considered null and void.
  • Mortgage loan (Préstamo hipotecario):

The borrower guarantees the obligation of restitution with a right of mortgage (hipoteca) on a property and the faculty to the creditor (lender) to urge the sale upon default of the secured obligation and for which the amount of the sale is intended for the extinction of the obligation in preference to others of the same debtor.

Useful to finance the sale of real estate.

Registering in the Real Estate Registry.

What does the mortgage guarantee? The obligation of restitution of the capital and of the agreed interests.

What is it necessary to determine in the mortgage?

  • Quantity of the capital: determined on having constituted the mortgage.
  • Interests: it is necessary to indicate the maximum quantity of which the estate (finca) ensures.
  • Express stipulation in order that the mortgage should reach the payment of the following:
    • Interests moratorios.
    • Legal Costs (costas judiciales) and expenses.

Mortgage lending to finance the acquisition of real property. Two juridical businesses:

  • Sale: The buyer turns into the owner with the delivery of the thing.
  • Loan: Between the buyer and the bank company. The mortgage is the guarantee of the bank company to recover the given amount of money.

Consumer Credit

  • Consumer credit is regulated by Act 26/2011 (June 24, 2011).
    • This regulation is applied when the lender agrees to grant a loan to a consumer with deferred payment or another equivalent source of finance.
      • Consumer: A natural person when operating in a non-professional or business field.
    • Most relevant aspects of this regulation:
      • A) Article 26, Effectiveness of the contract linked to a specific credit: If a consumer contract aims to allow a consumer the acquisition of goods or services with financing of the purchase, the effectiveness of the contract of purchase will be conditioned by the acquisition of the credit.
      • B) Article 29, Linked Credit Contracts: A linked credit contract is planned to finance a contract aimed to obtain specific goods or undertake concrete services when they can all be seen as a unity.
  • When the consumer exercises his right of withdrawal in a linked contract to obtain goods or undertake services, he will also be untied from the finance contract, without any kind of penalty.
  • In the case of a linked credit contract, the consumer will be able to exercise the same rights against the deliverer and the lender when in the contractual relation the following circumstances occur:
    • a) The goods or services have not been properly delivered or performed, or they are not in accordance with the description of the contract.
    • b) The consumer has judicially or extra-judicially claimed for his right without obtaining legal protection.

Leasing

Concept: A contract by which one of the parties (the leasing company) gives to another the use of a movable equipment acquired by indication of the user in exchange for a periodic amount being agreed that at the end of the agreed duration, the user can choose to renew the contract for a lower consideration, return the good to its owner, or purchase it for a pre-established residual price.

Contract of financing.

During the period of use, the company of leasing preserves the property of the thing, though there is granted to the user a purchase option (opción de compra) that it will be able to exercise as soon as that period finishes.

Regulation: agreement, lease (transfer of use), and purchase option (exercise of the right).

Custodian Agreement or Deposit

  • Concept: A custodian agreement is a contract by which someone (the depositor, “depositante”) delivers a movable thing to another person (the custodian or depository, “depositario”) with the aim of keeping such a thing in the state in which it was delivered.
    • It is the essence of this kind of contract to custody a thing, which is not only the main obligation of the custodian but the cause or purpose of the contract. E.g., when a coat is left in the cloakroom of a museum, a suitcase is left in a locker at a train station, or jewelry is left in a bank safety deposit box.
  • Regulation: This contract is ruled by the will of the parties, and on a subsidiary basis by Articles 1758 and following of the Civil Code. However, if the depositor is a trader and the agreement a commercial contract, it will be applied the Commercial Code.
  • Parties’ obligations:
    • The depositor must pay the price of the custody service if this has been agreed upon; otherwise, the custody service will be free of charge (Article 1760 CC). Also, he must reimburse the custodian for the maintenance costs and pay compensation for the damage caused as a result of custodying the thing (Article 1779 CC).
    • The depositor must keep and custody the thing object of the contract; therefore, he cannot use it (Article 1768 CC). Finally, he must return the thing at the request of the depositor.
    • Custodian’s liability:
      • The custodian or depository is liable in case of loss, destruction, or damages in the thing, and in case of breach of the duty of restitution, unless grounds for release from liability occur (fortuitous events of force majeure, Articles 1104-1105 CC).
  • The thing object of the custody contract must be returned in the form in which it was delivered.
  • Where the thing given in deposit is delivered closed and sealed, the depository must return it in the same way and shall be liable for any damages if the seal or lock should have been forced as a result of his negligence. The depository’s negligence shall be presumed unless evidence to the contrary is provided.
  • As concerns the value of the thing deposited, where the forcing of the lock or seal should be attributable to the depository, the depositor’s statement shall prevail unless evidence to the contrary is provided.

Hotelier and Restaurateur’s Liability

  • There are two articles in the Civil Code which regulate the liability of the hotelier or hotel’s management when the clients suffer loss or damage in their travel articles. We refer to Articles 1783 and 1784 CC. In accordance with these norms, the deposit of any personal effects introduced by travelers in inns and restaurants shall also be deemed a necessary deposit. The innkeepers (hoteliers) or restaurateurs shall be liable for them as such depositories, provided that they or their employees should have been made aware of the personal effects introduced into their property, and that the travelers in their turn observe any precautions made by such innkeepers or their substitutes concerning the care and surveillance of such effects.
  • This liability comprises any damages to the personal effects of travelers caused by both the servants and employees of the innkeepers (hoteliers) or restaurateurs and by strangers, but not those incurred as a result of armed robbery or which are caused by another event of force majeure.
      • But if the traveler uses the custody service offered by the hotelier and delivers him the object which is kept under the custody and surveillance of the hotelier, it will be applied the regulation of the custody or deposit contract (Articles 1758-1780). (It will be a case of deposit contract).