CREDIT TRANSACTIONS

Two types of Credit Transactions: accomplished or kept until the bailor

reclaims it.
1. Secured Transactions or contracts
of real security – Those supported Parties in BAILMENT
by collateral or an encumbrance if
1. Bailor – the giver, the party who
property.
delivers possession/ custody of the
2. Unsecured transactions or contracts
thing bailed
of personal security – Those the
2. Bailee – the recipient, the party who
fulfillment of which by the principal
receives the possession/custody of
debtor is secured or supported only
the thing delivered
by a promise to pay or the personal
commitment of another such as a KINDS OF CONTRACTUAL BAILMENT
guarantor or surety.
1. Those for the sole benefit of the
What is SECURITY? bailor, e.g. gratuitous deposit (Art.
1965) and mandatum, i.e., where
- Something given deposited or
the mandatory or person to whom
serving as a means to ensure the
the property is delivered undertakes
fulfillment or enforcement of an
to do some act with respect to the
obligation or of protecting some
same.dssd
interest in property.
2. Those for the sole benefit of the
A. Personal Security – as when an
bailee, e.g. commodatum and
individual becomes a surety
gratuitous simple loan or mutuum
guarantor
(Art. 1933)
B. Real Security – as when a mortgage.
3. Those for the benefit of both
Pledge, antichresis, charge, or lien or
parties, e.g. deposit for a
other device used to have property
compensation, involuntary deposit,
held, out of which the person to be
pledge and bailments for hire
made secure can be compensated
A. Hire of things – for the
for loss. Thus, a secured creditor is
temporary use of the hirer (i.e.
one who holds a security from his
lease, Arts. 1642-1643)
debtor for payment of the latter’s
B. Hire of service – for work or
debts.
labor upon the goods delivered
What is BAILMENT? How is it created? Who (i.e. contract for piece of work,
are parties to a BAILMENT? Art. 1717)
C. Hire for carriage of goods – for
Bailment – The delivery of property of one
goods delivered to be carried
person to another in trust for a specific
from place to place by a
purpose, witch a contract, express or
common carrier (Art. 1732) or
implied, that the trust shall be faithfully
private person
executed for when the special purpose is
CREDIT TRANSACTIONS

D. Hire of custody – for storage of Bailments for hire

goods delivered (Arts. 1507-
1520, Warehouse Receipts Law)
DEFINITION
Mandatum -- involves money or other
consumable thing; ownership is transferred
to the borrower; maybe gratuitous or
onerous, i.e. with stipulated interest;
borrower need only pay the same amount
of the same kind and quality; refers only to
personal property; loan for consumption;
lender may not demand its return before
the lapse of the term agreed upon;
borrower suffers the loss even if caused
exclusively by a fortuitous event and he is
not, therefore, discharged from his duty to
pay; purely personal in character.
Commodatum -- is a real, principal,
essentially gratuitous, and personal contract
where one of the parties (called the bailor
or lender) delivers to another (called the
bailee or borrower) a non-consumable
object, so that the latter may USE the same
for a certain period and later return it
Mutuum -- money or other consumable
thing, upon the condition that the same
amount of the same kind and quality shall
be paid
Deposit for compensation --
Gratuitous deposit
Involuntary deposit
Pledge -- is a contract by virtue of which the
debtor delivers to the creditor or to a third
person a movable or document evidencing
incorporeal rights for the purpose of
securing the fulfillment of a principal
obligation with the understanding that
when the obligation is fulfilled, the thing
delivered shall be returned with all its fruits
and accessions. (Art.2085 in rel to 2093)