I.

INTRODUCTION
A. M EANING & SCO PE of CREDIT
TRANSACTIO NS Parties in a bailment
1. Bailor—The giver, or the party who delivers
Definition of credit transactions possession or custody of the thing
All transactions involving the loan or purchase of 2. Bailee—The recipient, or the party who receives
goods, services, or money in the present with a possession or custody of the thing
promise to pay or deliver in the future.
via de Leon Sr. & de Leon Jr. Parties in a bailment
Classified according to compensation:
Credit transactions involve: 1. For the sole benefit of the bailor
- The trust and confidence reposed in one person (the Example: Gratuitous deposit
borrower) by another (the lender) 2. For the sole benefit of the bailee
- The expectation that the thing loaned will be returned Examples: Commodatum, gratuitous mutuum
3. For the benefit of both parties
What is the borrower’s credit? Examples: Mutuum with interest, deposit for
It is his ability to make a loan or purchase goods and compensation, involuntary deposit, bailment for
services based on his promise that he will pay later. hire (of things, of service, for carriage of goods,
and of custody)
- Now: Loan/delivery » money/thing, or purchase »
goods/services Bailments for hire
- Future: Promise to pay/deliver A bailment for hire (location et conductio) is when
goods are left with the bailee for his use or for a
service by him, always with compensation. The kinds
Principal vs. accessory contracts
of bailment for hire are:
Credit transactions such as that of loan and deposit 1. Hire of things—Goods are delivered for the
are principal contracts, and may be accompanied by temporary use of the hirer (location rei)
the accessory contract of security. Example: Lease
2. Hire of service—Goods are delivered for some work
B. M EANING & KINDS of SECURITY or labor upon it (location operis faciendi)
Example: Contract for a piece of work
Definition of security 3. Hire for carriage of goods—Goods are delivered
Something given, deposited, or serving as a means to either to a common carrier or to a private person
ensure the fulfillment or enforcement of an obligation for the purpose of being carried from place to
or of protecting some interest in property. place (location operis mercium vehendarum)
via de Leon Sr. & de Leon Jr. 4. Hire of custody—Where goods are delivered for
storage (location custodiae)
Kinds of security via de Leon Sr. & de Leon Jr.
1. Personal—Fulfillment by the principal debtor is
secured only by a promise to pay or the personal
commitment of another
Examples: Guaranty, surety
2. Real—Supported by a collateral or an
encumbrance of property
Examples: Pledge, chattel mortgage, real estate
mortgage, antichresis

C. CO NTRACTS of BAILMENT
Definition of bailment
Delivery of property of one person to another in trust
for a specific purpose, with a contract, express or
implied, that the trust shall be faithfully executed and
the property returned or duly accounted for when the
special purpose is accomplished or kept until the
bailor reclaims it.
via de Leon Sr. & de Leon Jr.

The key elements of this definition are, therefore:

1. There is a delivery of property;
2. Such delivery has been in trust; and
3. There is a promise to return the thing delivered.

APO ESPAÑOLA & CARLOS MARIN BLOCK A 2016 PROF. HECTOR DE LEON, JR.