Meaning and scope of credit transactions.
property held, out of which the person to be made
Credit transactions – all transactions involving the purchase or
loan of goods, services, or money in the present with a
promise to pay or deliver in the future.
- more exchanges are possible,
- persons are able to enjoy a thing today but pay for it
later
- through the banking system, actual money transfer is
eliminated by cancellation of debts and credits
- bailment contracts, together with the other related
subjects such as usury, the contracts of guaranty and
suretyship, mortgage, antichresis, and concurrence
and preference of credits
2 Types of Credit Transactions
1. Secured transactions or contracts of real security -
supported by a collateral or an encumbrance of
property
2. Unsecured transactions or contracts of personal
security - fulfillment of which by the principal debtor is
secured or supported only by a promise to pay or the
personal commitment of another such as a guarantor
or surety
Meaning and kinds of security
Security - something given or deposited serving as a means to
ensure the fulfillment or enforcement of an obligation or of
protecting some interest in property
 Personal security - an individual becomes a surety or a
guarantor
 Property or real security - when a mortgage, pledge,
antichresis, charge or lien or other device used to have
secure can be compensated for loss
Secured creditor - holds a security from his debtor for payment
of the latter’s debts
Meaning of bailment
Bailment - French word “bailler,” meaning “to deliver.”
- 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
- a contractual relation
- to be legally enforceable, must contain all the
elements of a valid contract
- may be created by operation of law
Parties in bailment
1. Bailor (Comodatario). — the giver; the party who
delivers the possession or custody of the thing bailed
2. Bailee (Comodante). — the recipient; the party who
receives the possession or custody of the thing thus
delivered
Kinds of contractual bailment
1. Those for the sole benefit of the bailor - gratuitous
deposit and mandatum
 Mandatum - bailment of goods without recompense
where the person to whom the property is delivered
undertakes to do some act with respect to the
 same; as simply to carry it, or keep it, or otherwise LOAN (Arts. 1933-1961.)
to do something with respect to it gratuitously
ARTICLE 1933. By the contract of loan, one of the parties
2. Those for the sole benefit of the bailee - commodatum
delivers to another, either something not consumable so
and gratuitous simple loan or mutuum
that the latter may use the same for a certain time and
3. Those for the benefit of both parties - deposit for a
return it, in which case the contract is called a
compensation, including involuntary deposit, pledge,
commodatum; or money or other consumable thing, upon
and bailments for hire.
the condition that the same amount of the same kind and
1 & 2 – gratuitous bailments - considered more as a favor by quality shall be paid, in which case the contract is simply
one party to the party benefited; but the law imposes definite called a loan or mutuum.
obligations upon both the bailor and the bailee
Commodatum is essentially gratuitous.
3 - mutual-benefit bailments - results from bailments involving
Simple loan may be gratuitous or with a stipulation to pay
business transactions
interest.
Kinds of bailment for hire
In commodatum the bailor retains the ownerships of the
Bailment for hire (locatio et conductio) - goods are left with the thing loaned, while in simple loan, ownership passes to
bailee for some use or service by him and is always for some the borrower.
compensation
Characteristics of the contract
1. Hire of things (locatio rei). — where goods are
(1) a real contract because the delivery of the thing loaned is
delivered for the temporary use of the hirer (i.e., lease)
necessary for the perfection of the contract (Art. 1934; see
2. Hire of service (locatio operis faciendi). — where goods
also Art. 1316.); and
are delivered for some work or labor upon it by the
bailee (i.e., contract for a piece of work) (2) a unilateral contract because once the subject matter has
3. Hire for carriage of goods (locatio operis mercium been delivered, it creates obligations on the part of only one of
vehendarum). — where goods are delivered either to a the parties, i.e., the borrower
common carrier or to a private person for the purpose
of being carried from place to place
4. Hire of custody (locatio custodiae). — where goods are
delivered for storage.