THE CREDIT CONTRACT

AND CHARACTERISTICS OF
CREDIT
Presented by:
Jaybien Mapusti
Markgil Opao
Lei Ashley Osicos
Kathlyn Jamablos
 WHAT IS A CREDIT CONTRACT?
A credit contract refers to a legally binding agreement between a
lender and a borrower. It outlines the terms and conditions of a loan,
including the amount borrowed, the interest rate, the repayment
schedule, and any other relevant terms.

Credit contract have a several types, each contract tailored to

different borrowing need. Here are the some common types.
1. Personal Loan - This type of credit contract is used for personal
expenses, such as home renovations, debt consolidation, or
medical bills.
2. Mortgage Loan
A mortgage loan is used to finance the purchase of a property.
3. Auto Loan
An auto loan is used to finance the purchase of a vehicle.
4. Student Loan
Student loans are specifically designed to help finance
education expenses.
5. Business Loan
Business loans are used to fund business operations,
expansion, or capital investments.
CHARACTERISTICS OF CREDIT
It is a bi - partite contract
Credit given rise to an agreement between two persons or to a creditor -
debtor relationship. Here, the creditor his faith in his debtor by
transferring the goods upon the debtor’s promise to pay them later. At the
same time, the debtor binds himself to pay and also recognizes the right of
the creditor to collect from him.

The contract is personal in nature

This is so because in granting credit, the primary basis in the personal
character of the debtor and his ability which are in turned are determined
by other personal factors.
CHARACTERISTICS OF CREDIT
The contract has a pecuniary nature
This means that credit involves money matter in the sense that the most accurate
way of measuring his means that credit involves money matter in the sense that
the most accurate way of measuring the extent of obligations of the debtor and
extent of claims of the creditor is no other than “money”.
There is the presence of trust and confidence.
Here, there is credit because of the faith and belief of the creditor towards his
debtor’s ability and willingness to pay his obligations.
Credit is risk.
Until the obligation is not yet settled of discharged, there will always remain the
possibility that the debtor might not or refuse to pay his debt. Hence, the risk
involved may be due to the probability of non-payment.
CHARACTERISTICS OF CREDIT
Futurity.
The creditor looks forward to the future as specified in the credit
instrument when he will receive payments from his debtor as promised.

Creation of legal obligation

Credit gives rise to a legal obligation on the part of the debtor and at the
same time legal rights to claim on the part of the creditor

The transfer of ownership or title

This means that with the existence of credit, there ushers a transfer of title
of property from the creditor to the debtor.
Property transfer is the process under which one person or
persons ceases to own a property and that ownership moves to a
new person or persons. To transfer property, the title is needed, as
the title contains the legal rights to use or change the property.
Once the property is transferred, the change is recorded in the
deed.
The property deed lists the owner of the property and is used to
transfer property.
Conveyance is the process under which the property is transferred.
It is a legal process that moves ownership of a property.
THANK YOU!