LOAN FOR CONSUMPTION

4 definitions found across Law Mind sources

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LOAN FOR CONSUMPTIONAuthored
The Law Mind • 1040 words
Definition
A loan for consumption is a contract by which one party (the lender) delivers to another (the borrower) a quantity of goods that are consumed in their ordinary use, with the borrower obligated to return not the identical items received but an equivalent quantity of the same kind and quality. The defining feature is fungibility: the borrower may use — and in doing so, consume — the original goods, because what is owed back is kind and measure, not the specific items transferred. The classic examples are money, grain, oil, and wine. A loan of one hundred dollars obligates repayment of one hundred dollars, not the same physical bills. A loan of a bushel of wheat is satisfied by returning a bushel of equivalent grade, not the original kernels. Loan for consumption stands in deliberate contrast to a loan for use (commodatum), in which the borrower must return the identical object received and bears no ownership interest in it during the loan period. In a loan for consumption, ownership of the goods passes to the borrower at delivery; the lender retains only a personal claim for equivalent return.
Common Confusion
LOAN FOR CONSUMPTION vs. LOAN FOR USE (COMMODATUM): These two categories are the fundamental division of loan contracts in civil law systems and are frequently conflated in historical sources that use "loan" without qualification. In a loan for use, the borrower gets possession but not ownership — the lender's property right in the specific object continues, and the borrower must return that exact thing. In a loan for consumption, ownership transfers to the borrower because the goods cannot be separated from their use; return of identical goods is impossible by the nature of the transaction. The distinction carries legal weight: a borrower in a loan for consumption who fails to return equivalent goods is a debtor, not a converter. A borrower in a loan for use who fails to return the object may face an action in tort as well as contract. LOAN FOR CONSUMPTION vs. BAILMENT: Bouvier's entry flags this directly. Loan for consumption resembles bailment on its surface — goods are delivered, an obligation to return arises — but it lacks the one essential element of bailment: the obligation to return the specific res delivered. Because ownership transfers and fungible equivalents satisfy the return obligation, the transaction is more accurately classified as a form of mutuum (civil law) or a species of contract rather than a true bailment.
Why It Matters in Research
Researchers will encounter "loan for consumption" most heavily in three contexts: Louisiana civil law materials, historical treatises on bailment, and comparative law discussions of mutuum. Louisiana is the primary domestic source. The term appears in the Louisiana Civil Code and in Louisiana case law interpreting articles derived from the French civil tradition. Researchers working on Louisiana lending disputes, agricultural credit arrangements, or historical commodity transactions should treat this as a Louisiana-specific term of art that may not map directly onto common law concepts from other states. In historical treatises — particularly nineteenth-century works on bailment by Story and Schouler — loan for consumption appears as the category that sits just outside bailment proper. These sources debate whether mutuum is truly a bailment or something distinct. The confusion matters for researchers tracing how obligations ran between parties in historical commercial transactions: the wrong categorization leads to the wrong body of law. The term also appears in canon law and early common law discussions of usury. Because a loan for consumption transfers ownership, any return above the principal was historically analyzed as the price of the use of money — the doctrinal ground on which usury prohibitions operated. Researchers connecting lending doctrine to usury history will find this term a gateway concept. Modern common law sources rarely use the phrase. Contemporary commercial lending operates under Article 9 of the Uniform Commercial Code, general contract principles, and federal lending statutes — none of which employ the civil law taxonomy. A researcher who encounters "loan for consumption" in a modern context is almost certainly reading a Louisiana source, a comparative law analysis, or a historical document.
Historical Dictionary Support
Black's Law Dictionary provides a serviceable functional definition, drawing directly from the Louisiana Civil Code (art. 2910) and articulating the core distinction between loans for consumption and loans for use. The entry correctly identifies fungible return as the operative obligation. Bouvier's Law Dictionary reaches the same substantive result through different framing — the lender delivers a personal chattel to be returned "in kind" — and explicitly raises the bailment problem, noting that loan for consumption lacks the essential element of bailment (return of the specific res). This is analytically sharper than Black's on the doctrinal classification question. Neither dictionary addresses the usury dimension that historically attached to loans for consumption, nor do they explain how the concept integrates with Article 9 of the UCC in modern practice (which it does not, by name). Researchers should not rely on either entry for any jurisdiction outside Louisiana without supplementing with comparative law sources.
Jurisdictional Note
Loan for consumption is a civil law concept. It is a term of art in Louisiana law and in comparative discussions of French, Spanish, and Roman-derived legal systems. Common law jurisdictions do not use this terminology as an operative legal category, though the underlying transaction — a fungible goods loan — is fully recognized and governed by contract law and, where applicable, the UCC.
Encyclopedia Cross-Reference
The Law Mind Real Estate Transactions & Construction Encyclopedia: Commercial Real Estate Lending — Loan Structure, Recourse vs. Non-Recourse, and Loan Covenants (realestate_29) — for context on how modern loan obligations are structured, useful as a contrast to the civil law framework underlying loan for consumption.
Related Terms
Mutuum — the Roman and civil law term for the same transaction; the source concept Commodatum — loan for use; the essential contrast term Bailment — parent category from which loan for consumption is distinguished Fungible goods — the class of property to which loan for consumption applies Usury — historically analyzed through the loan-for-consumption framework Lender; Borrower — the parties to the transaction Louisiana Civil Code — primary domestic statutory source
LOAN FOR CONSUMPTIONmain
Black's Law Dictionary • 1891
loan for consumption is an agreement by which one person delivers to another a cer- tain quantity of things which are consumed by the use, under the obligation, by the bor- rower, to return to him as much of the same kind and quality. Civil Code La. art. 2910. Loans are of two kinds,—for consumption or for use. A loan for consumption is where the article is not to be returned in specie, but in kind. This is a sale, and not a bailment. Code Ga. 1882, § 2125.
LOAN FOR CONSUMPTIONmain
Bouvier's Law Dictionary • 1928
IN GREMIO LEGIS (Lat.). In the bosom of the law. This is a figurative ex- pression, by which is meant that the subject is under the protection of the law: as, where the title to land is in abeyance. See GREMIUM; IN NUBIBUS; ABEYANCE.
LOAN FOR CONSUMPTIONmain
Bouvier's Law Dictionary • 1928
A contract by which the owner of a personal chattel, called the lender, delivers it to the lee, called the borrower to be returned in kind. For example, if a person borrows a bushel of wheat, and at the end of a month returns to the lender a bushel of equal value. This class of loans is commonly considered under the head of bailments; but it lacks the one essential element of bailment, that of a return of the property; it is more strictly a barter or an exchange: the prop- erty passes to the borrower; 4 Ν. Υ. 76; 8 id. 483; 4 Ohio St. 98; 3 Mas. 478; 1 Blackf. 853; Story, Bailm. § 489. Those cases, sometimes called ventuum (the correspond- ing civil law term), such as where corn is delivered to a miller to be ground into wheat, are either cases of hiring of labor and service, as where the miller grinds and returns the identical wheat ground into flour, retaining a portion for his services, or constitute a mere exchange, as where he mixes the wheat with his own, undertaking to furnish an equivalent in corn. It amounts to a contract of sale, payment being stipulated for in a specified article instead of money. See IN GENERE; IN KIND; MUTUUM.

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