Notes in Credits

NOTES ON CREDIT TRANSACTIONS

Credit transactions include all transactions involving purchase or loan of goods, services, or money in the present with a promise to pay or deliver in the future.

By the use of credit, more exchanges are possible, persons are about to enjoy a thing today but pay for it later, and through the banking system, actual money transfer is eliminated by cancellation of debts and credits.

Scope of Credit Transactions:

The study of Credit Transaction is wider in scope than Bailments, the following make up the whole credit transactions:

1. Commodatum – it is the gratuitous loan of a thing, to be used for a certain time and for certain purpose and with the obligation to return the same thing after the time expires or the purpose accomplished. (Art. 1935)

2. Mutuum – A contract by virtue of which one of the contracting parties delivers to the other money or any other consumable thing subject to the condition that the same amount of the same kind and quality to be paid or return (Art. 1938)

3. Deposit – When a person receives a thing belonging to another, with the obligation to safely

keeping and returning it at the instance of the owner or depositor.

4. Pledge – The deposit of personal property by a debtor a creditor as security for payment of debt.

5. Lease – A written agreement under which possession and use of property is granted for a specified time, for a specified payment. The landlord (lessor) and tenant ( lessee) relationship.

6. Warehouse Receipt – A receipt showing storage of goods or property in a warehouse.

7. Usury – Charging a rate of interest in excess of the maximum rate allowed by law.

8. Guaranty – An undertaking to be legally responsible for the payment of a debt of another or for performance of another’s act secondarily that is required as a legal obligation.

9. Suretyship – A contract where one party agrees to be answerable for the debt of another...