Borrowing and lending

The terms borrowing and lending are often used interchangeably, but they are two quite different things. Did your neighbour lend you a lawnmower? Then it’s a loan. But if he lent you a plate of eggs, it would be a loan. We’ll look at exactly how the two institutes differ and when you might encounter them in this article.

8 minutes of reading

Chapters of the article

Loan agreement

In the case of a loan agreement, this is a free temporary loan of an unusable item. Unusable in this context means a thing that cannot be used, only enjoyed. In this case, the borrower does not become the owner of the item, but has only borrowed it. This could be, for example, real estate or a machine. It is also important that the lender cannot ask for payment for the borrowing, whether in the form of money or perhaps some kind of consideration.

The loan agreement may specify the period of validity of the loan. This may be a specific date or an event that is to occur in the future. An example might be when your car breaks down and you get a replacement from the garage. The loan agreement then lasts until your car is back in service.

Tip: Has someone sold you a car that has defects you didn’t know about or doesn’t have the required features? We can help you with the claim. We will assess your case and within 24 hours we will prepare a proposal for legal services leading to a remedy.

However, the loan agreement does not need to include a duration date at all, but in this case the purpose of the loan must be included in the agreement. Once this purpose is fulfilled, the loan ends and the borrowed item should be returned as soon as possible. In this case, for example, the borrowing of a mixer from a neighbour for the purpose of building a wall. Once the wall is completed, the borrowing should end and the mixer should be returned.

There are certain obligations on the part of both the borrower and the lender:

Obligations of the lender

The lender must deliver the item to the borrower in a condition that allows its proper use. In the event that the item has a defect of which the borrower had no prior knowledge, the lender must compensate for the damage caused. In addition, the lender must also inform the borrower how to handle and use the borrowed item.

Obligations of the borrower

The borrower must use the borrowed item in the manner specified in the contract. However, if the manner of use is not specified, the borrower must use the item in a reasonable manner so as to avoid unnecessary wear and tear or damage. In addition, the borrower is obliged to bear the costs of using the borrowed item (e.g. petrol for the operation of the car). The only exception is for extraordinary costs (e.g. the cost of repairing a fault in the car). Last but not least, the lender must not transfer the item to a third party for use without the lender’s consent.

Do you need help?

Do you need to draft or review a loan or loan agreement or any other contract? We are here for you. We will handle your contracts quickly, reliably and completely online.

Loan agreement

A loan agreement, unlike a borrowing agreement, relates to a usable item. A loan agreement therefore consists in the lending of a usable thing with the proviso that the same thing, but of the same kind, is not returned on termination. Therefore, because of the nature of the thing lent, the borrower becomes the owner of that thing. In this sense, a usable item is an item which can be used and thus consumed. It is therefore, for example, money, building materials or foodstuffs. Consequently, the same thing cannot be returned because the money is spent, the building materials are used to build a house and the food is eaten. Therefore, another thing of the same kind is returned.

It is also important to note that the loan may or may not be chargeable. If it is chargeable, the money lent is returned with interest or, in the case of material things, the thing is returned in a larger quantity or of a higher quality corresponding to the interest.

The duration of the loan may be specified in the contract, but it is not necessary. If the duration is not fixed, the contract is terminated with the termination of the contract. The notice period is set at 6 weeks. However, it is possible to set the notice period in the contract according to the needs of both parties.

Tip: Do you lend money to anyone? Write a contract about it. We will advise you what such a contract should definitely contain so that you don’t lose your money.

Where you can meet the borrowing and lending

As we have already mentioned, borrowing refers to unusable items. You may therefore encounter it in situations where you borrow tools or property. Often the loan will involve cars or land.

Car loan agreement

You may come across a car loan agreement, for example, in the case of a replacement vehicle. This may be provided by a garage while your car is being repaired or by your insurance company in the event of a car accident. You may then want to draw up a loan agreement yourself, for example if you want to lend your van to a friend for a move. You may think that a contract is not needed for something like this, but it is always better to protect yourself unnecessarily than to regret it later.

A car hire agreement should contain some basic information:

  1. Identifying information of the borrower and lender: specifically, name, date of birth and place of residence.
  2. Theexact specification of the car: Model, year, color, license plate number and vehicle identification number.
  3. Specification of the purpose and duration of the loan: The contract should state for what purpose you are borrowing the car and for how long. For example, for the purpose of moving from address X to address Y for the period 20-22 February 2024.
  4. Other rules: The contract should state any other rules.
  5. Description of condition: The contract should also describe the condition of the car and any defects.
  6. Place and time of return: It is a good idea to specify in the contract the date of return and the place where the return is to take place.
  7. Penalties: These do not necessarily need to be included in the contract, but it is good to have them there in case there are problems. Penalties can be specified, for example, in the event of a late return or a return in poor condition.

Tip: Planning to buy a car? We will make sure you buy or sell a car legally without any confusion or loopholes. You can sign in as little as 3 days.

Land loan agreement

You may encounter a land lease agreement mainly in the case of public land or land owned by municipalities. Usually, these lands are borrowed for use by various associations or even private individuals for the purpose of improving the land or beneficial use of unused land.

Even a land loan agreement should contain some basic information:

  1. Identification details of both parties
  2. The subject of the loan: in the case of land, the parcel numbers and cadastral area should be given. If the loan concerns only a part of the land, it is necessary to specify this part precisely, e.g. by means of a drawing of the land.
  3. Purpose and duration: The land is borrowed for a specific purpose, which should be described in the contract. For example, this may be the purpose of using the land to operate a communal garden. The duration does not have to be specified, but may be.
  4. Other rules: the contract may include other rules that both parties must follow. For example, a prohibition on certain encroachments on the land or the lender’s right to inspect ongoing work on the land.
  5. Termination terms: The contract should also include rules for termination and a specification of the notice period.
  6. Penalties: Even in the case of a land lease agreement, penalties for non-compliance may be provided for. E.g. penalties for unauthorised alterations to the land.

Tip: You may find yourself renting rather than borrowing land. In case of renting, do not hesitate to contact us. We will draw up or review a lease agreement tailored to your case. Thanks to our services, even after the end of the lease, no disputes will arise between landlord and tenant regarding unclear rights or obligations.

Loan from a non-bank company

You may encounter a loan especially in interpersonal relationships. For example, when you borrow money from a family member or a neighbour lends you the missing flour for a cake. However, you may also encounter loans from non-banking companies.

Many non-banking companies are licensed by the CNB to provide consumer credit and are therefore regulated by the CNB. This makes these companies among the more reliable and less risky ones. On the other hand, there are also non-banking companies that do not have this licence and therefore lend money through a loan. We advise you to stay away from these companies. You may be very unpleasantly surprised by unclear contract terms, hidden fees, extreme interest rates and high penalties for non-payment.

Tip: Some loans from non-banking companies amount to usury. However, this is illegal and you can file a criminal complaint against the company. An affordable lawyer is there to protect your rights. An attorney with more than 10 years of experience in criminal law will evaluate your case and then prepare representation.

Are you solving a similar problem?

Dostupný advokát team of online lawyers will solve it for you.

Solutions Tailored for You

Our team of experienced attorneys will help you solve any legal issue. Within 24 hours we’ll evaluate your situation and suggest a step-by-step solution, including all costs. The price for this proposal is only CZK 690, and this is refunded to you when you order service from us.

Preset Prices
All services pre-priced for no surprises.
We Do Everything Online
Save time, money and the hassle of travel.
We Work Fast
90 % of issues get solved by the following day.
Experienced Team
We have specialists for every field of law.

Has this content helped you? Give it a rating

No rating yet. Be first to rate and help others.

Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

Reviews of the Dostupný advokát service

Recenze služby

Filip Rufer, Prague

before 4 years

Dostupný advokát updated the terms of a contract for our web portal, to insure that they were in strict accordance with the GDPR (General Data Protection Regulation). The entire process was done online and for reasonable price.

Recenze služby

Ms Magic, Google reviews

before 3 years

Fast and professional solutions for most normal legal needs at affordable, preset prices. Seriously, what could be better than that? While it sounds ‘too good to be true,’ I’m happy to report that the staff at DA are pros, and what’s more they are honestly dedicated to their awesome mission, which is to make quality (zobrazit více) Fast and professional solutions for most normal legal needs at affordable, preset prices. Seriously, what could be better than that? While it sounds ‘too good to be true,’ I’m happy to report that the staff at DA are pros, and what’s more they are honestly dedicated to their awesome mission, which is to make quality legal services affordable for the average person. I find their prices very fair when compared to what I’ve usually paid for similar services, which means I (and my family and friends) can get the legal help I need without worrying about some black hole of never-ending fees. In my own experience with DA I’ve found everyone there very responsive, and emails and calls are answered in a timely manner. Their large staff also gives me confidence that any legal needs I have can be handled professionally, as there’s always someone with experience in my particular issue. Their head attorney also writes a regular blog and keeps up with all the latest legal trends, which means they as a business stay up-to-date. As someone who’s spent a fortune over the years on legal assistance, or tried to “go it alone” when I couldn’t afford legal help, I wish Dostupny Advokat had been around a long time ago. I highly encourage anyone who needs legal help to TRY THEM FIRST!

Recenze služby

Pavel Kasal

before 4 years

I decided to withdraw from my operating lease prematurely and was charged a ridiculously high penalty, apparently because the car had been sold for a significantly lower price than its market value. I found it frustrating, so I turned to Dostupný advokát for help. They got to work on the case very fast and recommended (zobrazit více) several options on how to proceed. They also helped me prepare all necessary documentation. Thanks to them, I had to pay only a fraction of the original amount and saved tens of thousands of Crowns.

View All Testimonials

You could also be interested in

About us in public media
Logo Česká advokátní komora Logo Advokátní kancelář roku 2023 a 2024
Follow the news
Facebook Dostupný advokát Twitter / X Dostupný advokát