types of contracts

It is important to understand contracts as we discuss voluntary systems of government. Contracts will play a role in our daily life. There are many other types of contracts possible, but the following will serve to help the reader understand.

Types of contracts

Commodatum-this is a real contract made in good faith, by which one person-the lender-entrusts to another-the borrower or commodatary-a specific item to be used for free for a certain period of time, at the end of which the item must be restored to its owner; that is, the very thing loaned must be returned. It is called “real” because the article must be given over.

Mutuum-a contract by which the lender entrusts the borrower or mutuary with a certain quanity of fungible goods, and the borrower is obliged, at the end of a specified term, to return and equal quantity of goods of the same type and quality. Without the explicit or implicit establishment of a fixed therm, the mutuum contract/loan cannot exist.

Deposit-a contract made in good faith by which one person-the depositor-entrusts to another-the depository-a movable good for that person to guard, protect, and return at any moment the depositor should ask for it. This contract is always carried out in the interest of the depositor. The fundamental purpose of the deposit contract is the custody of safe-keeping of the good and it implies, for the duration of the contract, that the complete availability of the good remain in favor of the depositor, who may request its return at any moment. The obligation of the depositor, apart from delivering the good, is to compensate the depositary for the costs of the deposit (if such compensation has been agreed upon; if not, the deposit is free of charge). The obligation of the depositary is to guard and protect the good with the extreme diligence typical of a good parent, and to return it immediately to the depositor as soon as he asks for it.

The deposit of fungible goods (“irregular“ deposit contract)

There are many times in life in which we wish to deposit not specific things (such as painting, jewlry, etc), but fungible goods (dollars, oil, gas, etc). The deposit of fungible goods is a real deposit like any other, in that the main element is the complete availability of the deposited goods in favor of the depositor, as well as the obligation on the part of the depositary to conscientiously guard and protect the goods. The only difference between the deposit of fungible goods and the regular deposit is that when the former takes place, the goods deposited become indiscernably mixed with others of the same type and quality. Due to this indistinguishable mixture of different deposited units of the same type and quality, the depositor effectively transfers ownershsip to the depository. The fungible nature of these goods makes them impossible to treat individually, and thus the deposit of fungible goods is called an “irregular deposit”.