Civil Code > TITLE XV CONTRACTS RELATING TO THE ASSIGNMENT OF RIGHTS 4

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Chapter 4. Loan of money and other fungibles

Art. 2471 – Definition.

The loan of money and other fungibles is a contract whereby a party, the lender, undertakes to deliver to the other party, the borrower, a certain quantity of money or other fungible things and to transfer to him the ownership thereof on the condition that the borrower will return to him as much of the same kind and quality.

Art. 2472 – Proof of loan.

(1) Where the sum lent exceeds five hundred Ethiopian dollars, the contract of loan may only be proved in writing or by a confession made or oath taken in court.

(2) The contract of loan may not be proved by any other means.

(3) The provisions of this Article shall apply as regards the manner of proving the repayment of any sum exceeding five hundred Ethiopian dollars.

Art. 2473 – Relations between bankers and their clients.

(1) The provisions of Art. 2472 shall not apply to the relations between persons or companies mainly concerned with banking business and their clients.

(2) The contract of loan or the repayment of the loan may in such cases be proved by witness or presumptions.

Art. 2474 – Obligations of lender.

(1) The provisions of the Chapter on “Sale” concerning the obligations of the seller shall apply to the lender (Art. 2273-2302).

(2) The obligations of the lender shall however be construed with less strictness where the loan is made gratuitously.

(3) In such case, the lender shall only warrant such defects of the thing as are known to him.

Art. 2475 – Insolvency of borrower.

(1) The lender may refuse to deliver the promised thing where the borrower has become insolvent since the making of the contract.

(2) He may do so notwithstanding that the insolvency arose before the making of the contract where he has known it only after having contracted.

Art. 2476 – Expenses and safe keeping of thing.

(1) The provision of the Chapter on “Sale” concerning the obligations of the parties relative to expenses or to the safe keeping of the thing shall apply to the loan (Art. 2314-2322).

(2) In this respect, the lender shall assume the obligations of the seller and the borrower, those of the buyer.

Art. 2477 – Risks.

(1) The borrower shall become the owner of the thing lent.

(2) He shall bear the risk of its loss or deterioration from the moment of delivery.

Art. 2478 – Interest. – 1. When due.

The borrower shall not owe interest to the lender unless the payment of interest has been stipulated.

Art. 2479 – 2. Rate of interest.

(1) The parties may not stipulate a rate of interest exceeding twelve percent per annum.

(2) Where it has been agreed that the loan will bear interest but a higher rate has not been fixed in writing, the borrower shall owe interest at the rate of nine percent per annum.

(3) The borrower shall also owe interest at the rate of nine percent per annum where a rate exceeding twelve percent per annum has been agreed in writing.

Art. 2480 – 3. Exigibility.

Unless otherwise agreed, interest shall be paid at the end of each year reckoned from the making of the contract.

Art. 2481 – Compound interest.

(1) The parties may not agree in advance that interest will be added to capital and itself produce interest.

(2) Nothing shall affect the rules for the calculation of compound interest on current accounts.

Art. 2482 – Time for restitution. – 1. Agreed time.

(1) The borrower shall return the things lent in the same quantity and quality at the time agreed.

(2) Where the loan does not bear interest, he may return them before the time agreed after having informed the lender of his intention to restore them to him.

(3) Notwithstanding any agreement to the contrary, the provisions of sub-art (2) shall apply where a rate of interest exceeding twelve percent has been fixed in writing.

Art. 2483 – 2. Absence of agreed time.

(1) Where no time has been fixed, the borrower shall return the thing lent within one month from the day when the lender claims the restitution of them from him.

(2) He may in the same circumstances return them to the lender one month after having informed the latter of his intention to restore them to him.

Art. 2484 – 3. Special stipulation.

Where it has been agreed that the borrower will repay when he can or when he has the means to do so, the court shall fix a time for payment, according to the circumstances, which cannot exceed six months.

Art. 2485 – Object of restitution. – 1. Sum in Ethiopian dollars.

(1) Where the thing lent is a sum of money expressed in Ethiopian dollars, the borrower shall discharge his obligation by paying an equal numerical sum in notes or cash being legal tender on the day of payment.

(2) No regard shall be had to variations in the purchasing power of this sum since the date of the loan.

(3) No regard shall be had to any change which may have occureed in the definition of the Ethiopian dollar since the date of the loan.

Art. 2486 – 2. Sum in foreign currency.

(1) Where the thing lent is a sum of money expressed in a foreign currency, the borrower shall discharge his obligation by paying a sum numerically equal to the same sum in foreign currency in notes or cash being legal tender on the day of payment in the country of this currency.

(2) He may, if he prefers, free himself by paying the equivalent on the day of payment of this sum in Ethiopian dollars.

Art. 2487 – 3. Commodities or ingots.

(1) Where the thing lent consists of ingots, wares or commodities, the borrower shall free himself by returning the same quantity and quality.

(2) No regard shall be had to the variations in the price of such ingots, wares or commodities since the date of the loan.

(3) Where it is impossible for the borrower to restore the thing or this restitution is very difficult for a reason beyond his control, the borrower shall free himself by paying the lender the value of the thing estimated on the day and at the place where the restitution should take place.

Art. 2488 – Delay of borrower. – 1. Cancellation of contract.

(1) In the case of non-payment of interest, the creditor may not demand the repayment of the loan, unless the borrower is in arrears for two consecutive payments representing together at least one tenth of the capital lent.

(2) The provisions of sub-art. (1) shall apply where it has been agreed that the capital lent shall be repaid by instalments.

(3) Any provision to the contrary shall be of on effect.

Art. 2489 – 2. Damages.

(1) Where the borrower is late in returning the thing lent or in paying the interest due by him, he shall pay legal interest in accordance with the provisions of the Title of this Code relating to “Contracts in general” (Art. 1790-1805).

(2) Any provision increasing the liability of the borrower shall be of no effect.

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