Mutuum (Loan for Consumption)
(1) Nature and Development
There are two basic types of loan contract that can be imagined. If I lend you a sum of money, that money is only of use to you if you can spend it.
I do not, therefore, expect to get the very same coins and notes back. By contrast, if I lend you my car, I expect to get back the very same car. The Romans had two different types of contract of loan, one for each of these situations. Mutuum was used for the former situation, where an equivalent was to be returned rather than the original. Commodatum, considered below, was for the case where the original thing was to be returned.Mutuum was one of the oldest types of contract, having been known already at the time of the Twelve Tables.[2076] It was used for loans of things that are reckoned by weighing, counting or measuring, which are consumed by use.[2077] It was unilateral and stricti iuris: by the fact of receiving the property, the borrower undertook to restore an equivalent. The borrower indeed became owner of the thing lent,[2078] and, once this had happened, the lender had no further duties. Mutuum was gratuitous: if payment was made, it would be a different sort of contract.
(2) The Borrower’s Duties
The borrower was obliged to restore an equivalent to the thing lent. This had to be something of equivalent quality, not just something of the same kind:
When something has been given on the basis of mutuum, even if there is no proviÂsion that something just as good should be returned, the debtor is not allowed to return something that, even though it is of the same kind, is of worse quality, such as new wine for old.[2079]
What if the property was lost or damaged? If this happened before delivery to the borrower, there could be no liability on either party,[2080] as the contract was not formed until delivery.
After delivery, risk lay with the borrower as owner of the property.[2081] The borrower became liable to repay on receipt of the thing lent, and it was no concern of the lender what happened to the thing lent thereafter. There were certain exceptions to this. The most important was the maritime loan, consisting of ‘money carried overseas'.[2082] In this case, the lender bore the risk from the date on which it was agreed that the ship should sail.[2083]If the borrower failed to make repayment, the lender could enforce the obliÂgation, not by means of an ownership remedy[2084] (because the lender was not owner any more), but by means of a condictio.[2085]
(3) Moneylending
As the most common use for mutuum was in loans of money, it is appropriate to say something about moneylending here.[2086]
First, as we have already seen, mutuum was gratuitous.[2087] As a result, any provision for payment of interest had to be added on by way of stipulatio.[2088] The exception to this was those loans, such as the maritime loan, where the lender undertook to accept the risk of loss or damage. In those cases, provision for interest could be made by agreement, without the parties needing to go to the formality of a stipulatio.[2089]
There were limits on the interest rates permitted for loans already in the time of the Twelve Tables, though it is not clear precisely how the limits were intended to work.[2090] Throughout the classical period and beyond, up to the time of Justinian, the maximum interest rate was 12 per cent annually, except for maritime loans, which had unlimited interest to reflect the different allocation of risk. A maximum of 6 per cent was introduced where the lender was a senator.[2091] Justinian reduced the maximum rates to 4 per cent for lenders of high social status (illustribus... personis), 8 per cent for those running businesses, 12 per cent for maritime loans and 6 per cent for other cases.[2092] If the maximum interest rate was exceeded, the contract itself was still valid, but the lender could not require payment of the excess interest.
Only the maximum could be recovered.[2093]A more specific restriction was introduced in the first century AD by the senaÂtusconsultum Macedonianum:
Whereas Macedo, to whom nature gave the inclination to crime, had added indebtedness to this, and whereas those who lend money on terms which may be called doubtful often provide the means for evil men to do wrong; it has been decided that, in order to make an example of those who give money on the basis of mutuum to sons-in-power, so that they know that the debt cannot be made good on the death of the father, no action will be given, even after the death of the parÂent in whose power the son was.[2094]
The background to this seems to have been that a young man by the name of Macedo had borrowed from moneylenders. Pressed for payment by the moneyÂlenders and, being inpotestas,[2095] unable to pay them until his father's death, he murÂdered his father.[2096] The purpose of the senatusconsultum Macedonianum was to remove the incentive to patricide by providing that loans of money to sons-in-power were unenforceable, even after the death of the paterfamilias. The purpose here was to protect, not the son-in-power, but the paterfamilias. The senatusconsultum was, howÂever, interpreted restrictively by the jurists. For example, it only applied to loans of money, not to other loans. Even though the debt was unenforceable, it nonetheless created a natural obligation,[2097] so any payments made towards it were irrecoverÂable.[2098] The senatusconsultum did not apply if the lender reasonably believed that the borrower was sui iuris.[2099] If, notwithstanding the senatusconsultum, the paterfamilias made payments towards the debt, he was treated as having ratified it.[2100] [2101] The same was true if the borrower began repayment after becoming sui iuris26 C.