Loan For Use Agreement for Germany

Loan For Use Agreement Template for Germany

A Loan for Use Agreement (Leihe) under German law is a contract governed by §§ 598-606 of the German Civil Code (BGB) where one party (the lender) permits another party (the borrower) to use an item free of charge for a specified or unspecified period. This agreement details the terms of the temporary transfer of possession, including the parties' rights and obligations, maintenance responsibilities, permitted use, and return conditions. It is distinguished from rental agreements by its gratuitous nature and is commonly used for both personal and business purposes where temporary use of property is needed without monetary compensation.

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What is a Loan For Use Agreement?

The Loan for Use Agreement (Leihe) is essential when one party wishes to temporarily grant another party the use of property without charging rent or fees. This document type, governed by German law under the Civil Code (BGB), is commonly used in various contexts, from lending equipment between businesses to facilitating cultural exchanges between institutions. It must clearly identify the loaned item(s), specify usage conditions, establish maintenance responsibilities, and outline return requirements. The agreement is particularly important for protecting the lender's ownership rights while ensuring the borrower understands their obligations regarding the care and permitted use of the item(s). Unlike lease or rental agreements, this contract's defining characteristic is its gratuitous nature, making it suitable for collaborative, non-commercial arrangements or situations where building business relationships is prioritized over immediate financial gain.

What sections should be included in a Loan For Use Agreement?

1. Parties: Identification and details of the lender and borrower

2. Background: Context of the loan for use arrangement and relationship between the parties

3. Definitions: Key terms used throughout the agreement

4. Subject Matter of Loan: Detailed description of the item(s) being loaned and confirmation of gratuitous nature of the loan

5. Term of Loan: Duration of the loan period, including start date and return date if specified

6. Delivery and Return: Arrangements for handover and return of the loaned item(s)

7. Permitted Use: Specific purposes and ways in which the borrower may use the loaned item(s)

8. Care and Maintenance: Borrower's obligations regarding the maintenance and protection of the loaned item(s)

9. Costs and Expenses: Allocation of costs related to the use, maintenance, and preservation of the loaned item(s)

10. Risk and Liability: Allocation of risk and responsibility for damage or loss

11. Termination: Circumstances under which the agreement can be terminated and consequences of termination

12. Governing Law: Confirmation of German law application and jurisdiction

What sections are optional to include in a Loan For Use Agreement?

1. Insurance: Requirements for insurance coverage of the loaned item(s), recommended for valuable items

2. Third Party Use: Provisions regarding whether and how the borrower may allow others to use the loaned item(s)

3. Modifications: Whether and under what conditions the borrower may modify the loaned item(s)

4. Intellectual Property: Relevant for loans of items with associated intellectual property rights

5. Export Control: Necessary when loaned items may be subject to export restrictions

6. Registration Requirements: Relevant for items requiring official registration (e.g., vehicles)

7. Return Condition: Specific requirements for the condition in which items must be returned, relevant for valuable or sensitive items

What schedules should be included in a Loan For Use Agreement?

1. Schedule 1 - Item Description: Detailed technical specifications and condition report of the loaned item(s)

2. Schedule 2 - Delivery Protocol: Form to be completed at handover, documenting condition and completeness

3. Schedule 3 - Usage Instructions: Specific instructions for proper use and maintenance of the item(s)

4. Schedule 4 - Return Protocol: Form to be completed upon return, documenting condition and completeness

5. Appendix A - Photographs: Visual documentation of the item(s) condition at time of loan

6. Appendix B - Maintenance Records: Template for recording maintenance activities during the loan period

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use
Relevant Industries

Education

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Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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