Mutuo

Mutuo is a contract in civil law by which one party, the lender, transfers to another party, the borrower, a sum of money or other fungible goods for use, with the obligation to return the same amount and the same kind when due. The contract is bilateral and typically a real contract, since it requires the actual delivery of the lent items.

The object of a mutuo can be money or other fungible assets. The borrower must restitute the lent amount in the future. The parties may agree on interest; if interest is agreed, it becomes part of the price of the mutuo. If no interest is specified, the contract is usually considered to be without interest, although legal limits on usury may still apply if interest is charged.

Mutuo can be simple (unsecured) or secured by guarantees or collateral. When the loan is secured by real estate or other assets, it may be described as mutuo ipotecario or as a mortgage-backed loan. The agreement may also specify a repayment schedule, late-payment penalties, and remedies in case of default.

In contemporary practice, mutuo is the standard form of a loan from a financial institution to a private or corporate borrower. It encompasses consumer loans, mortgages, and business financing. The term is contrasted with broader concepts of financing or credit, but at its core denotes the transfer of a fungible resource with an obligation to restore an equivalent amount.