The loan contract according to Bulgarian law

With the conclusion of a loan contract according to Bulgarian law, the lender obliges to put a specific amount of money or replaceable goods at the borrower’s disposal. The borrower obliges to return the amount of money or goods in the same kind, amount and quality.

The loan contract is an unilateral gratuitous actual contract. There is only one formal requirement: the borrower must pay interest only if he obliged himself to this by a written agreement. This rule does not apply to banks.

In contrast to loan agreements, the subject matters of loan contracts are replaceable and consumable.

Effects of the contract: obligations of the borrower

The borrower’s primary obligation is to return the money/goods. The rule provided in Article 240 (4) of the law of obligations and contracts is essential: if nothing else is appointed, the amount of money or the goods must be returned after the expiry of one month after request of the lender. The borrower defaults one month after the request has been made.

Regarding possible obligations of the lender, the law refers to the regulations of the loan agreement: the lender is obliged to compensate the damages caused by hidden defects of the borrowed goods that he intentionally or neglected mention to the borrower.

Article 241 of the law of obligations and contracts contains the so called promises to grant a loan. According to this Article, the promise to grant a loan is invalid if the borrower becomes insolvent. Thus due to insolvency of the borrower, the lender may refuse the transfer of the promised sum or goods.