Explanation of Article 25
This article addresses the distinction between "fungible" and "non-fungible" items, which results in numerous provisions in civil transactions, including those related to contracts of exchange and donation contracts, as well as those concerning the rules of guarantee and compensation.
A fungible item is: "an item whose units and attributes are similar, and each part can substitute another upon fulfillment, and it is measured by count, weight, volume, or measurement."
By "its units and attributes are similar," it is meant that each part resembles the other in quality and type, such as rice, sugar, wheat, gold, silver, and oil.
By "each part can substitute another upon fulfillment," it is meant that delivering any part of it achieves the intended purpose, such as delivering any kilogram of rice fulfills the obligation to deliver a kilogram of rice.
By "measured by count, weight, volume, or measurement," it is meant that its value is determined by its weight, count, volume, or measurement, such as selling rice by weight, selling sugar by quantity, selling wheat by volume, and selling fabrics by measurement.
In contrast, a non-fungible item is one whose units and attributes are not similar, cannot substitute each other upon fulfillment, and is not measured by count, weight, volume, or measurement, such as real estate, land, cars, furniture, rare artifacts, and artworks.
It is established that the criterion for describing an item as "fungible" or "non-fungible" is the nature of the item itself. For example, a car of a specific type, color, and specifications is considered non-fungible, but if cars are similar in type, color, and specifications and produced in large quantities, they are considered fungible.
The ruling of the article is not affected if the item is intended for value despite its nature not dictating so, such as selling rare artifacts or selling old machines; in this case, the intention of the parties involved is the determining factor.
This article has a significant impact on transactions, for instance: if a fungible item is destroyed before delivery, it is permissible to deliver a similar one, whereas if a non-fungible item is destroyed before delivery, compensation is required. Additionally, the rules of mortgage differ depending on whether the mortgaged item is fungible or non-fungible.
Related To
Article 25
Financial rights are either in personam or in rem.