Explanation of Article 387
This article sets forth the borrower's obligations in a loan contract; the loan imposes two obligations on the borrower:
The first obligation is to repay the borrowed money. This article specifies the term for fulfilling this obligation, while the following articles (388) and (389) specify the means and place of repayment. The second obligation is to bear the expenses of the loan and its repayment, which is explained in article (390). Regarding the term for loan repayment, this article distinguishes between two cases:
The first case: If a specific term or purpose is set for the loan, the borrower is not required to repay before the term expires or before the usual period for benefiting from the borrowed money for such a purpose. For example, if the repayment term is set for a year, the borrower is not obliged to repay until that term, and the lender cannot demand repayment before then. Another example is if the purpose of borrowing is specified as purchasing certain goods for resale; the repayment period is determined by the usual period for benefiting from it for that purpose. Mentioning the purpose at the time of contracting is considered an implicit condition that the term is as long as the benefit from the money for that purpose. If it is explicitly or implicitly agreed that repayment will only occur when feasible, the condition is valid according to the general rule in article (209). In this case, the court sets a term likely to allow for repayment, considering the borrower's current and future resources and what is required by a diligent person's care to fulfill their obligation. Once the ability is established, the term lapses.
The second case: If no term or purpose is set for the loan, such as when a person borrows money from another without specifying the purpose or repayment term, there are two conflicting possibilities for interpreting the silence of the contracting parties. It could be interpreted that they referred to the usual period for benefiting from such money, or that they intended the loan to be due on demand, which is customary in loan contracts. The second paragraph of the article clarifies that in this case, the silence is interpreted as the loan being due, requiring the borrower to repay upon the lender's request, as the lender is volunteering their money and should not bear additional burdens. What the paragraph stipulates aligns with the general rule in article 9(1,4) that conditions should be interpreted in favor of the party bearing the burden. However, if the borrower proves that repayment would cause harm, they are not obliged to repay until the usual period for benefiting from such borrowed money has passed. The burden of proving harm lies with the borrower, such as if repayment would result in the loss of a deal they made, and so on. In this case, the repayment period extends to the usual period for benefiting from the borrowed money, considering its type and amount, regardless of the purpose for which the borrower used it, as they failed to specify a repayment term or purpose when receiving the money.
The article does not specify the necessity of the term for the borrower, relying on what article (206) of the general rules has established. Based on what that article has established, if the loan is deferred, the borrower may expedite repayment, considering the term is for their benefit, unless expediting causes harm to the lender. If there is doubt whether the term is for the benefit of the borrower or the lender, the default is that it is for the benefit of the borrower.
Related To
Article 387
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If a loan has a specific maturity date or purpose, the borrower shall not be obligated to repay the loan prior to said date or prior to the lapse of the reasonable period for utilizing the borrowed property for similar purposes.
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If a loan does not have a specific maturity date or purpose, the borrower shall repay the loan upon the lender’s request, unless repayment is prejudicial to the borrower; in such case, he shall repay the loan only upon the lapse of the reasonable period for utilizing similar property.