Explanation of Article 454
The article addresses the lender's obligation to guarantee the entitlement of the lent item or its freedom from defects. It states that the lender does not guarantee the entitlement of the lent item, nor does he guarantee its freedom from defects, because the lender is a donor; thus, he cannot combine donation with guarantee. Therefore, he is not obligated to compensate the borrower for the reduction in the value of the lent item due to entitlement or defect. However, he is responsible for the damage caused by the entitlement or defect to the borrower in two cases: the first case is if the lender deliberately conceals the cause of entitlement or defect from the borrower. The second case is if the lender guarantees the borrower that the lent item is free from them. In these two cases, the lender guarantees the damage caused by the entitlement or defect to the borrower but does not guarantee the reduction in the lent item due to either of them. For example, if a person lends another a defective construction crane, the lender does not guarantee this defect. If the borrower uses it and the defect results in it falling on some of the borrower's properties and damaging them, the lender does not guarantee that damage unless he deliberately concealed the defect from the borrower or guaranteed him that the crane was free from defects. In these two cases, he is obligated to compensate the borrower for the damage to his properties due to the crane's fall, not for the defect of the crane itself. The rules of guarantee for entitlement and defect in the loan contract, like other contracts, are generally not part of public policy, and the general rules for amending the provisions of contractual liability stipulated in articles (173, 174) apply, allowing for the agreement to amend the provisions of contractual liability except in cases of fraud or gross error. It is permissible to agree to increase the lender's guarantee, for example, by agreeing that the lender's guarantee for entitlement or defect is not limited to the damage caused by either but includes the reduction in the value of the lent item due to entitlement or defect, or that he is obligated to replace it.
Related To
Article 454
A lender shall not warrant the ownership of the lent thing nor warrant such thing against any defect; he shall, however, be liable for any harm the borrower sustains due to the deliberate concealment of the existence of issues relating to ownership or the existence of defects or due to warranting the absence of such issues or defects.