Mutuum Law and Legal Definition

Mutuum is a Latin term which means a loan or a borrowing for the purpose of consumption by the borrower. The borrower can consume its use. However, such loans are to be replaced in kind at the termination of the bailment. A mutuum arises where one person transfers certain quantity of res fungibles to another who becomes the owner, subject to obligation to restore same amount of same quality as those received.

At common law, a "mutuum" was generally regarded as a sale for the reason that the specific property delivered is not to be returned, subject to certain exceptions under which transactions were regarded as bailments. [In re Estate OF Ellis, 24 Del. Ch. 393 (Del. Ch. 1939)].