Contract of loan

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The expression a “contract of loan” finds voice in Section 6 of the Limitation Act 1980. It is a term of legislative art, used in distinction to “simple contract” dealt with in Section 5.

It isn’t entirely clear what it means, but by our best guess it applies to any monetary loan regardless of form — so including deposits, debt securities and so on. But would it extend to the loan of property, the transfer of which doesn’t confer title? The context — which speaks of creditors, and “repayment of the debt”, as if there must be one — suggests not. As does common sense: if I lend you my car and forget to ask you for it back, does it become yours after six years? No, because you never own it in the first place. But my ability to sue you for rental income on it might.

But what of contracts that we call loans, but which economically don’t resemble loans? full collateralised stock loans, for example? Here, title is automatically transferred, and the obligation to “return” is indeterminate, absent a demand. One one hand, it would seem odd if these loans could suddenly by extinguished if undemanded for six years. On the other hand, other liabilities arising under a stock loan contract, before its termination — to manufacture a dividend for example — are payable on a fixed or determinable date. Are these not time barred either, simply because the stock loan repayment itself is time barred?