You might be wondering…

“How detailed does the agreement need to be?”
“Is it enough to state that I lend the item for free?”
“And what happens if the item is lost or damaged?”

These are exactly the questions this article answers. I’ll show you step by step how to set up a loan-for-use agreement so it protects both parties — and most importantly, protects you.

1️⃣ Basic elements every loan-for-use agreement should include

Every loan should contain at least the following minimum elements:

1. Identification of the parties
   – name, address, birth number / company ID, contact details.
   (Without this it is hard to prove who exactly was party to the agreement.)

2. Precise description of the item
   – type, brand, serial number, dimensions, condition, and photographs where relevant.
   – for real estate: parcel number, land register entry, address.
   (The more specific the description, the less room for disputes.)

3. Purpose of the loan
   – why the item is lent: personal use, trial operation, temporary help, etc.
   – the purpose matters when assessing whether the borrower used the item contrary to the agreement.

4. Duration of the loan
   – specify exactly: e.g. “from 1 April 2025 to 31 October 2025” or “until the purpose is fulfilled.”
   – if no duration is set, the lender may demand return at any time.

5. Return conditions
   – place, method (in person, by courier, with a handover protocol), deadline, and the condition in which the item should be returned.
   – I recommend attaching a handover protocol (photos + signatures).

6. Liability and damage
   – the borrower is liable for damage caused by failing to take proper care.
   – specify who covers normal wear and tear, repairs and servicing.

2️⃣ How to phrase the agreement properly — concrete examples

❌ Poor wording:

“The lender lends the borrower the lawnmower for use.”

➡️ Problem: missing purpose, duration, liability, and condition description.

✅ Correct wording:

“The lender hereby provides the borrower with a petrol lawnmower, Brand XYZ, serial number 12345,
for free use for garden maintenance at House No. 45, from 1 April 2025 until 31 October 2025.
The borrower undertakes to return the lawnmower no later than the stated date in working condition, taking into account normal wear and tear.”

3️⃣ Common client questions

“What if the other party keeps the item longer than agreed?”
→ You can demand immediate return. If they refuse, it may constitute unjust enrichment or give rise to other civil remedies — and in some cases can escalate further.

“What if the item is accidentally damaged?”
→ If the borrower proves the damage resulted from an unforeseeable technical defect and not from improper handling, they may not be liable. However, the burden of proof lies with them.

“Is an oral agreement sufficient when I trust the other person?”
→ It can be sufficient legally, but oral agreements have almost no evidentiary value. A written record protects both parties much better.

4️⃣ Most common mistakes in practice

• the contract lacks a fixed period or a stated purpose,

• no handover protocol is attached,

• the parties did not agree who pays for repairs and maintenance,

• confusion between a loan-for-use and a lease or a monetary loan,

• the item is used in a way not agreed upon.

🧠 Lawyer’s tip: avoid generic templates from the internet — they are usually too general and often fail to address liability and evidence issues.

5️⃣ Step-by-step procedure

1. Write down what exactly you are lending.

2. Specify who (lender) and to whom (borrower) the item is lent.

3. State the purpose and duration of the loan.

4. Include terms on liability and damages.

5. Attach a handover protocol.

6. Sign by both parties — ideally with date and place of signing.

6️⃣ Short practical example

A company lent equipment to a subcontractor for assembly “for a few days.”
On return the equipment was damaged and a part was missing; the subcontractor claimed they never received that part. Without a handover protocol, the company could not prove the item’s prior condition and had to write off the loss.

➡️ A written contract plus a few photos would have solved the issue immediately.

7️⃣ Lawyer’s recommendations + checklist

✅ written agreement (a short one is fine),
✅ precise description of the item and its condition,
✅ defined duration and return conditions,
✅ agreed liability for damage,
✅ signatures and date,
✅ handover and return protocol.

❓FAQ

Do signatures need witnesses?
No, but if you fear a dispute, witnesses or notarisation of signatures can help.

Can I extend the loan?
Yes — by an addendum stating the new date or purpose.

What if the borrower refuses to return the item?
Send a written demand — if ignored, you may proceed with a claim for return or damages in court.