The Contract of Deposit in the Light of the Egyptian Civil Code and the Civil Transactions Law

Deposit is among the nominate civil contracts whose provisions the civil codes govern — the Egyptian Civil Code and the Civil Transactions Law among them — and which Islamic law has likewise governed. In the usage of the jurists, a deposit is property placed with a person for safekeeping. Al-Iqna', in the jurisprudence of Imam Ahmad, states that the deposit is the name of the property deposited; that depositing is a gratuitous mandate to keep it; and that it is a revocable contract.

What a contract of deposit is

Article 718 of the Egyptian Civil Code defines deposit as "a contract by which a person is bound to receive a thing from another so as to keep it and return it in specie". The Civil Transactions Law calls this the contract of deposit, and Article 506 defines it as "a contract by which the depositary keeps the depositor's property on condition that he return it in specie".

Deposit is thus a consensual contract by which the depositary is bound to receive a thing — a movable or an immovable — so as to keep it and then return it in specie; or to receive property alone and then return it in specie, as the Civil Transactions Law provides. The object of the contract under that Law is property and not immovables, so as to accord with the school of Imam Ahmad. Under the Egyptian Civil Code the object of deposit is a thing, unspecified in the text, so that it may equally be an immovable or a movable — though most commonly a movable, movables standing in greater need of safekeeping than immovables. Nothing prevents the deposit of an immovable, however, as where a person is entrusted with the keeping of a house while the depositor travels; conventional sequestration is one species of deposit.

In this contract the person delivering the thing is called the depositor, the person receiving it the depositary, and the thing deposited the deposit. The keeping and return of the thing must be the essential purpose of the parties.

The characteristics of the contract of deposit

1. Deposit is a consensual contract arising on the mere meeting of offer and acceptance between its parties, and no particular form is required of the offer and acceptance. Since no particular form is required for its conclusion, it is not a real contract; receipt of the thing is therefore an obligation in the depositary's patrimony and not an element of the contract, so that the contract is complete before the thing is delivered and its formation does not depend on that delivery. The meeting of offer and acceptance creates a personal obligation on the depositary to receive the deposit as soon as the contract arises, unless otherwise agreed. Article 719 of the Egyptian Civil Code accordingly provides that "the depositary must receive the deposit".

This approach accords with the Mejelle, Article 733 of which provides that deposit is concluded by offer and acceptance, whether express or by implication. Where the owner of the thing says, I have deposited this with you, or made it a trust in your hands, and the depositary says, I accept, the deposit is concluded expressly. Where a person enters an inn and asks the innkeeper where he may tether his animal, and the innkeeper shows him a place in which he tethers it, the deposit is concluded by implication. Likewise where a man places his property in a shop and the shopkeeper sees it and stays silent, and the man then leaves the property and departs, it becomes a deposit in the shopkeeper's hands. But if the shopkeeper rejects the deposit by saying, I do not accept, no deposit is concluded.

1. Deposit, like mandate, is in principle a gratuitous contract. Under Article 507 of the Civil Transactions Law, "the depositary has no remuneration for keeping the deposit, unless otherwise agreed". Article 724 of the Egyptian Civil Code likewise provides that "in principle a deposit is without remuneration". A deposit may therefore be with or without remuneration. Where the deposit is gratuitous, taking possession is required, as Article 508 of the Civil Transactions Law lays down.

The obligations a contract of deposit creates

One: the depositor's obligations

a. To pay the depositary the remuneration agreed at the end of the deposit, where the deposit is for remuneration. In principle a deposit is without remuneration unless remuneration is stipulated. This is provided for in Article 724 of the Egyptian Civil Code and Article 512 of the Civil Transactions Law. The agreement on remuneration may be express or tacit, as where custom indicates that the depositary takes a charge for the deposit, as with the keeper of a garage or a warehouse.

The remuneration may be payable in a single sum, falling due at the time the keeping of the deposit ends, unless the parties agree otherwise; or it may be payable by instalments over periods of time, falling due for each period at its end. Where the keeping of the deposit ends before the time fixed for it and remuneration has been agreed, the general rules permit the depositary to claim so much of the agreed remuneration as corresponds to the obligation of keeping that he has performed, unless it appears that the parties intended otherwise, in which case their intention is to be followed.

b. To reimburse the depositary what he has spent in keeping the thing, and to compensate him for every loss he has suffered by reason of the deposit, under Article 725 of the Egyptian Civil Code and Articles 513 and 514 of the Civil Transactions Law.

By expenses here are meant those laid out to preserve the thing deposited from deterioration or from interference with it; the basis of these expenses is the contract of deposit. Useful and luxury expenditure, by contrast, is recovered under the general rules on the footing of the act of expenditure, and not on the contract of deposit.

Where the deposit causes harm to the depositary — as where it carries a defect such as woodworm which passes to the depositary's property and destroys it — the depositor is responsible for compensating the harm thereby caused to the depositary, unless the latter knew of that defect, or the depositor notified him of it before he received the thing deposited, or the fault was not caused by:

* his excess;

* or his negligence;

as Article 514 of the Civil Transactions Law lays down, unless otherwise agreed.

Two: the depositary's obligations

a. The depositary is bound to receive the deposit, and may not use it.

Under Article 719 of the Egyptian Civil Code and Article 511 of the Civil Transactions Law, the prohibition on use is confined to the absence of the depositor's permission. Where the depositor permits use, expressly or tacitly, Article 719 of the Egyptian Civil Code allows it. Tacit permission is drawn from the circumstances and from the nature of the thing: a car deposited with another must be used from time to time so that it does not rust, and such use may fall within the obligation to keep the thing. The burden of proving permission to use falls on the depositary, and may be discharged by every means. For a contract of deposit to retain its character, keeping is the essential thing and use is secondary; otherwise the contract turns into a loan for use or a loan for consumption.

b. To exercise due care in keeping the thing deposited with him.

The depositary's obligation is one of means and not of result: his liability is negatived once he has exercised that care, even where it has not resulted in the deposit being preserved. The care required differs according to whether the deposit is with or without remuneration.

Where the deposit is for remuneration, he must exercise in keeping it the care he exercises in his own property, without being required in that to more than the care of a reasonable person; the care required in that case is that of an ordinary person, even where what he exercises in his own affairs falls below it. Where the deposit is without remuneration, the care required is that which the depositary exercises in his own affairs, even where it falls below the care of a reasonable person. This is provided for in Article 720 of the Egyptian Civil Code and Article 509 of the Civil Transactions Law.

c. Not to put another in his place in keeping the deposit without the depositor's permission, unless compelled to do so.

It is presumed in a deposit that the person of the depositary is of particular consideration to the depositor, so that he may not put another in his place in keeping the deposit without the depositor's express permission — unless he is compelled to do so by an urgent and pressing necessity, in which case he is bound to recover it once the cause has passed, as Article 510 of the Civil Transactions Law adds to what Article 721 of the Egyptian Civil Code provides. The depositary is responsible for the act of the third party who keeps the deposit, unless the depositor relieves him of that. The depositor is likewise bound for the substitute's remuneration where he has permitted the depositary to have the deposit kept by another.

d. To return the deposit to the depositor upon his mere demand.

The return of any other thing is not accepted from him. The burden of proving the identity of the deposit falls on the depositor, and this is most commonly done by a writing setting out the kinds of thing deposited and their particulars. Return is made at the place where the thing was to be kept, and its expenses fall on the depositor unless otherwise agreed.