I hope the title itself is clear. I want to lend money to a friend, are there any legal ways that I can make some sort of a 'contract' for the return? What is the most practical way?
- Choice of jurisdiction: You’re pretty much free to choose your jurisdiction. You don’t have to contract under German law. The German state will intervene though if you’re doing criminal stuff.
- Legally, the best is of course to draft a written agreement. You’re completely free in the terms (unless it becomes immoral, § 138 BGB), but a loan, § 488 BGB (Darlehensvertrag), with a 0% interest rate (if it’s meant as a short-term aid) is standard.
- The next level is to collateralize your loan, specifically with a pledge, §§ 1204 ff. BGB, i. e. your friend gives you a valuable item which you may (and actually have to) sell for profit if he doesn’t return the loan. However, unlike contract law, in property law you are not completely free regarding the terms (numerus clausus of property law, Typenzwang des Sachenrechts). Here it becomes too difficult though for the layman, so I wouldn’t recommend that unless you know what you’re doing.
- Ultimately, I/we think it’s nice of you to consider helping out your friend, but as Nike Dattani already portrayed it can get really nasty if you intend to legally enforce such matters. Trish mentioned the saying: Friendship ends where business begins. I, too, suggest to refer your friend to a pawnshop, research (third-party) microloan opportunities, and help him without directly giving him cash, dine together and offer company (i. e. address the psychological dimension financial troubles entail).
PS: § 9 SGB Ⅰ: Germany is (to some degree) a welfare state. Maybe your friend is eligible for some kind of assistance. However, and probably typical of Germany, if you want to get money, you have to fill in forms.