Kiva Contract

[Guest]

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[Richard77]

Not to spoil any of the fun, but has anyone actually read the Kiva participation contract? 

The link below is accurate.  The contract is not the work of amateurs, I can assure you, and has some rather oppressive terms in it, from the perspective of the "lender," who is not permitted to earn any interest, and has virtually no recourse in the event of default by the borrower.  The "loan" is essentially a donation; perhaps a revolving donation, but nevertheless, a donation.

[Sherri]

Can you link to it for us?

[ej]

     Yes. I have read it. It was changed somewhat last month, I think it was.


I always read stuff like that.
I even read the MFI partner descriptions and check to see if the interest rates they charge the Kiva borrowers are listed.
Always read the fine print. Have you checked your credit card terms? Now THOSE are scary.

[ej]

Here is the link:
       http://www.kiva.org/about/termsOfUse

[AccountAbility]

Forgetting for a moment the typos, it looks a lot like a third year law student's work.  You know, the kind that throws in the kitchen sink just in case.

While there is not much of the basic content that I would find objectionable, it is not the kind of terms I would expect from an organization which is handling millions of other people's money.  "Don't blame us if we do something negligent" doesn't fly in very many courts.

And I would wonder whether MFIs will be particularly happy to participate when Kiva says all of its lenders will have to deal directly with the Partner if something goes wrong.

But all in all, not a bad first draft.

Dan

[Richard77]

The contract has clearly been prepared, for a fee, by an experienced law firm.  It creates a sort of "revolving donation" system, which does not permit "lending" in any meaningful sense, because (ignoring the absence of interest provisions), the "lender" has virtually no recourse against the borrower.

[AccountAbility]

I am surprised that you think it was prepared for a fee, since typos are one of the first things that fees eliminate.  But I also wonder about the legal validity of a number of the provisions.  Maybe it doesn't hurt to say them (except for the public relations for those who wade through them), but other than intimidation they probably serve little purpose.

For everyone's sake, especially Kiva's, I hope they are never tested.

Dan

[Soriak]

I think Kiva has always been open that if a borrower defaults, you take the loss... it certainly was not a surprise to me. You can hardly track them down and sue them out of their home - that's not the point of Kiva loans and I'm sure most lenders would find it objectionable. Also known that we don't get interest for our loans, at least not at this point.

[ej]

This is a link to the older Kiva Terms of Use:
http://web.archive.org/web/20070414183431/www.kiva.org/about/termsOfUse

I think that the old terms were a shade friendlier in tone, and better written than the new Terms of Use.
And I agree with AccountAbility that the legal validity of a number of the provisions could be challenged.

However the "If I Should Die Before I Wake, My Kiva Loans You're Going to Take!" clause was changed in the new terms.  http://www.kivafriends.org/index.php/topic,866.0.html
The change was noted in that discussion topic thread.

The Kiva "lender" has no recourse against the borrower: yep, that's right. The MFI partner may have though.
At MyC4.com the loan provider, (MFI partner here), usually posts what the collateral is and what percentage of the loan principal that collateral is worth.

I have no idea what Kiva's MFI partners do, but I would expect that they each have some sort of collections policy.

[Natasha]

OK I think this is new (didn't happen last night or any other time in the last few months) ...

When I logged into my portfolio I was required to (read and) agree to terms and conditions of use before proceeding...

Interesting...