Legal Definitions - res fungibiles

Res fungibiles refers to things that are commercially interchangeable with other items of the same kind, quality, and quantity. In essence, one unit of a fungible item is considered equivalent to another, and can be substituted for it without any practical difference to the parties involved. These items are typically valued by measure, number, or weight rather than by their unique characteristics.

• Example 1: Currency

  Imagine a situation where a person borrows $500 from a friend. When it's time to repay the debt, the borrower doesn't need to return the exact same physical $500 bills they received. Any $500 in legal tender—whether it's five $100 bills, fifty $10 bills, or a combination of different denominations—will satisfy the debt. This illustrates res fungibiles because one unit of currency is perfectly interchangeable with another unit of the same value; the specific physical bills are not unique or essential.

• Example 2: Agricultural Commodities

  Consider a contract between a large bakery and a grain supplier for 1,000 metric tons of Grade 1 milling wheat. The bakery is interested in receiving the specified quantity and quality of wheat, not wheat harvested from a particular field or stored in a specific silo. Any 1,000 metric tons of Grade 1 milling wheat that meet the agreed-upon standards will fulfill the contract. Here, the wheat is a res fungibiles because any ton of Grade 1 milling wheat is commercially identical and interchangeable with another, serving the same purpose for the bakery.

• Example 3: Shares of Publicly Traded Stock

  When an investor purchases 50 shares of common stock in a major corporation listed on a stock exchange, they are acquiring ownership units that are identical to all other shares of that same class. The investor does not own specific, uniquely identifiable shares. If they later decide to sell those 50 shares, any 50 shares of that company's common stock held in their brokerage account would be considered the same for the purpose of the transaction. This demonstrates res fungibiles because one share of a company's common stock carries the exact same rights and value as any other share of that same company, making them perfectly interchangeable.