As for animals other than human beings—such as horses, cattle, donkeys, sheep, and the like—it is permissible to loan them, because the Prophet ﷺ borrowed a young camel and repaid it with one better than it, saying: “The best of you are those who repay most excellently.” (1) Accordingly, if a guest arrives at someone’s home and he goes to his neighbor and says, “Loan me a sheep so that I may slaughter it for my guest,” this is permissible.
His statement, “and ownership is acquired through taking possession of it”: the pronoun refers to the item loaned. Once the borrower takes possession of it, he becomes its owner, with complete ownership over it. He may sell it, lease it out, dedicate it as an endowment, pledge it as collateral, and otherwise dispose of it as owners dispose of their property.
His statement, “he is not required to return the very item itself”: this follows from our statement that he becomes its owner. Thus, the borrower is not required to return the very item loaned. If the lender demands that the borrower return it, the latter may say, “No. I acquired ownership of it upon taking possession, and I owe you its substitute; I am not obliged to return that very item.” Hence he said, “he is not required to return the very item itself.” However, if he returns the very item and it has not changed, then, if it is a fungible item, its acceptance is obligatory; but if it is not fungible, accepting it is not obligatory, as the author will mention, Allah willing.
His statement, “rather, its substitute becomes established”: that is, the substitute for the item loaned. This is a comprehensive expression. He did not say, “its equivalent becomes established”; rather, he said, “its substitute becomes established,” because the substitute may be an equivalent item or it may be its value. For this reason, the author used an expression applicable to both cases. A loaned item is either fungible or valued—what the jurists call mutaqawwam (an item assessed by value). If it is fungible, what must be returned is its equivalent; and if it is valued, its value must be returned.