Q-9: Describe the essentials of contract of pledge:
Ans: ESSENTIALS OF CONTRACT OF PLEDGE
A contract of pledge has the following essential features.
A pledge is contract of bailment where goods are given as security for the payment of debt for the performance promise.
2. MOVEABLE PROPERTY
In a contract of pledge only the moveable proper (goods) is given as security and it is not for immoveable property. The moveable property includes goods Jewellery and documents of title to goods like bill of lading, railway receipts etc.
3. CHANCE / TRANSFER OF POSSESSION
The possession of goods must be affected by contract of pledge. Mere custody without, possession is not the contract of pledge.
4. COOPS IN THE POSSESSION OF PAWNEE
In a contract of pledge the change of possession of good is not necessary> if the good are already in the possession of Pawnee.
5. PURPOSE OF DELIVERY
In a contract of pledge, the goods are given as security for the payment of debt or for the performance of contract main purpose of the pledge is to assure the payment or the performance of the contract.
6. NUMBER OF PARTIES
In a contract of pledge (pawn), there are two parties the Pawnor and Pawnee the person who gives the goods, as security is known as Pawnor and the person to whom goods given as security is known as Pawnee.
7. RIGHT OF OWNERSHIP
In a contract of pledge (pawn), the right of ownership remains with the Pawnor and is not changed. If the ownership is transferred, the contract will be a contract of sale and not of pledge.
8. CHANCE OF FORM
In a contract of pledge (pawn), the goods must not change the form and same goods be returned to Pawnor after the performance of the contract.
9. REDELIVERY OF GOODS
Under the contract pawn the goods are redelivered to the Pawnor when he pays the debt or the promise has been performed for whom goods are given as security.
10. RIGHT OF SALE
If the Pawnor becomes default, the Pawnee can sell the goods to recover his funds giving reasonable notice of this fact to the Pawnor.
MEANING OF PLEDGE (OR PAWN) Next Post:
rights and duties of the Pawnor and Pawnee under the contract of pawn (pledge)