MEANING OF PLEDGE (OR PAWN)

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Q.8      Write a short note on Pledge. OR Distinguish between bailment and pledge.

Ans:    MEANING OF PLEDGE (OR PAWN) [SECTION 172]

“The bailment of goods as security for payment of a debt or performance of a promise is called pledge (or pawn)”

 

 

EXAMPLE

X borrows Rs. 100,000/= from Citi Bank and keeps his shares as security for payment of debt. It is a contract of pledge.

Bailor is called pledge or “Pawnor” Bailee is called “Pawnee”

 

DISTINCTION BETWEEN BAILMENT & PLEDGE:

Both the terms can be distinguished by the following facts.

1.         RIGHT OF SALE

(a)        In case of bailment a bailor has no right of sale.

(b)        Under special circumstances a pledge has a right to sell.

2.         PURPOSES OR OBJECT

(a)        Bailment may take place for any purpose.

(b)        A pledge is made only for special purpose.

3.         DELIVERY OF COOPS

It is very essential for the completion of pledge contract and bailment.

4.         CARE OF GOODS

(a)        In case of pledge the Pawnee is bound to take proper care of the goods pledged.

(b)        In case of bailment bailee has the same responsibility.

5.         BRANCH OF BAILMENT

Pledge is the branch of bailment.

6.         COMMON POINT

Both the contracts are the result of an agreement between the parties concerned. Q.9 Describe the essentials of contract of pledge.

 

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