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Definition (S.172 Indian Contract Act)

Pledge is defined as the bailment of goods as security for payment of a debt or performance of a promise. The pledger is the bailor who provides goods as collateral, while the pledgee is the bailee who holds the goods. The key differences between a pledge and regular bailment are the purpose of providing security, authorized use of goods only by the pledgee, and the pledgee's right of lien over the goods. The pledger has rights to redeem the debt and retrieve the goods, while being responsible for undisclosed faults. The pledgee has rights of retainer over the goods and against third parties, and duties to care for the goods and return them upon repayment of debt.

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455 views

Definition (S.172 Indian Contract Act)

Pledge is defined as the bailment of goods as security for payment of a debt or performance of a promise. The pledger is the bailor who provides goods as collateral, while the pledgee is the bailee who holds the goods. The key differences between a pledge and regular bailment are the purpose of providing security, authorized use of goods only by the pledgee, and the pledgee's right of lien over the goods. The pledger has rights to redeem the debt and retrieve the goods, while being responsible for undisclosed faults. The pledgee has rights of retainer over the goods and against third parties, and duties to care for the goods and return them upon repayment of debt.

Uploaded by

welcome2jungle
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Pledge

Definition (S.172 Indian Contract Act):


“ Bailment of goods as security for payment of a
debt or performance of a promise is called
pledge”

Bailor is called pledger/pawner


Bailee is called pledgee/pawnee

Distinction between Pledge & Bailment:


1. Purpose
2. Use of goods
3. Rights
4. Lien
Rights & Duties of Pledger
Rights:
1. To receive back
2. To enforce preservation & proper maintenance
3. To redeem the debt

Duties:
1. Must disclose any material fault or risks in goods
2. Responsible to meet extraordinary expenses in
preservation of goods pledged
3. When pledgee exercises his right of sale, any shortfall
has to be made good by pledger
4. Liablle for loss caused due to defects in his title
Rights & Duties of Pledgee
Rights:
1. Right to retainer (S.173)
2. Right to retainer for subsequent advances
3. Right to extraordinary expenses
4. Right on default by pledger (sue/sell)
5. Right against its owner, when pledger’s title is defective
Duties:
1. Required to take as much care as any person of ordinary
prudence
2. Must not put the goods to an unauthorized use
3. Bound to return goods on payment of debt
4. Any accruals to the goods should be delivered accordingly

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