PLEDGE OR PAWN
The bailment of goods as security for payment of a debt or performance of a promise is called Pledge or Pawn. The bailor in this case is called the. Pledgor or, the pawnor. The bailee is called the Pledgee or the Pawnee.-Sec. 172.
DIFFERENCE BETWEEN PLEDGE AND BAILMENT
Pledge is a particular kind of bailment. The difference between Pledge and other kinds of bailment lies in the purpose or objective of the transaction. The purpose of a pledge is to provide security for a debt or the performance of a promise. In other kinds of bailment there are other purposes for example, repair, safe-custody etc. The pledgor and the pledgee have certain special rights and duties. PLEDGE
* PURPOSEThe goods are delivered to provide a security of a loan or for the performance of promise. * RIGHTSThe pledgee has the right of a sale of the pledged goodson default after giving a notice to the pledgor. * USE OF GOODSThe pledgee has no right of using the goods pledged e.g. A placed 50 kg gold to NationalBank. Bank cannot use that goods or sell to anyone.
| The goods are delivered for a purpose other than the above two i.e. For repair and safe custody etc. The bailee has no right of sale. He can retain the goods or sue for the dues. There is no such restriction, if the nature of transaction so requires.
When can a non-owner make a valid Pledge?
The owner of goods can always make a valid-pledge. In the following cases, one who is not, an owner can make I valid pledge.
1. Mercantile Agent
A mercantile agent, who is, with the consent of the owner, in possession of the goods or of the documents of title to goods, can make a valid pledge of the goods while acting in the ordinary course of business of a mercantile agent. Such a pledge will be valid even if the agent had no authority to pledge, provided that the Pawnee acts in good faith and has not at the time of the pledge any notice that the pawnor has no authority to pledge Sec.178.
2. Possession under a voidable contract
A person having possession of goods under a voidable contract can make a valid pledge of the goods so long as the contract is not rescinded. The Pawnee gets a good title to the goods provided he acts in good faith and without notice of the pawnor’s defect of title.-Sec. 178
A gets an ornament by inducing the owner to sell it to him by undue influence. Before the contract is rescinded by the owner, he pawns it to B. B will get a good title to the ornament provided he acted in good faith and was unaware of A’s defective title.
3. Pawnor with a limited interest
Where a person pledges goods in which he has only a limited interest, the pledge is valid to the extent of that interest.- Sec. 179.
4. Possession with co-owner
If one of several co-owners is in sole possession of the goods with the consent of the owners, he can make a valid pledge of he goods.-Sec. 30 (I). Sale of Goods Act. RIGHTS OF PLEDGEE OR PAWNEE
1. Right of Retainer
“The Pawnee can retain the goods pledged not only for payment of the debt or the performance of the promise, but also for the interest of the debt and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged.”-Sec. 173.
2. Retainer for subsequent advance
The Pawnee’s lien is a particular lien, i.e., he cannot retain the goods for any debt other than the debt for which the security was given unless there is an express contract to the contrary. the Pawnee makes fresh advances to the same debtor it will he presumed that the debtor has agreed to. create on the goods already pledged a lien for the fresh advance.-Sec. 174
3. Extraordinary expenses
The Pawnee is entitled to receive from the pawnor extra0rrlinary expenses incurred by him for the preservation of the goods pledged.-Sec. 175. .
4. Pawnee’s right where pawnor makes default...
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