What is meant by pledge and state the rights and duties of pownor and pawnee
Contract of pledge Q. What is meant by pledge and state the rights and duties of pownor and pawnee. (1993)
Q. What are the rights of a awnor and Pawnee. Can a person other than the owner make a valid pledge. (1995)
Q. Can a valid pledge be made by a person other than owner of the goods. If so explain. Also state the rights of Pawnee. (1998) (1999) (2000) (2001)
A pledge is a special kind of bailment. In case of pledge the goods are deposited as security to get a loan. It is delivery of goods by the pledge to the pledge by way of security upon a contract that they shall when the debt is paid or the promise is performed, be returned or otherwise deposited of according the directions of pledgor.
According to contract act Sec 172:
“The bailment of goods as security of payment of a debt or performance of a promise is called pledge.”
3. Parties involved in pledge:
There are two parties involved in the contract of pledge.
Bailor is called pownor or pledger. The person who delivers the good for the performance of promise is called pawnor.
Bailee is called paween or pledge. The person to whom the goods are delivered and the person who gives debt is called pawnee.
4. Essentials of pledge:
Following are the essentials of pledge.
(I) Moveable property:
The property must be moveable. This includes any kind of goods, valuable, document etc. etc.
(II) Limited interest:
When a person pledges goods in which he has limited interest the pledge is valid to only that extent.
(III) Transfer of possession:
Only the possession of goods is transferred by pawner to the pawnee.
(IV) No transfer or ownership:
The ownership of goods remains with the pawnor.
(V) Not mere custody:
Person who have the mere custody of goods can not pledge them.
5. Rights of pawnor:
Rights of pawnor are following.
(I) Right to redeem:
Pawnor can file a suit for redemption of goods.
(II) Right to claim damages.
If the pawnee mixes the goods pledged with his own goods or converts into other from, the pawnor has right to claim damages.
(III) Right to claim increase:
Pawnor has right to claim any incruse.
(IV) Right to redeem debt:
A parwon who makes default in payment of debt at the stipulated date has right to redeem the debt at any subsequent time before the actual sale of goods pledged.
6. Duties of pawnor:
Following are the duties of pawnor.
(I) Duty to compensate:
He should pay the extra ordinary charges.
(II) Duty to complete:
Pawner must meet the obligations regarding the contract with in specified time.
7. Rights of pawnee:
Following are the rights of pawnee:
(I) Rights for other debt:
Pawnee can retain the goods pledged until his dues are paid.
(II) Retain for other debt:
He has right to retain the goods for other debt.
(III) Recover other charges:
Pawnee has right to recover the all other charge e. g preservation of pledged goods.
(IV) Sell the goods:
If pawner fails to make payment than pawnee can sell the pledged goods after issuing notice.
8. Duties of pawnee:
Following are the duties of pawnee.
(I) Reasonable care:
He should take reasonable care of goods pledged.
(II) Return of goods:
On receipt of his due he should return the goods.
(III) Not make un authorized use:
He should not make any unauthorized use of the goods.
(IV) Not to mix the goods:
Pawnee should not mix the pledged goods with his own goods.
9. Pledge by non owner:
Following person can make pledge:
(I) Mercantile agent:
A mercantile agent can with the consent of the owner of the goods make a valid pledge.
(II) Person in possession under voidable contract:
A person having possession under a voidable contract can make a valid pledge.
(III) Pledge where pawnor has only a limited interest:
Where a person pledge goods in which he has only a limited interest, the pledge is valid to that interest.
(IV) Pledge by co-owner:
Where there are several joint owners of goods one of them co-owner of the other, can make a valid pledge of goods.
To conclusion I can say that, pledge is a special kind of bailment. Where the object of the delivery of goods is to provide a security for a loan, that kind of bailment is called pledge.