Contract of Pledge
What legal safeguards are there in a Contract of Pledge for each party?
The Contract of Pledge specifies the legal protections, which could change depending on the jurisdiction. Common legal principles are the entitlement to equitable treatment, appropriate default notification and compliance with relevant legislation.
Is it possible for ownership to change in a Contract of Pledge?
No, the pawnor still has ownership. Not ownership, but possession and a security interest are transferred in a pledge.
Is it possible to renew or extend the Contract of Pledge?
It is possible to negotiate and specify the conditions of an extension or renewal in the original pledge agreement. If both parties consent, they may decide to prolong the pledge’s duration.
What is the general rule of the Pledge?
A Pledge is a bailment that conveys the possessory title to property owned by a pledgor to the pledge to secure repayment for some debt or obligations.
How is Contract of Bailment different from Contract of Pledge?
Bailment focuses on temporary transfer for safekeeping or repair, a pledge involves using goods as a collateral for debts.
Contract of Pledge : Meaning, Features, Duties and Rights
A Contract of Pledge is a formal agreement whereby one party, referred to as the Pawnor, promises particular items or property to another, referred to as the Pawnee, as security for a debt or obligation. The Pawnor transfers ownership of the pledged item to the Pawnee under the agreement, with the understanding that the Pawnor keeps ownership and the Pawnee has a security interest.
Geeky Takeaways:
- Contract of Pledge is said to be a subset of a Contract of Bailment.
- The goods bailed here are kept as security for a debt or a performance of a promise.
- The bailor here is called Pawnor, and the bailee here is called Pawnee.
Table of Content
- What is a Contract of Pledge?
- Essential features of a Contract of Pledge
- Duties of the Pawnor and Pawnee
- Rights of the Pawnor and Pawnee
- Conclusion
- Contract of Pledge – FAQs