Q. Write down essentials of a valid Pledge.

 

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Answer

Section 172 of ICA defines pledge as:

“The bailment of goods as security for payment of a debt or performance of a promise is called pledge. The bailor is in this case called ‘pawnor’. The bailee is called ‘pawnee’.”

A pledge can also be defined as , Pledge is the transfer by one person to another of the possession of certain goods to be held by the latter as security for the performance by the former of some obligation to pay or perform, which being performed, the pledge must be restored.

 

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Essential elements of the Pledge :

         To constitute Pledge, the following conditions are to be satisfied:

1.     Delivery of possession:

The property pledged should be delivered by the pawnor to the pawnee. The delivery of the possession can be either actual or constructive.

 

2.     There must be a contract for same:

There can be no pledge without a contract. all conditions for valid contract are to be satisfied, such as: Competent parties, free consent, lawful object etc.

 

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3.     Existence of previous debt:

The bailment must be by way of security. The goods are delivered as security for the payment of an existing debt or performance of a promise.

 

4.     Subject matter should be of Movable goods only:

The subject matter of contract should be of movable goods only. Further, it is also necessary to existence of those goods at the time of pledge. No contract regarding pledging the future goods shall have any effect in the law.

 

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