Definition of Pledge

• The pledge is a variety of bailment in

which goods are transferred from one
party to another party as security for the
payment against debts owed by him.
• The person who delivers the goods is
known as Pawnor whereas the receiver of
goods is known as Pawnee.
• When the objective of the transferring the
goods is completed or say when the
payment for debt for which goods are
pledged, is met, then the receiver shall
return the goods to its real owner.
• However, if he fails to redeem the goods
within a reasonable time, then the
receiver has the right to sell the goods
after giving a proper notice to its owner.
• It is the duty of the Pawner to take good
care of the goods, as he takes care of his
own goods as well as he should not use
the goods without the permission of its
owner. Moreover, the pawnor must tell the
all the defects in the goods.
• Example: Money taken as debt from the
money lender by pledging gold as security
against it is an example of Pledge.
 BASIS FOR COMPARISON
BAILMENT PLEDGE
• When the goods are • When the goods are
temporarily handed over delivered to act as
from one person to security against the debt
another person for a owed by one person to
specific purpose, it is another person, it is
known as bailment. known as the pledge.
• Section 148 of the Indian • Section 172 of the Indian
Contract Act, 1872. Contract Act, 1872.
• The person who delivers • The person who delivers the
the goods is known as the goods is known as Pawnor
Bailor while the person to while the person to whom the
whom the goods are goods are delivered is known
delivered is known as as Pawnee.
Bailee. • Always present.
• Consideration May or may • The party whom goods are
not be present. being delivered as security
• The party to whom goods has the right to sell the goods
if the party who delivers the
are being delivered has no
goods fails to pay the debt.
right to sell the goods.
• the party whom goods are • The party whom goods
being delivered can use are being delivered has
the goods only, for the no right to use the goods.
specified purpose. • As security against
• Purpose is to Safe keeping payment of debt.
or repairs, etc