Page 51 - 01. Indian Contract Act, 1872

Pledge / Pawn

 As per Sec. 172, It refers "to the bailment of goods as security for payment of
debt or performance of a promise."

 It refers to a contract where by an article is deposited with a money lender as a
security for the loan repayment or for the performance) of promise.
 Parties

a) Pawnor- The person who pledges i.e. bailor incase of pledge
b) Pawnee- The bailee incase of pledge

 Essential Elements of Pledge

(a) There must be expressed implied contract between the parties
(b) It can be of goods only
(c) There must be delivery of goods from one person to another

(d) It must be for some purpose.

 Duties of Pawner

(a) Repay the loan or perform the promise
(b) Pay expenses in cases of default

(c) Pay the deficit on sale
(d) Pay extraordinary expenses incurred for preserving the goods.
(e) Disclose faults in goods which are material for the use of goods or may put
pawnee to extra-ordinary risks

(f) Indemnify pawnee if he suffers any loss due to defective title of the pawner.

 Rights of Pawner
(a) Sec. 177: Redeem the goods pledged.

(b) Right to sue in the event of pawnee refusing to return the goods even after
payment of debt etc.

(c) Receive any increase in goods.
(d) Receive notice of sale.

 Duties of Pawnee
(a) Not to use the goods unless authorised by pawner

(b) Return the goods to pawnor on payment of debt etc.

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