Jehangir Khan

Contract law Assignment
Topic Name:- Pledge.

Submitted to:- Mr. Abdul Manan.
Submitted by:- Jehangir khan.
Roll no:- 3353-FSL/LLB(E)F17.
International Islamic university

Islamabad
1
What is meant by pledge?
Pledge means “a deposit of personal goods as security.”
Pledge is a bailment or we can say it is part of bailment. Pledge is
also known as pawn. Pledge has only purpose that is security. A
pledge is bailment that conveys possessory title to property
owned by debtor (pledger) to a creditor (pledgee) to secure
repayment for some debt or obligation and to the mutual benefit
of both parties. A pledge is type of security interest.
According to section 71 of the contract act, “ the bailment

of goods as a security for the payment of debt or for the
performance of a promise is called pledge.”
Parties to a pledge:
There are two parties in pledge:
 Pledger or Pawner:
A person who delivered a goods as a security is called
pledger. Or simply the bailor is called pledger or Pawner.
 Pledgee or pawnee:
A person to whom the goods should be delivered is called
pledgee. Or simply the bailee is called pledgee.
Example:
Mr. “A” borrows Rs. 20000 from Mr. “B” and keeps his
motorcycle to Mr. “A” as security for payment of debt. The
bailment of motorcycle is called pledge. In this case Mr. “B” is a
pledger as well as debtor and Mr. “ A” is a pledgee as well as
creditor.
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Basic essentials of pledge:
Following are the important essentials of pledge:
 Movable property:
The pledge is concerned with the movable property. All
types of goods and valuable documents are included in it.
 Transfer of possession:
In case of pledge only possession of goods transferred by the
pledger to the pledgee.
Example:
Mr. Nelson ledges car with Mr. Izimam an gets Rs. 100000.
He gives the possession of car to Mr. Inzimam.
 Ownership of right:
In case of pledge the ownership of the goods remains with
the pledger. It is not transferred to pledgee.
Example:
Mr. Kamran pledge the plot with Mr. Shafi and gets 10 lac.
The ownership of the plot remains with Mr. Kamran.
 Limited interest:
3
Pledge property cannot be used for unlimited interest. When
a person pledge goods in which he has only limited interest,
the pledge is valid to the extent of that interest only.
Example:
Mr. nelson gives car to Mr. Kamran for repair, but does not
pay Rs. 20000 repair charges. Mr. Kamran pledges the car
with Mr. simth and borrows Rs. 50000. The pledge is valid
up to ten thousands.
 In case of mere custody:

Those people who have only mere custody of the goods
cannot pledge them.
Example:
A custodian cannot pledge his maters banglow. It will be

invalid pledge.
Rights of Pledger:
Rights of pledger are as following:
 Right of Redemption:
A pledger has a right of redemption after depositing the
dues.
 Right of suit:
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If pledgee makes unauthorized sale the pledger has right to
file suit against the pledgee.
 Right of proper care :

The pledger can enforce the pledgee to do proper care and
maintain the pledged goods.
Duties of the Pledger:

Following are the duties of powner:
 Meet the obligations:

Pledger must meet the obligations regarding the contract
with in specified time.
 Pay extra expenditure:

He pay also pay the extra ordinary charges.
Rights of Pledgee:
Following are the rights of pledgee:
 Receipt of payment:
Pledgee can retain the goods pledged until his dues are paid.
 Retain for other debts:
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He has also right to retain the pledged goods for other debts
taken.
 Sell the goods:

If pledger fails to make payment then pledgee can sell the
pledged goods after issuing the reasonable notice.
Duties of Pledgee:
 Return of goods:
On the receipt of his dues he should return the goods.
 Reasonable care:
He must do the reasonable care of the pledges goods.
 Comply terms:
He should abide by the terms.
 No Mixation:
He should not mix the pledged goods with his own goods
beard by the pledgee.
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THE END.

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Contract law Assignment

Topic Name:- Pledge.

International Islamic university

According to section 71 of the contract act, “ the bailment

 In case of mere custody:

A custodian cannot pledge his maters banglow. It will be

 Right of proper care :

Duties of the Pledger:

 Meet the obligations:

 Pay extra expenditure:

 Retain for other debts:

 Sell the goods:

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