Ingredients of Pledge

The ingredients of a pledge are:

  • Delivery of possession of goods to the bailee. The bailor must deliver possession of the goods to the bailee. This means that the bailor must give up control of the goods to the bailee.
  • Intent to create a security interest. The bailor must intend to create a security interest in the goods. This means that the bailor must intend that the goods will be used as security for the debt or obligation.
  • Debt or obligation. There must be a debt or obligation that is secured by the pledge. The debt or obligation can be present or future, certain or uncertain.
  • Bailee’s right to retain possession of goods till debt is discharged. The bailee has a right to retain possession of the goods until the debt or obligation is discharged.
  • Bailee’s right to sell the goods in case of default by the bailor. If the bailor defaults on the debt or obligation, the bailee has a right to sell the goods and use the proceeds to pay off the debt or obligation.

MCQs on Ingredients of Pledge

  1. Which of the following is not an ingredient of pledge?
    • Delivery of possession of goods to the bailee.
    • Intent to create a security interest.
    • Debt or obligation.
    • Registration of the contract with the government.
    • Answer: Registration of the contract with the government. Registration of the contract with the government is not an ingredient of pledge.
  2. The bailor has the right to redeem the goods by paying the debt or obligation. What does this mean?
    • This means that the bailor can get the goods back by paying the debt or obligation.
  3. The bailee has a duty to take care of the goods. What does this mean?
    • This means that the bailee must take reasonable care of the goods and keep them in good condition.
  4. The bailee has a right to sell the goods in case of default by the bailor. What does this mean?
    • This means that if the bailor defaults on the debt or obligation, the bailee has a right to sell the goods and use the proceeds to pay off the debt or obligation.
    • The sale of the goods must be conducted in a fair and reasonable manner.