Contracts II Pledge

Ordinarily the owner of the goods, or any person authorized by the owner can pledge. Which of the following exceptions are correct ?

• ICA- Section 178 & Section 178 A

• ICA- Section 179

• Sale of Goods Act- Section 30 (1), 30 (2)

• All of the above

Identify the correct essentials of Section 178, ICA

• The Pledge should be by a mercantile agent

• The mercantile agent should have obtained the possession of the goods or documents of title in his capacity of a mercantile agent with / without the consent of the owner

• He must pledge the goods while acting in the ordinary course of business

• The pledgee should have acted in good faith and without notice that such a mercantile agent did not have an authority to pledge

Answer explanation

The mercantile agent should have obtained possession of the goods or documents of title in his capacity as a mercantile agent and WITH THE CONSENT OF THE OWNER.

Phillips v. Brooks Ltd. 1919 - A person "Mr. North went to P's shop and selected a ring. He falsely represented himself as being "Sir George Bullough", a man of good reputation and credit. North handed a cheque to P and convinced him to hand over the ring to him. The cheque was dishonoured, before P could avoid the contract on the ground of misrepresentation/ fraud, North had pledged the ring to D, who had taken the ring in good faith and without notice of the fact that the ring was gotten under a voidable contract. Is this pledge valid?

• Yes, it is a valid pledge U/ Sec. 178 A

• No it is not a valid pledge U/ Sec. 178 A

The following are the rights of the Pledgee/Pawnee:-

• Right to retain the goods pledged

• Right to recover extraordinary expenses

• Right to sue to procure the debt, etc

• Right to sell the thing pledged

Answer explanation

Sections 173 to 176

Explain briefly the Pawnor's right to redeem.

Pawnor's legal heir has the right to redeem.

• Yes

• No

Purpose of pledge is (a)   for payment of debt

Difference between Bailment & Pledge ?

Answer explanation

1. 1.Bailment includes Pledge. Pledge is a specific kind of bailment.

2. 2.Bailment- right of lien/ Pledge- right of lien and sale

R. D. Saxena v. Balaram Prasad, 2000 case deals with ?

• General lien of wharfingers

• General lien of policy brokers

• General lien

• General lien of attorneys

Banker's lien does not extend to -

• goods, jewellery

• negotiable instruments like promissory note, Fixed deposit receipts

• security given for special purpose