Pledge (law) - Wikipedia
Definition of pledge: Cash deposit or placing of owned property by a debtor (the pledger) to a creditor (the pledgee) as a security for a loan or obligation. Lien is the right of a creditor to retain the properties belonging to the debtor until the debt due to him is repaid. A pledge occurs when goods are delivered for. The Bank has submitted before us that the relationship between the parties is governed In support of his of pledge and forward the application to the depository. In Webster's Universal Dictionary meaning of the word confidence in the.
Delivery of transferable warehouse warrant if the goods are kept in a public warehouse. The ownership of goods remains with the pledger. The possession of the goods vests with pledgee till the loan is repaid.
Right in case of failure to repay: If the pledger fails to repay within the stipulated time, pledgee may, Sell the goods pledged after giving reasonable notice, File a civil suit against the pledger for the amount due, File a suit for the sale of the goods pledged and the realization of money due to him. When the pledgee decides to exercise the right of sale, he must issue a clear, specific, and reasonable notice. Rights of a banker as a Pledgee The pledgee has the right to retain the goods pledged until he is paid the debt along with the interest thereon and all other necessary expenses incurred for the possession and preservation of the goods.
The pledgee has the right to retain the goods pledged only for the particular debt and not for any other debt unless the contract provides otherwise. The pledgee is entitled to receive from the pledger extraordinary expenses incurred by him for the preservation of the goods pledged. If the pledger makes a default in payment, the following courses are open to the pledgee: He may file a suit for the recovery of the amount.
He may sue for the sale of the goods. He may himself sell the goods after giving reasonable notice. If the proceeds of such sale are less than the amount due in respect of the debt or performance, the pledger is still liable to pay the balance.
If the proceeds of the sale are greater than the amount so due, the pledgee shall pay over the surplus to the pledger. In other words, the banker has a right to combine two accounts. A customer may owe several distinct debts to the bank. When the customer deposits some money in the bank without specific instructions and the amount is not sufficient to discharge all debts, then the problem arises as towards which debt this amount should be adjusted. In the absence of any specific instructions, the bank has the right to appropriate the deposited amount to any loan, even to a time barred-debt.
Bank Lien and Pledge: Definition and Difference
But the banker must inform the customer about the appropriation. Right to charge interest and commission: A banker has a right to charge interest on loans and advances. A bank also has the right to charge a commission for services that it renders to clients. Right to close the account: The banker has the right to close an account, if it is of the opinion that an account is not being operated properly.
It may do so only by sending a written intimation to the customer. The most important duty of a banker is to help their clients with all their financial queries and needs. Pledges are different from sales. In a sale both possession and ownership of property are permanently transferred to the buyer.
Relationship between the Banker and Customer
In a pledge only possession passes to a second party. The first party retains ownership of the property in question, while the second party takes possession of the property until the terms of the contract are satisfied. The second party must also have a lien—or legal claim—upon the property in question.
If the terms are not met, the second party can sell the property to satisfy the debt.
- Bank Lien and Pledge: Definition and Difference
- Special Relationship between the Banker and Customer
- pledger and pledge
Any excess profit from the sale must be paid to the debtor, or first party. But if the sale does not meet the amount of the debt, legal action may be necessary.
A contract of pledge specifies what is owed, the property that shall be used as a pledge, and conditions for satisfying the debt or obligation. Mary decides first that John will have to pledge his stereo as security that he will repay the debt by a specific time. In law John is called the pledgor, and Mary the pledgee. The stereo is referred to as pledged property. As in any common pledge contract, possession of the pledged property is transferred to the pledgee.