Q.What is pledge ?

A pledge is the bailment of goods as security for a loan or the performance of a promise; possession of the goods passes to the lender while ownership stays with the borrower.

Meaning of Pledge

Pledge relates to the lending/secured-advance function of commercial banks in the TN HSC Class-11 Commerce syllabus. Under Section 172 of the Indian Contract Act, 1872, a pledge is the bailment of goods as security for the payment of a debt or the performance of a promise.

Key points:

• The person who delivers the goods as security is called the pledger (pawnor).
• The person to whom the goods are delivered (for example, a bank) is called the pledgee (pawnee).
• Possession of the goods passes to the pledgee, but ownership remains with the pledger.
• If the borrower fails to repay, the pledgee can sell the pledged goods (after giving notice) to recover the amount due. …