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The Bailment of goods as security for payment of a debt or performance of a promise is called:
- a)Pledge
- b)Bailment
- c)Contingent contract
- d)Agreement
Correct answer is option 'A'. Can you explain this answer?
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The Bailment of goods as security for payment of a debt or performance...
Understanding Pledge in Bailment
In legal terms, a pledge is a specific type of bailment where goods are transferred to a lender as security for a debt or performance of a promise. Here’s a deeper look into why the correct answer is option 'A'.
Definition of Pledge
- A pledge involves the delivery of goods to a creditor (the pledgee) by the borrower (the pledgor) as collateral.
- The pledgee has the right to retain possession of the goods until the debt is repaid or the promise fulfilled.
Characteristics of Pledge
- Security: The primary purpose of a pledge is to secure a loan or obligation.
- Possession: The lender receives possession of the goods but does not own them.
- Right of Sale: If the debtor defaults, the pledgee has the right to sell the pledged goods to recover the debt.
Distinction from Bailment
- While all pledges are bailments, not all bailments are pledges.
- A general bailment may involve the transfer of goods for various purposes, such as storage or repair, without the necessity of securing a debt.
Legal Framework
- Pledge laws are governed by the Sale of Goods Act in many jurisdictions, outlining the rights and duties of both parties involved.
Conclusion
In summary, a pledge is specifically designed to secure payment for a debt or the performance of a promise through the bailment of goods. This distinguishes it from general bailment, making option 'A' the correct choice. Understanding this distinction is crucial for those studying contract law and the nuances of financial transactions.
In legal terms, a pledge is a specific type of bailment where goods are transferred to a lender as security for a debt or performance of a promise. Here’s a deeper look into why the correct answer is option 'A'.
Definition of Pledge
- A pledge involves the delivery of goods to a creditor (the pledgee) by the borrower (the pledgor) as collateral.
- The pledgee has the right to retain possession of the goods until the debt is repaid or the promise fulfilled.
Characteristics of Pledge
- Security: The primary purpose of a pledge is to secure a loan or obligation.
- Possession: The lender receives possession of the goods but does not own them.
- Right of Sale: If the debtor defaults, the pledgee has the right to sell the pledged goods to recover the debt.
Distinction from Bailment
- While all pledges are bailments, not all bailments are pledges.
- A general bailment may involve the transfer of goods for various purposes, such as storage or repair, without the necessity of securing a debt.
Legal Framework
- Pledge laws are governed by the Sale of Goods Act in many jurisdictions, outlining the rights and duties of both parties involved.
Conclusion
In summary, a pledge is specifically designed to secure payment for a debt or the performance of a promise through the bailment of goods. This distinguishes it from general bailment, making option 'A' the correct choice. Understanding this distinction is crucial for those studying contract law and the nuances of financial transactions.
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The Bailment of goods as security for payment of a debt or performance...
Explanation:
In this case, the bailment of goods as security for payment of a debt or performance of a promise is specifically referred to as a pledge. A pledge involves the delivery of goods to secure the fulfillment of an obligation, such as repayment of a loan or the performance of a contract. It is a common practice in financial transactions where a lender may require a borrower to pledge collateral to secure the loan.
- Pledge: Pledge is a type of bailment where goods are delivered as security for payment of a debt or performance of a promise.
- Bailment: Bailment is the act of delivering goods to another person for a particular purpose, without transferring ownership.
- Contingent contract: A contingent contract is a contract where the performance of one party is contingent upon the occurrence of a specific event.
- Agreement: An agreement is a mutual understanding between two or more parties about their rights and obligations.
In this case, the bailment of goods as security for payment of a debt or performance of a promise is specifically referred to as a pledge. A pledge involves the delivery of goods to secure the fulfillment of an obligation, such as repayment of a loan or the performance of a contract. It is a common practice in financial transactions where a lender may require a borrower to pledge collateral to secure the loan.
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The Bailment of goods as security for payment of a debt or performance of a promise is called:a)Pledgeb)Bailmentc)Contingent contractd)AgreementCorrect answer is option 'A'. Can you explain this answer?
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