Pledge Defined
A pledge is a specific type of bailment where goods are delivered by one party (the bailor) to another (the bailee) as security for a debt or obligation. Understanding the terminology used in pledge agreements is crucial for clarity in legal and financial contexts.
Bailor and Bailee Explained
- Bailor: The party who delivers the goods or property to another party for a specific purpose. In the context of a pledge, the bailor is the individual or entity that provides the asset as security.
- Bailee: The party who receives the goods or property from the bailor. The bailee is responsible for holding and safeguarding the item, typically until the obligation is fulfilled or the debt is repaid.
Pawn vs. Pawnee
- Pawn: This term refers to the goods or items that are pledged as collateral. The pawn serves as security for the loan or obligation.
- Pawnee: The pawnee is the recipient of the pawn, essentially the bailee in a pledge situation. They have the right to retain the pawned item until the debt is settled.
Correct Answer Explanation
The correct answer to the question is option 'A', which states that the bailor in a pledge is referred to as the Pawn. This is because:
- The pawn represents the goods or property that the bailor provides as security.
- The term "pawnee" refers to the bailee, not the bailor.
In conclusion, recognizing the distinction between the terms is vital in legal agreements involving pledges. The bailor is indeed associated with the pawn, solidifying option 'A' as the correct choice.