Rights and Obligations of the Pledger

Rights and Obligations of the Pledger

A pledge is a bailment that conveys possessory title to property owned by a debtor (the pledgor) to a creditor (the pledgee) to secure repayment for some debtor obligation and to the mutual benefit of both parties.

The Pledger is the person who has a right of ownership of a movable asset or the capacity of the holder of a right of which he/she may dispose of freely.

Rights and Obligations of Pledger:

Rights: The pledger has a right to claim back the security pledged on repayment of the debt with interest and other charges. The pledger has a right to receive a reasonable notice in case the Pledgee intends to sell the goods and in case he does not receive the notice, he shall have a right to claim any loss that may result on such sale. In case of sale, the pledger is entitled to receive from the pledgee any surplus that may remain with him alter the debt is completely paid off.

The pledger has a right to claim any accruals to the goods pledged. If any loss is caused to the goods because of mishandling or negligence on the part of the pledgee. The pledger has a right to claim the same.

Obligations:

  • A pledger must disclose to the pledgee any material faults or extraordinary risks in the goods to which the pledgee may be exposed.
  • A pledger is responsible to meet any extraordinary expenditure incurred by the pledge for the preservation of the goods.
  • Where the pledgee has exercised his right of sale of goods, any shortfall has to be made good by the pledger.
  • The pledger is liable for any loss caused to the pledgee because of defects in his (pledgor’s) title to the goods.

Share This Post