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Narrate the circumstances under which a person other than the owner can make a valid pledge.

Narrate the circumstances under which a person other than the owner can make a valid pledge.

Owlgen
Course: B.Com

1 Answer

The law in order to facilitate mercantile transaction has recognized certain exception to the general rule of the owner pledging the goods. It is because of this fact that these pledges are for bonafide pledges made. by the persons who are not the actual owners. These would include the following:

Pledge by a mercantile agent: The following necessary conditions of validity under this section are:
  • The person pledging the goods must be a mercantile agent.
  • Mercantile agent must be in possession either of the goods or the documents of title to goods.
  • Such possessions must be with the consent of the owner.
  • Pledge must have been made by the mercantile agent when acting in the ordinary course of business.
  • The pledgee must act in good faith.
  • The pledgee should have no notice of the pledger’s defect of title.

Pledge by person in possession under voidable contract:

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If the consent is caused due to misrepresentation, fraud, coercion, undue influence or mistake such contract is voidable at the option of the person where the consent was so obtained. If the goods are pledged by the person who had obtained their
possession under a voidable contract then the pledge is valid provided that the contract has not been rescinded at the time of pledge. Also that the pledgee had acted in good faith.

Pledge where pledger has only a limited interest: Where the pawner is not the actual owner of the goods, but has a limited interest and he pledges the goods, then the pledge is valid to the extent of that interest.
Pledge by a co-owner in possession: If the goods are owned by many persons and with the consent of the other owners. the goods are left with one of the co-owners, then it makes a valid pledge if the goods in his possession.

Pledge by seller or buyer in possession: A seller in possession in whose possession the goods have been left after the sale or a buyer who with the consent of the seller has the possession of the goods before sale makes it a valid pledge provided that the pawnee acts in good faith and does not have knowledge of the defected title.

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September 11, 2019
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