Pledge (law)

Source: Wikipedia, the free encyclopedia.

For other uses, see Pledge (disambiguation).

A pledge is a

title to property owned by a debtor (the pledgor) to a creditor (the pledgee) to secure repayment for some debt or obligation and to the mutual benefit of both parties.[1][2] The term is also used to denote the property which constitutes the security.[3] The pledge is a type of security interest.[4][5] Pledge is the pignus of Roman law, from which most of the modern European-based law on the subject is derived, but is generally a feature of even the most basic legal systems.[3] A pledge of personal property
is known as a pawn.

Features

The pledgee has the right of selling the pledge if the pledgor fails to make payment at the stipulated time. No title to a third party purchaser is guaranteed following a wrongful sale except in the case of property passing by delivery, such as money or negotiable securities. In all other cases, persons must show that they are a bona fide purchaser, for (good) value, without notice (BFP). In the case of some types of property as defined on the detailed laws of the jurisdiction, such a new possessor (BFP) must have first consulted (before purchase) revealing no other ownership and then made a public notice or registered their title in a court-recognized register before the pledgor.[3]

By legal system

Civil law system

In earlier medieval law, especially in Germanic law, two types of pledge existed, being either possessory (cf.

intellectual property rights
.

Therefore, a pledge in

ship hypothec
).

Common law system

In English law, the pledge is in the possession of the pledgee, as opposed to a nonpossessory lien or a mortgage.[3] Another difference between Roman and English law is that certain things (e.g. apparel, furniture and instruments of tillage) could not be pledged in Roman law, while there is no such restriction in English law. In the case of a pledge, a special property passes to the pledgee, sufficient to enable him to maintain an action against a wrongdoer, but the general property, that is the property subject to the pledge, remains in the pledgor. As the pledge is for the benefit of both parties, the pledgee is bound to exercise only ordinary care over the pledge.[3] After a wrongful sale by a pledgee (such as if the pledgor has been keeping to his payment schedule and will have the right to redeem the goods if continuing to do so), the pledgor cannot recover the pledge/the value of the pledge without a tender of (full payment of) the amount due (secured under the pledge). That contrasts with the general law of mortgages, which allows most mortgagors to sustain a cause of action (sue) on a wrongful sale to restore the property into their qualified ownership if they bring any payment arrears up to date.[3]

Mixed law systems

The

US states, the common law as it existed apart from the Factors Acts is still followed, but in others, the factor has a more-or-less restricted power to give a title by pledge.[3]

See also

References

  1. ^ Joseph Story, Story on Bailments, 286.
  2. ISBN 978-0314151995
    .
  3. ^ a b c d e f g  One or more of the preceding sentences incorporates text from a publication now in the public domain: Chisholm, Hugh, ed. (1911). "Pledge". Encyclopædia Britannica. Vol. 21 (11th ed.). Cambridge University Press. p. 835.
  4. JSTOR 792194
    – via Yale Database.
  5. ^ "Pledge". LII / Legal Information Institute. Retrieved 2022-03-17.


Retrieved from "https://en.wikipedia.org/w/index.php?title=Pledge_(law)&oldid=1219791383"