Bailment vs Pledge
Bailment and pledge are terms primarily used in contract law and are often mistakenly used interchangeably. However, they represent distinct concepts in jurisprudence.
Bailment refers to the act of delivering goods for a specific purpose. The person delivering the goods is known as the bailor, while the recipient is called the bailee. Once the purpose of the contract has been fulfilled, the goods are to be returned to the owner. It is important to note that in bailment, the ownership of the goods does not change. Bailment only involves goods, excluding property and money. Therefore, depositing money in a bank account does not constitute bailment.
Pledge, on the other hand, is a special type of bailment in which a person deposits their valuables with a bank or money lender in exchange for a loan. In this case, the goods act as security for the loan repayment. The pledgor promises to repay the loan, while the pledgee agrees to hold the valuables as collateral. All conditions applicable to bailment also apply to pledges.
Key Takeaways:
– Bailment is the transfer of goods for a specific purpose, with the expectation that the goods will be returned to the owner once the purpose is completed.
– Pledge is a special type of bailment where goods are used as security for the repayment of a loan.
– Ownership of the goods does not change in either bailment or pledge, and both involve goods rather than property or money.
