Rights of the Pawnor and Pawnee
1. Rights of the Pawnor:
- Right to Redemption: By paying back the debt or meeting other requirements mentioned in the pledge agreement, the pawnor has the option to redeem the pledged goods. The pawnor can regain ownership of the pledged property according to this fundamental right.
- Right to Notification: In the event of default or any other violation of the pledge agreement, the pawnee is usually required to notify the pawnor. Before the pawnee asserts their claim over the collateral, the pawnor is given the chance to remedy the default through this notification.
- Right to Inspection: The right of the pawnor to examine the pledged goods and make sure the pawnee is taking proper care of them may vary depending on the terms of the agreement.
2. Rights of the Pawnee:
- Right of Retention: Until the pawnor complies with their end of the bargain, the pawnee is entitled to keep ownership of the pledged items. The pawnee is permitted to retain the collateral as security for the debt due to this right.
- Right to Sell or Dispose: The pawnee may be able to sell or otherwise dispose of the pledged goods in order to recoup the unpaid obligation in the case if the pawnor defaults. The pledge agreement typically contains the terms and conditions of the sale.
- Right to Interest and Costs: As indicated in the agreement, the pawnee may be entitled to request interest on the outstanding obligation. The pawnee may also be entitled to a refund for reasonable fees and expenses spent in carrying out the pledge’s execution.
Contract of Pledge : Meaning, Features, Duties and Rights
A Contract of Pledge is a formal agreement whereby one party, referred to as the Pawnor, promises particular items or property to another, referred to as the Pawnee, as security for a debt or obligation. The Pawnor transfers ownership of the pledged item to the Pawnee under the agreement, with the understanding that the Pawnor keeps ownership and the Pawnee has a security interest.
Geeky Takeaways:
- Contract of Pledge is said to be a subset of a Contract of Bailment.
- The goods bailed here are kept as security for a debt or a performance of a promise.
- The bailor here is called Pawnor, and the bailee here is called Pawnee.
Table of Content
- What is a Contract of Pledge?
- Essential features of a Contract of Pledge
- Duties of the Pawnor and Pawnee
- Rights of the Pawnor and Pawnee
- Conclusion
- Contract of Pledge – FAQs
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