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Difference Between Bailment and Pledge

May 21, 2011 Posted by Olivia

Bailment vs Pledge

The words bailment and pledge are used mainly in terms of contract. They can be seen being referred to by lawyers in a court of law to prove their point. Bailment is a type of contract and pledge is also a type of contract. People who are not aware of the origin of these words use them in the same breath as if they are interchangeable which is not correct. This article will throw light on these two concepts as they hold significance in jurisprudence.

Bailment

The act of delivering goods for a special purpose is termed as bailment. The person who is delivering the goods is called a bailor while the person who receives the goods is referred top as a bailee in the contract. The goods that are transferred in this manner shall be returned to the owner upon completion of the purpose of the contract. The point to be remembered in this kind of transaction is that ownership of the goods does not get changed. In bailment, only goods are involved, and all movable items apart from property and money come under bailment. Thus it is clear that when you keep money in a bank account, it does not come under bailment.

Pledge

But, if a person keeps his gold or other valuable items in a bank locker or with a money lender in exchange for a loan, he is making a pledge to the money lender or the bank that he will return the money and get back his valuables. This is deemed as a kind of bailment and all conditions that are applicable on a bailment apply in such a case also. Bailment for security can be termed as a pledge. You are keeping your valuables with the money lender as a security against the loan and also making a pledge to pay back the money. To your pledge, the money lender agrees to keep the valuables as a security. In this special type of bailment where goods act as a security for payment of loan is called a pledge.

In brief:

Bailment vs Pledge

• Bailment is an act of transferring goods to another person and such goods need to be returned to the owner after the completion of the purpose

• Bailment involves only goods other than property and money

• Pledge is a special type of bailment where you promise to pay the money a money lender gives in exchange for your valuable goods that act as a security.

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Filed Under: Legal Tagged With: bailee, bailment, Bailment for security, bailor, lender, pledge, pledge and bailment, security for payment, type of contracts

About the Author: Olivia

Olivia is a Graduate in Electronic Engineering with HR, Training & Development background and has over 15 years of field experience.

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