What is the Difference/Distinction between Bailment and Pledge with examples / B.N.C.L.

Difference between Bailment and Pledge

B.N.C.L.

1) Meaning: The term Bailment is derived from the French word "Bailor", which means "deliver". It means voluntary possession of one person to another.

Meaning: Promise is a special type of bond. If the assets are rescued as collateral for the payment of a debt or the fulfillment of a promise, it is called Pledge.

2) Sections 148-171 of the Indian Contract Law of 1872 deal with bail.

Sections 172-181 of the Indian Contract Law deal with Pledge.

3) Definition: Delivery of goods by Bailor to Bailee for a defined purpose with the condition of their return or elimination, when the purpose is accepted. (Section 148, Indian Contract Act)

Definition: The rescue of assets as collateral for the payment of a debt or the fulfillment of a promise is called a pledge. (Section 178, Indian Contract Act)

4) Example: Sam hands John a cloth, a tailor who makes a shirt. The contract between Sam and John is the bailment.

Example: If a farmer gives the bank 50 bags of wheat as collateral for a loan, it is called a commitment or pledge.

5) The Bailee has no right to sell the salvaged property/ goods bailed.

The Pledgee / Pawnee is entitled to sell the promised goods if the buyer or pledger is unable to redeem them within the stipulated period.

6) The Bailee can use the goods. Pledgee cannot use the goods. 

7) Bailment  is made for any purpose.Pledge is made for specific purpose

8) Bailee can levy assets only for work and service.

The Pledgee can exercise the right of retention even for non-payment of interest.

9) In the case of Bailment, there are two parts; Bailor-who delivers the goods for a certain purpose and Bailee- who is the recipient of the good

In the case of Pledge, there are two parts; Pawnor, who gives his good as collateral for the debt and pawnee, who receives the good.

10) In the bailment contract, consideration may be involved or may be absent. It depends on the contractual terms.

In the case, since the whole concept of the commitment or pledge is that it is a guarantee for a debt, so the participation of the consideration is important or otherwise there will be no commitment contract.

11) The primary purpose of making a bailment contract is for the primary custody of the property or for repair.

The main objective of carrying out this contract is to guarantee security against the payment of the debt.

12)

Who can undertake Bailment

 As such, there are no legal or special provisions that specifically mention who can and cannot enter the bond or bailment.

Who can undertake pledge

I) Merchant agent [section 178]

II) Pawnee may further pledge the assets to subsequent Pawnee, provided she has the right to do so in accordance with her interest in the property [section 179].