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CMA Foundation · Fundamentals of Business Laws and Business Communication · Meaning of Indemnity, Guarantee, Pledge, Agent

Ramesh, a jeweller, delivers gold ornaments to Sundaram Finance as security for a loan of Rs 2,00,000. In the language of pledge, Ramesh and Sundaram Finance are respectively called:

Ramesh is the pawnor and Sundaram Finance is the pawnee. In a pledge, the owner who delivers goods as security is the pawnor, while the lender who receives and holds the goods as security is the pawnee.

  1. APawnee and pawnor
  2. BPawnor and pawneeCorrect
  3. CSurety and creditor
  4. DIndemnifier and indemnity-holder

Explanation

The person who delivers the goods as pledge is the pawnor, and the person to whom they are delivered is the pawnee. Ramesh delivered the ornaments, so he is the pawnor and the finance company is the pawnee. Reversing the terms is the key error in the first option.

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