Skip to content

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

Under the Indian Contract Act, 1872, a contract of pledge is best described as the bailment of goods as security for:

A pledge is a bailment of goods as security for payment of a debt or performance of a promise. The owner (pawnor) delivers the goods to the pawnee, who holds them as security without becoming owner. Therefore the correct description is security for a debt or promise.

  1. APayment of a debt or performance of a promiseCorrect
  2. BSale of the goods to a third person
  3. CTransfer of ownership of the goods to the bailee
  4. DGratuitous safe custody of the goods

Explanation

Pledge is a bailment of goods as security for payment of a debt or performance of a promise. The bailor is the pawnor and the bailee is the pawnee. Ownership does not pass to the pawnee, so the option on ownership transfer is wrong, and safe custody without security is ordinary bailment, not pledge.

Did you get it right without looking?

One question tells you little. A timed set on Meaning of Indemnity, Guarantee, Pledge, Agent shows your real accuracy, how long you take and where you lose marks.

Practise Meaning of Indemnity, Guarantee, Pledge, AgentFree diagnostic mock

More Meaning of Indemnity, Guarantee, Pledge, Agent questions