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.

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.