No
Bailment
1
Meaning :
Bailment means change of
possession voluntarily from
one person to another
2
Object :
The object of Bailment is
temporary possession of the
goods in the hands of the
Bailee
3
In Bailment the ownership
does not change. The Bailor is
the owner of the goods before,
during and after the period of
Bailment.
5
In Bailment, the Bailor pays
some nominal charges to the
Bailee for the services
rendered by him. Sometimes,
he is not required to pay any
charges.
6
The Bailee cannot
appropriate the property
bailed to him.
5
In bailment, on certain
occasions, the Bailee can
exercise his right of lien over
the goods bailed.
Sale
Meaning :
Sale literally means “transfer of
absolute interest in property (it may
be movable or immovable) from one
person to another in lawful
consideration of price paid.
Object :
The object of sale is permanent
transfer to the purchaser.
In contract of sale, the Purchaser
becomes owner. The seller does not
possess any connection with the
property sold.
In contract of sale, the transferee
shall have to pay the full market
value of the property to buy
property.
The purchaser can appropriate the
property purchased by him.
In contract of sale, The seller of the
property has no such right of lien.
However, an unpaid seller of goods
can exercise lien or stoppage in
transit
 What Is Pledge?
Pledge is a subset of a contract of bailment defined under section 172 of the
Indian Contract Act, 1872.

Contract of bailment is the temporary transfer of the movable goods from one
part to another till the time of the fulfilment of the specific purpose and with the
expectation to be returned to the owner. Whereas the pledge is a bailment of
movable goods as security till the time debt is repaid, or the promise is
performed.

• The person who delivers the goods is known as a pawnor or pledgor.

• The person who accepts the goods, for the time being, is known as
a pawnee or pledgee.

Essential Features of Pledge

1. Valid contract: All the basic features of a valid contract should be
fulfilled; For example, offer, acceptance, consideration, capacity to
contract, wilful consent, etc. If basic features are not fulfilled, the contract
would be void and unenforceable.

2. Delivery of possession: Possession of goods should be transferred from

the pawnor/pledgor to the pawnee/pledgee. It can either be actual or
constructive. Actual delivery is where goods are transferred in real whereas
constructive delivery is where the goods are transferred indirectly. For
example:

• The key to the warehouse is handed over to Mr A, where the goods are kept
– is a constructive delivery.
• On the other hand, if the actual goods had been handed over to Mr A, that
would be actual delivery.

3. Ownership cannot be transferred: Pawnee/pledgee only possesses the

goods for the time being, as per the duration of the contract. Pawnor/pledgor
still remains the actual owner of the goods.

4. Security against debt: Goods must be pledged against the debt of the
pawnor.

5. Return of goods on repayment: Once the motive of the contract gets

performed, the pledged goods should be returned to the pawnor/pledgor, who
is the real owner of the goods, in the duly prescribed manner.

There are some rights provided to both the contracting parties, i.e., pledgor
and pledgee. They are as follows.

Rights of the Pledgor

1. Right to redeem goods: If the pledgor from his end fails to fulfil the
contract or does any default, then according to section 177 of the Indian
Contract Act, the pledgor can redeem his pledged goods before the pledgee
sells them. But the pledgor has to compensate the pledgee for the expenses
or damages incurred to him.
2. Right over the increased value of goods: If the value of the pledged
goods increases, it is the right of the pledgor to claim those values along with
the return of the goods.

Rights of the Pledgee

1. Right to retain goods: As per section 173 of the Indian Contract Act, the
pledgee has the right to retain the goods unless the amount owed by the
pledgor is paid, the promise is fulfilled, or the interest accrued during the
preservation of the goods is paid.

2. Right over extraordinary expenses: As per section 175 of the Indian

Contract Act, the pledgee is entitled to receive compensation for the
extraordinary expenses he incurred while preserving the goods.

3. Right to sell goods: On the same grounds where the pledgee was entitled
to retain goods, the pledgee can also sell them under section 176 of the
Indian Contract Act by giving reasonable notice of sale to the pledgor.

Note: If the amount received after the selling is still lesser than the amount
due, the pledgor still would be liable to pay the balance amount, and if the
amount received is in surplus, then the pledgee is bound to return the surplus
to the pledgor.

With rights come duties that need to be fulfilled. So, now you will read some of
the duties imposed on the pledgor and the pledgee.
 Duties of the Pledgor
1. Duty of compensation: For the care taken by the pledgee of the pledged
goods, the pledgor is entitled to compensate for all ordinary and extraordinary
expenses incurred by the pledgee.

2. Duty to pay interest in addition to principal amount: Pledgor is bound to

repay the entire principal amount back to the pledgee by adding the interest
upon it if it arises during the contractual period.

3. Duty to disclose all facts: Pledgor is liable to reveal all the facts about the
goods he is pledging to the pledgee before coming into the contract. If the
pledgee experiences any loss because of the non-disclosure of the fact, the
pledgor will be held liable.

Duties of the Pledgee

1. Duty to take reasonable care: Care taken by the pledgee should be just,
fair, and reasonable. It should be in such a way as if the pledgee is taking
care of his own goods. If goods get damaged due to the pledgee’s negligence,
the pledgee would be liable to compensate the pledgor.

2. Duty of not using the pledged goods: Pledgee is not supposed to use
the goods pledged to him by the pledgor unless and until the pledgee is
authorised to do so.
3. Duty to return goods: Once the motive of the contract is fulfilled, the
pledgee is liable to return the goods back to the pledgor.

4. Duty to return the benefit: If the pledgee gets any benefit arising from the
pledged goods during the contract, the pledgee is supposed to repay the
benefit enjoyed by him to the pledgor.

5. Duty to keep goods separate: Pledgee is supposed to keep his goods

separate from the pledgor’s goods, and if he mixes it, only he has to bear
expenses to separate, and if it is not possible, he shall pay for the damages
incurred to the pledgor.