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Pledge

PLEDGE

Abailmentor delivery ofpersonal propertyto a creditor as security for a debt or for the performance of an act.

Sometimes called bailment, pledges are a form of security to assure that a person will repay a debt or perform an act under contract. In a pledge one person temporarily gives possession of property to another party. Pledges are typically used in securing loans, pawning property for cash, and guaranteeing that contracted work will be done. Every pledge has three parts: two separate parties, a debt or obligation, and a contract of pledge. The law of pledges is quite old, but in contemporary U.S. law it is governed in most states by the provisions for secured transactions in article 9 of the uniform commercial code.

Pledges are different from sales. In a sale both possession and ownership of property are permanently transferred to the buyer. In a pledge only possession passes to a second party. The first party retains ownership of the property in question, while the second party takes possession of the property until the terms of the contract are satisfied. The second party must also have a lien—or legal claim—upon the property in question. If the terms are not met, the second party can sell the property to satisfy the debt. Any excess profit from the sale must be paid to the debtor, or first party. But if the sale does not meet the amount of the debt, legal action may be necessary.

A contract of pledge specifies what is owed, the property that shall be used as a pledge, and conditions for satisfying the debt or obligation. In a simple example, John asks to borrow $500 from Mary. Mary decides first that John will have to pledge his stereo as security that he will repay the debt by a specific time. In law John is called the pledgor, and Mary the pledgee. The stereo is referred to as pledged property. As in any common pledge contract, possession of the pledged property is transferred to the pledgee. At the same time, however, ownership (or title) of the pledged property remains with the pledgor. John gives the stereo to Mary, but he still legally owns it. If John repays the debt under the contractual agreement, Mary must return the stereo. But if he fails to pay, she can sell it to satisfy his debt.

Pledged property must be in the possession of a pledgee. This can be accomplished in one of two ways. The property can be in the pledgee's actual possession, meaning physical possession (for example, Mary keeps John's stereo at her house). Otherwise, it can be in the constructive possession of the pledgee, meaning that the pledgee has some control over the property, which typically occurs when actual possession is

impossible. For example, a pledgee has constructive possession of the contents of a pledgor's safety deposit box at a bank when the pledgor gives the pledgee the only keys to the box.

In pledges both parties have certain rights and liabilities. The contract of pledge represents only one set of these: the terms under which the debt or obligation will be fulfilled and the pledged property returned. On the one hand, the pledgor's rights extend to the safekeeping and protection of his property while it is in possession of the pledgee. The property cannot be used without permission unless use is necessary for its preservation, such as exercising a live animal. Unauthorized use of the property is called conversion and may make the pledgee liable for damages; thus, Mary should not use John's stereo while in possession of it.

For the pledgee, on the other hand, there is more than the duty to care for the pledgor's property. The pledgee has the right to the possession and control of any income accruing during the period of the pledge, unless an agreement to the contrary exists. This income reduces the amount of the debt, and the pledgor must account for it to the pledgee. Additionally, the pledgee is entitled to be reimbursed for expenses incurred in retaining, caring for, and protecting the property. Finally, the pledgee need not remain a party to the contract of pledge indefinitely. She can sell or assign her interest under the contract of the pledge to a third party. However, the pledgee must notify the pledgor that the contract of pledge has been sold or reassigned; otherwise, she is guilty of conversion.

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"Pledge." West's Encyclopedia of American Law. . Encyclopedia.com. 22 Jul. 2017 <http://www.encyclopedia.com>.

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"Pledge." West's Encyclopedia of American Law. . Retrieved July 22, 2017 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/pledge

pledge

pledge / plej/ • n. 1. a solemn promise or undertaking: the conference ended with a joint pledge to limit pollution. ∎  a promise of a donation to charity: the company's pledge of 10% of profits to environmental concerns. ∎  (the pledge) a solemn undertaking to abstain from alcohol: she persuaded Arthur to take the pledge. 2. Law a thing that is given as security for the fulfillment of a contract or the payment of a debt and is liable to forfeiture in the event of failure. ∎  a thing given as a token of love, favor, or loyalty. 3. a person who has promised to join a fraternity or sorority. 4. archaic the drinking to a person's health; a toast. • v. 1. [tr.] commit (a person or organization) by a solemn promise: the government pledged itself to deal with environmental problems. ∎  formally declare or promise that something is or will be the case: the president pledged that 20,000 government buildings would have solar roofs. ∎  [intr.] solemnly undertake to do something: they pledged to continue the campaign for funding. ∎  [tr.] undertake formally to give: Japan pledged $100 million in humanitarian aid to pledge allegiance. 2. [tr.] Law give as security on a loan: the creditor to whom the land is pledged. 3. [tr.] promise to join (a fraternity or sorority): Francie and I pledged the same sorority. 4. [tr.] archaic drink to the health of. PHRASES: pledge one's trothsee troth.DERIVATIVES: pledg·er n. pledg·or / ˈplejər/ n. ( Law ).

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"pledge." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. 22 Jul. 2017 <http://www.encyclopedia.com>.

"pledge." The Oxford Pocket Dictionary of Current English. . Encyclopedia.com. (July 22, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/pledge-0

"pledge." The Oxford Pocket Dictionary of Current English. . Retrieved July 22, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/pledge-0

pledge

pledge bail. surety XIV; something handed over as security XV; token of favour or goodwill XVI; solemn promise XIX. ME. plege — OF. plege (mod. pleige) :— Frankish L. plebium (VI), corr. to plebīre warrant, assure, engage, of unkn. orig.
Hence pledge vb. XV.

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"pledge." The Concise Oxford Dictionary of English Etymology. . Encyclopedia.com. 22 Jul. 2017 <http://www.encyclopedia.com>.

"pledge." The Concise Oxford Dictionary of English Etymology. . Encyclopedia.com. (July 22, 2017). http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/pledge-1

"pledge." The Concise Oxford Dictionary of English Etymology. . Retrieved July 22, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/pledge-1

pledge

pledgeallege, dredge, edge, fledge, hedge, kedge, ledge, pledge, reg, sedge, sledge, veg, wedge •straight edge

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"pledge." Oxford Dictionary of Rhymes. . Encyclopedia.com. 22 Jul. 2017 <http://www.encyclopedia.com>.

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"pledge." Oxford Dictionary of Rhymes. . Retrieved July 22, 2017 from Encyclopedia.com: http://www.encyclopedia.com/humanities/dictionaries-thesauruses-pictures-and-press-releases/pledge