PLEDGE BY NON-OWNER

There are certain circumstances in which non-owners can make a valid pledge. these are –

1.Mercantile agent (sec 178) – A mercantile agent is an agent having the right to buy/sell goods on behalf of his Principal and can consign goods for the purpose of sale or raise money on the security of goods. Such agent with the consent of principle can make a valid pledge.

2.A person in possession under voidable contract (Sec 178 A) – Person having possession under voidable contract can make a valid contract of pledge of goods, provided that the contract has not been cancelled at the time of pledge and the pledge has acted in good faith and without knowledge of pledger’s defective title.

   example- where A purchase a watch from B, under coercion and pawns it with C before the contract is cancelled by B. the pledge is valid. C will get a good title to the watch and B can only claim damages from A

3. Pledger having Limited interest (sec. 179) – where a person pledges goods in which he has limited interest, the pledge is valid to the extent of his interest. thus, a person having a lien over goods can pledge it upto the extent of his interest.

   example – A goes to B( a tailor) to get his cloth sewed for a charge of 2000. in the course when the suit was ready, B needed urgent cash and pledged the suit to C for rs. 3000. Pledge is valid to the extent of B’s interest i.e. 1500. here A can directly recover his suit from C by giving him 1500.

4.Seller in possession of goods after sale ( sec 30(1) of sale of goods act)– A seller, left in possession of goods sold, is no more owner of the goods, but a pledge created by him is valid, provided the Pawnee has acted in good faith and has no knowledge of sale of goods to the real owner. in this case, the original buyer can obtain damages from the seller but cannot recover the goods from pledgee.

5. Co-owner in possession – where there are two or more than two co-owners in possession of goods anyone of them can make a valid pledge after taking consent of co-owners.

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