Bailment vs Pledge [Business Law]

Key differences between Bailment and Pledge.

• Bailment refers to hand over or transfer of goods from one party to another party for some specific purpose. Pledge, on the other hand, implies a contract, where an article/thing is deposited with the money lender, as security for repayment of a debt.
• The use of goods is prohibited in pledge, whereas in bailment the goods can be used them.
• The word Bailment is derived from the French word ‘Bailor’, which means ‘to deliver’. It means possession goes voluntarily from one person to another.
• Pledge is a special kind of bailment. If the goods are bailed as a security for payment of a debt or performance of a promise, it is called Pledge.
• Example of Bailment: Sam delivers a cloth to John, a tailor making a shirt . The contract between Sam and John is bailment
• Example of Pledge: If a Farmer delivers to bank 50 bags of wheat as security for obtaining a loan, it is called pledge.

Commonly asked MBA question:
Explain Bailment and Pledge along with its features and difference. Also give practical examples of Bailment and Pledge.

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