Pledge and Pawn

Bailment and Pledge are those matters which are governed by the special types of contract. It is specific types of transaction between the parties that play significant role in the operation of business. Bailment is a border term under which pledge is also compromised one of special form. It is one of the important areas to be addressed by the contract law. Nepalese Contract Act, 2000 has dealt the general principles in relation to this contract under its chapter 5 and 6. They are mentioned separately as underneath:

B. Pledge and Pawn 

Accumulation of capital is one of the significant functions for business. Capital may be raised by different means. One of these means is to obtain loan. Loan transaction is very much important in business operation and pledge or pawn provides security of repayment of such loan. Pledge is a specific bailment since it is relating only to the loan transaction. The goods deposited as security to repay the debt or to perform the promise is known as pledge. The term pawn is synonymous to the term pledge and it can be used interchangeably.

The Contract Act, 2000 has used the different terms Dhito or Dharaut for denoting pledge. Section 35 of the Act mentions that in case any person has obtained a collateral while supplying credit to anybody as a security for that credit, or obtained any property as a deposit in the form of a guarantee to perform the concerned work while having any work performed a contract relating to collateral or deposit shall be deemed to have been concluded. The Explanation of the same section further mentions that For the purpose of this chapter, the term property shall denote any movable or immovable property, and title or document establishing title to that property.

Therefore a pledge is only a special kind of bailment contract under which goods are deposited with a tender or promise as a security for the repayment, a pledge also involves only a transfer of possession of goods pledge not ht ownership. The ownership remains with the pledger. The pledge or Pawnee has a special interest in the goods pledged. The general interest always remains in the pawner and wholly reverts to him on discharge of debts or work to be performed.

Bailment and Pledge

Bailment and Pledge are those matters which are governed by the special types of contract. It is specific types of transaction between the parties that play significant role in the operation of business. Bailment is a border term under which pledge is also compromised one of special form. It is one of the important areas to be addressed by the contract law. Nepalese Contract Act, 2000 has dealt the general principles in relation to this contract under its chapter 5 and 6. They are mentioned separately as underneath:

A.      Bailment

A contract of bailment is one of the branch of general contract since it has to comply all the necessary elements of general contract. It is special in the sense that it comprises special matter under which party hands over certain movable goods to another party for certain purpose one returnable basis. This term bailment is received from the French term baillier. It means to deliver or handing over. A bailment is conditional delivery of goods by a person to another for definite purpose and after the fulfillment of purpose; the goods delivered have to be returned. The essence of bailment is to change the actual possession of goods; it does not comprise the transfer of ownership of goods like sale. Its common illustrations are hiring of goods, furniture cycle, delivering of cloth to a tailor for making suit, delivering a car or scooter for repairing, delivering dress to dry cleaner, etc.

Section 25 of Contract Act, 2000 defines: A contract relating bailment shall be deemed to have been concluded in case any person delivers any property to another person on a returnable basis or for handing it over to any other person or selling it as ordered by him/her. The same section has provided that a deed must be execute while bailing any property worth more than Five Thousand Rupees.

Some Examples of contract of bailment

1.       A hires 60 chairs from B for using in marriage ceremony

2.       A gives his suit to B, a dry cleaner for washing

3.       A gives his motorcycle to B for repairing

4.       A gives his watch to be for repairing

5.       A hand over his cow to B, a veterinary doctor, for treatment.

Carriage of goods

Transport plays a vital role in economic development of a country. It facilitates the movement of goods and labour from one place to another place. The role of carriage is very important in the development of industry and commerce. In one hand, it helps to carry the raw materials and machines to the industry and on the other hand the raw materials and machines to the industry and on the other hand it carries the industrial and agricultural productions to the market. Thus, the carriage of goods from one to another within the country or from one country to another plays an important role in the commercial life modern world.

As being a necessary part of modern business, it is essential to regulate such business under legal framework. Therefore, every country of the world has made required legal framework to regulate carriage of goods. The goods are carried by land, sea or air, are considered as ht law of carriage. The contract of goods under the law of carriage plays very significant role for operating the business activities.

The Contract Act, 2000 has incorporated some provision about the carriage under Section 65 to 70. Section 656 is concerning to the definition and other Sections relating to the liabilities to the carrier. The Act has not made sufficient provisions for regulating the carriage. It has not classified the carrier as common and private. It does not mention about the goods carriage. In the addition to this Act, there are other Acts also relating in respect of carriage. More or less these all Acts also relating in respect of carriage. More or less these all the Acts have made some provisions for regulating it. The relevant Acts are given below:

1.       The civil Aviation Act, 2015

2.       The Internal Postal Act, 2019

3.       The Necessary Services Discharging Act, 2014

4.       The Nepal Airlines Corporation Act, 2019

5.       The Railway Act, 2020

6.       The Shipping Act. 2027

7.       The Vehicle and Transport Management Act, 2049

8.       The Multimodal Transportation of Goods Act, 2063

Introduction to Agency

Modern business, due to it’s widen coverage and nature, is becoming complex with the pace of time. Due to vast expansion, it is not possible for a person to carry on all the businessman transactions him/herself. The circumstance requires a businessman necessarily depend on other persons to carry on all the business and even carrying out the several transactions. It is necessary to delegate powers to another for performing the contractual work. Another person who acts on behalf of the businessman is known as agent. The person to whom the act is done, or who is so represented is called principal and agent called a contract of agency. A appoints B to sell his land on his behalf and B sells the land of A on behalf of A. Here, A is principal and B is his agent. The relationship between A and B is called agency. In other words, here is a contract of agency between A and B for performing certain work.

The contract of agency is a special nature of contract. It governs the special relationship between the two persons, namely the principal and agent. The matter of contract of agency is governed by the Commercial Regulation, 1993 in England, Contract Act 1872 in India. In Nepalese context Nepal Agency Act 2014 B.S Nepal Agency Regulation 2019 B.S and Contract 2000 are relevant. Basically the Contract Act 2000 has made some provision in relation to the contract of agency.

The Contract Act 2000 has defined the term contract of agency under the Chapter 8. The section 56 of the Act defines it as any person may appoint any other person as his/her agent to do anything on his/her behalf, except connected to anything his/her personal skills or to conduct his/her agent of may transaction with a thirdperson on his behalf or to represent himself to such person, or toestablish any kind of legal relation with the person appointing an agent and a third party, and incase an agent is so appointed a contract relating to agent shall be deemed to have been concluded.

General Rules of Agency

1.       Whatever a person competent to contract may do himself, he do through an agent, except for acts involving personal skills and qualifications. In fact, where the work to be done is absolute personal, no agent can be employed.

2.       He, who does through another, does himself. In other words, the act of agent are, for all legall purpose, the acts of principal.

Contingent Contract

On the basis of creation of obligation a contract can be classified into two fold, namely general contract and contingent contract. Contingent contract is also one of the important parts of contract that plays significant role particularly in the area of insurance or indemnity. It remains incomplete to the study of contract until knowing about the contingent contract.

Contingent means dependent or conational and such condition is of uncertain in nature. It means there is no certainty about something, which may or may not happen in the day to come. It is a contract in which the performance remains due. At the time of making of contract, parties are bound by legal relationship but no obligation is emerged at that time. Obligation always based upon the event which may or may not happen in future. Thus, it is a contract, the performance of which is dependent upon, the happening or non- happening of an uncertain event, collateral to such contract, A aggress to pay B Rs. 10,000 if B’s house will burnt. This is a contingent contract. Here is no certainty the house B will burnt at the time of contract and there is no obligation at the time of making contract.

A promise, under the contract to be performed, may be absolute or unconditional when promissory undertakes to perform it any time and there is no precondition for the creation of an obligation. A promise is conditional when performance is due only if an event, collateral to contract, does or does not happen in future. A contract, for an illustration, to pay certain amount of money on the expiry of a fixed duration or on the death of a person is not contingent contract because these events are of certain in nature. But a contract to pay certain money on the destruction of a house due to earthquakes a contingent contract because that contingency may or may not happen is uncertain.

Performance of Contract

A contract is formed for fulfillment not to breach. After the formation of a contract the stage of fulfillment comes before the parties. The contract is performed when both the parties do what they had agreed to do in contract. This is called the performance of obligations by its parties. When both the parties have performed the respective obligations, the contract is said to be discharged by performance. This is the most usual and expected mode of termination of contract since parties wanted to perform it at the time of inception. Parties bound to perform only that obligation as specified by the contract. So, they are supposed to fulfill their respective obligations. Therefore, fulfillment of respective promises by the concerned parties on a manner as designed in the contract without making any variation in its terms and condition is called performance or execution of contract. If one party performs his promise under the contract, he alone is discharged from his liability and acquires right of action against the other non-performing party. But it is minimum condition to take action against other party that the claiming party has to perform or is willing to perform his promise on hi side.

 Possibility of performance is one of the significant elements of valid contract. An agreement must be capable of being performed to be regarded as valid one. If an agreement is made containing impossible obligation such as to colour in the sky, is void from the time of its formulation. Performance means fulfillment or execution of promises of parties by themselves.

Promises bind the representatives of the promisor in case of death of such promise before performance, unless a contrarily intention appears from the contract.

Performance of contract is expected at the time of its formulation and it is important to carry oui the sound business environment between the parties. The importance of performance of contract can be mentioned as:

1.       Performance promotes the good relationship between the parties.

2.       The good performance encourages the parties to further transactions.

3.       Both the parties feel greater profit and lesser loss from the consequence of performance.

4.       The parties have no further risk of disputing and invoking remedies.

5.       Both the parties are standing in winning position since they got what they want.

6.       The performance opens the further opportunities of exploring new areas of transactions.

7.       The purpose of making contract is fulfilled by the performance as expectation, and nothing remain to do between its parties.

Free Consent

Consent is a state of mind of a contracting party that leads to such party to enter into contract. It is a willingness or permission of party to form a contract after being aware about the terms and condition of the contract. It is a judgment to place oneself as a contracting party made by the party concerned. The free decision to form a contract by the parties is known as free consent upon it. Parties of the contract must be free from any kinds of coercion, pressure, threaten, undue influence to make contract in respect of forming the terms and condition under that contract. The contract Act 2000 has not defined the term consent but the section 14 of the Indian Contract Act, 1872 has defined this term as two or more are said to consent when they agree upon the same thing in the same sense. This definition clarifies the meaning of consent as agreeing upon the same thing in the same sense. Being agreed to do or not to do something in the same sense taken by offered is called consent The Both parties agree upon same thing is the same sense they are said to be consent or making meeting of mind. It is known as consensus-ad-idem in English law. It is the same intention regarding terms and condition of the contract of both parties.

Section 10 of the Indian Contract Act 1872 has mentioned that all agreements are contract if they are made by free consent of the parties. Therefore, only consent is not sufficient to form a contract but also it must be made freely.

So above clarify about the free consent and for more info go to www.ideainfoe.blogspot.com

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