Lesson-6 on Credit

Question: What is Set-Off?

Answer:

 Set of is the right of a creditor to the total or partial merging of a claim against the counter claim of the debtor.

Question: What is Assignment?

Answer:

An assignment means a transfer of right property or debt(existing or future) by one person to another person.

Question: What are the types of Assignment?

Answer:

a) Legal Assignment

b) Equitable Assignment

 Question: What is bailment and its characteristics?

Answer:

Bailment is the delivery of goods by one person to another for some purpose, under a contract that the goods shall, when the purpose is  accordind , be returned or otherwise disposed of according to the directions of the person delivering them.

The essential characteristics of bailment are as follows:

i)           Bailment is always based upon a contract.

ii)         There can be a bailment of movable properties only, but money is not included in the category of movable goods.

iii)       Delivery of goods is essential for a contract of bailment. Delivery means transfer of possession, actual or constructive (symbolic), from one person to another.

iv)       In bailment, ownership is not transferred, but only special right of retaining the goods for the security is passed on to the lender until payment of debt.

v)         Goods are delivered upon a condition that  on accomplishment of the purpose the very goods in their original form are to be returned by the bailee or are otherwise to be disposed of according  to the directions of the bailor.

Question: Who can create Pleadge?

Answer:

Anyone who is in legal possession of the goods can pledge them. The parties who can make a valid pledge are:

a)     The owner of the goods himself.

b)    Mercantile agent (Section 178 of Contract Act 1872)

c)     A person, who has obtained possession of goods by fraud, mis-representation  coercion or undue influence, such person shall create a valid pledge provided the following conditions are fulfilled.

i)   The contract has not been rescinded before he enters into the contract of pledge.

ii) The pledge acts in good faith without knowledge of the defective title of the pledger. This principle does not apply to a thief who has no title to goods and can give none.

d)    Joint owner with the consent of other co-owner (s).

e)     A person who, with the consent of the seller, obtains possession of the goods or documents of title to the goods for which the title has not yet passed to that person provided the pledge acts in good faith and without notice of the pledger’s defect in the title therto.

f)      A seller who is in possession of the goods after selling them, can create a valid pledge provided the pledge must act in good faith and without notice of the previous sale.

g)    A pledge may repledge the goods for borrowing money to the extent of his interest in the said goods.

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