13.2 Pledge (Pawn) / Collateral

(a) Meaning and basic features A pledge (pawn) is a bailment of goods as security for payment of a debt or performance of a promise: the pawnor/pledgor delivers possession of movable goods to the pawnee/pledgee, who holds until the debt is paid or the promise performed. "Pawn" the older popular word, "pledge" the technical one. The Nepali frame: the Muluki Civil Code 2074, Part 5, Chapter 9 (Contracts of Pledge or Deposit). Everyday forms: gold ornaments pledged for a loan; share certificates and fixed-deposit receipts pledged to banks; goods pledged with money-lenders; warehouse-receipt financing; vehicle documents deposited with financiers. Basic features (the five): Delivery of possession — actual (ornaments handed over), constructive (the warehouseman attorning to the pawnee), or symbolic (the godown's key, the endorsed document of title — mercantile practice's staple); Specific, existing, movable goods — immovables take mortgage instead; intangibles are pledged through their documents; Security purpose — a debt or performance must back the delivery; Ownership stays with the pawnor — only possession and a security interest shift; Redemption right — the pawnor reclaims on paying what is due (the pawn's essence: a security, not a sale). (b) Rights and duties of pledger and pledgee Pawnor's rights: to redeem the goods on payment of the debt, interest and lawful expenses (even after default, before an actual sale…