Business Law

Difference Between Lien And Pledge Under Indian Contract Act

Difference Between Lien And Pledge – Hello friends, today we are going to share Difference Between Lien And Pledge but before that we will share the meaning of both Pledge and Lien.

  • Pledge – The bailment of goods as security for payment of a debt or performance of a promise is called pledge’. The bailor is, in this case, called the ‘pawnor’ or ‘pledger’ and the bailee is called the ‘pawnee’ or ‘pledgee’.
  • Lien – It means the right of one man to retain that which is in his possession belonging to another until some debt or claim of the person in possession are satisfied.

Difference Between Lien And Pledge

Sr. No.BasisLienPledge
1OriginThe origin is a statute.The origin is a contract.
2ObjectThe object is to retain the goods or property in possession of the holder until all the claims of the holder (of the lien) are satisfied.The object is to provide security for the payment of a loan or the performance of a promise.
3Right Of SaleThe holder of a lien can only retain the goods till his demands are met. He cannot sell the goods that he retains.On the non-payment of a debt or non- performance of a promise,the pawnee has the right to sell the goods.
4TerminationThe lien terminates as soon as the holder releases the goods under his retention.Termination is only on the payment of a loan or the performance of a promise Even if the pawnee returns the goods before the payment of a debt,his right does not terminate.

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