The owner of the goods can always make a valid pledge but in the following cases pledge made by the non owner is also valid. (Section 38 of Nepal Contract Act, 2056 and Section 178, 179 of Indian Contract Act, 1872.)
Pledge by mercantile agent
Mercantile agent can keep some goods on pledge, on the consent of his principal. It can be valid if it was made on good faith even if he is not the owner of the goods pledged. According to the Section 178 of Indian Contract Act, 1872; Pledge by a mercantile agent, who is not authorized by the owner of goods, will be valid if it was made on the ground of the good faith. e.g. Railway receipt or bill lading can make a valid pledge of the goods while acting in the ordinary course of business.
Pledge by person in possession under voidable contract
A pledge may be made by a person who has obtained some goods under the voidable contract. It can be a valid pledge if:
- The Pawnee acts in good faith and he has no notice about the defective title of the pawner.
- The contract is not made void before the contract of pledge.
Pledged by erson having limited interest and right [Section 38 (3) of NCA]
When, Pledger has a limited right or interest, the pledge will be valid only to the extent of his rights over the goods. Example, 'A' delivers a suit to 'B' the tailor master for making a suit and agrees to pay Rs. 1,500/- as sewing charges. 'B' pledges the suit with for Rs. 3,000/-. The pledge is valid to the extent of 'B's interest in the suit, namely, Rs. 1,500/- (sewing charges). 'A' can, therefore, recover the suit only on paying Rs. 1,500/- to 'C', the pledge.
Pledge by buyer in possession of goods under an agreement to sale
When a buyer has got possession of goods under a contract of sale or even before payment he can make a valid pledged; which should be acted on the ground of good faith.
Pledge by co-owner in possession
Where there are several joint owners of goods, one of the co-owner may be sole possession with the consent of other co-owner may make a valid pledge of the goods.
Pledge by the same seller after sale
If a pledge is made in good faith by the same seller in possession after the sale it will be valid.