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Chapter 4 (Characteristic (Easy to value, Easy to dispose or sell, Easy to…
Chapter 4
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Pledge
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Involves the actual or constructive delivery of possession of goods by one person ( pledgor ) to another person such as bank ( pledgee )
Lien
A right of one party over the property of another until the later or debtor fulfills certain obligation owed to the lien holder / creditor.
Lien holder does not have right to sell the property and apply the proceeds towards discharge of the debt in the event of default by the holder
Security - Some right / interest in property given to creditor so that in the event of debtor failing to pay his debt and when due the creditor may reimburse himself for the debt out of the property charged
Guarantee - According to S 79 of Contract Act , guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. 2 types are specific guarantee and continuing guarantee
Indemnity - According to S 77 of The Contract Act, indemnity is a contract by which one party promise to save the other from loss. Parties involve is guarantor and creditor
Contract of UBERRIMAE FIDEI - Also known as " Utmost Good Faith ". Also to be valid requires the parties to it to disclose all Material facts in their possession.
Land - The surface of the earth and all substance forming that surface. 2 form of land are freehold land and leasehold land
Debenture - Term used to apply to certain types of document evidencing a debt of a company. 2 types are fixed charge and floating charge
Stock and shares - A share is not a sum of money but is an interest of a shareholder in the company measured by sum of money. 2 types are bearer shares or securities and registered shares
Life insurance policy - A contract between an insurance company ( the insurer ) and its customer ( the insured ). The insured agrees to pay to insurer certain sums of money known as premium
Letter of Hypothecation - When bank accepts goods a s security such as raw materials for an advance or loan but unable to obtain possession of the goods to them by which ownership may be transferable, bank should take from the owner of the goods a letter of hypothecation