Effects Of Pledge

Question 1

What are the 4 effects of Pledge?

Answer 1

1. Limited real right
2. Debtor defaulting and Foreclosure
3. The pledgee’s preference in general
4. Insolvency of the debtor

Question 2

In which of these effects is the debtor solvent?

Answer 2

1-3

Question 3

What does it mean for the creditor to have a limited real right of the asset?

Answer 3

They have the obligation to care for the item, but they do not have the right to use the item

Question 4

Who pays for the cost of caring and maintenance of the item?

Answer 4

The pledgor

Question 5

What happens if the pledgee loses possession of the item or its stolen

Answer 5

Then they lose the security

Question 6

If the debtor defaults and the NCA applies, then what must the creditor do?

Answer 6

Deliver them a sec 29 (1) (a) notice before they can sue on the debt

Question 7

Is paratie executie allowed in pledge and why?

Answer 7

Yes, because the pledgee is already in possession, so you’re not dispossessing without a court order

Question 8

What is the Pledgee’s preference?

Answer 8

If another unsecured creditor wants to execute against the asset, they can BUT the pledgee must be paid whatever is owed to them first

Question 9

What does it mean to have a secured claim?

Answer 9

They will get paid first out of the insolvent estate