Pledge Flashcards
Art. 2085, The following requisites are essential to the contracts of pledge…
Art. 2085. The following requisites are essential to the contract of pledge…
- That they be constituted to secure the fulfillment of a principal obligation;
- That the pledgor … be the absolute owner of the thing pledged…
- That the persons constituting the pledge … have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose…
What is the essence of a pledge?
Yes. Art. 2087. It is also of the essence of these contracts that when the principal obligation becomes due, the things in which the pledge … consists may be alienated for the payment to the creditor?
Must a thing pledged be in the possession of the creditor or third person?
Yes. Art. 2093. In addition to the requisites prescribed in Article 2085, it is necessary, in order to constitute the contract of pledge, that the thing pledged be placed in the possession of the creditor, or of a third person by common agreement.
Are the provisions on pledge applicable to pawnshops?
Art. 2123. With regard to pawnshops and other establishments, which are engaged in making loans secured by pledges, the special laws and regulations concerning them shall be observed, and subsidiarily, the provisions of this Title.
What is a pledge?
A pledge (or conventional pledge), form the Roman law pignus, is a real security transaction constituted to secure the fulfillment of a principal obligation by the absolute owner (the pledgor) of movable property who has free disposal of the property, and in the absence thereof, is legally authorized for hte purpose; perfected by the delivery of the movable property to the creditor or to a third person; subjecting the pledge to the condition that when the principal obligation becomes due, the collateral may be alienated for payment to the creditor
Must a pledge appear in a public instrument?
Art. 2096. A pledge shall not take effect against third persons if a description off the thing pledged and the date of the pledge do not appear in a public instrument.
What may be the object of a pledge?
Art. 2094. All movables which are within commerce may be pledged, provided they are susceptible of possession.
Art. 2095. Incorporeal rights, evidenced by negotiable instruments, bills of lading, shares of stock, bonds, warehouse receipts and similar documents may also be pledged. The instrument proving the right pledged shall be delivered to the creditor, and if negotiable, must be indorsed.
May a future debt be secured by a pledge?
Yes. A pledge may exceptionally secure after-incurred obligations so long as these debts that are yet to be contracted (or future debts) are accurately described. [Somera]
Is ownership transferred in a contract of pledge?
No. Art. 2103. Unless the thing pledged is expropriated, the debtor continues to be the owner thereof. Nevertheless, the creditor may bring the actions which pertain to the owner of the thing pledged in order to recover it from, or defend it against a third person.
Does the pledge generally cover the interest earned by the thing pledged?
Art. 2102. Unless there is a stipulation to the contrary, the pledge shall extend to the interest and earnings of the right pledged.
In case of a pledge of animals, their offspring shall pertain to the pledgor or owner of animals pledged, but shall be subject to the pledge, if there is no stipulation to the contrary.
Is the pledgor obliged to warrant the thing pledged?
Yes. Art. 2101. The pledgor has the same responsibility as a bailor in commodatum in the case under Article 1951.
Art. 1951. The [pledgor] who, knowing the flaws of the thing [pledged], does not advise the [pledgee] of the same, shall be liable to the latter for the damages which hey may suffer by reason thereof.
May the pledgee cause the sale of the thing pledged even if the principal obligation was not yet due?
Yes. Art. 2108. If, without the fault of the pledgee, there is danger of destruction, impairment, or diminution in value of the thing pledged, he may cause the same to be sold at a public sale. The proceeds of the auction shall be a security for the pincipal obligation in the same manner as the thing originally pledged.
How may the creditor proceed with the foreclosure of the thing pledged? May the creditor appropriate the thing pledged?
Art. 2112. The creditor to whom the credit has not been satisfied in due time, may proceed before a Notary Public to the sale of the thing pledged. This sale shall be made at a public auction, and with notification to the debtor and the owner of the thing pledged in a proper case, stating the amount for which the public sale is to be held.
If at the first auction the thing is not sold, a second one with the same formalities shall be held;
and if at the second auction there is no sale either, the creditor may appropriate the thing pledged. In this case he shall be obliged to give an acquittance for his entire claim.
May the pledgor sell the thing pledged while it is in possession of the pledgee?
Yes. Art. 2097. With the consent of the pledgee, the thing pledged may be alienated by the plegor or owner, subject to the pledgee. The ownership of the thing pledged is transmitted to the vendee or trransferee as son as the pledge consents to the alienation but the latter shall continue in possession.
