Multiple choice

Which of the following statements is correct?

  1. Lien is the right to deliver possession

  2. Hypothecation is the right to possession

  3. To constitute a pledge, delivery of possession to the pledge is necessary

  4. Pledge and hypothecation are the same
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Lien is a right to keep possession of property belonging to another person until a debt owed by that person is discharged. To constitute a pledge, delivery of possession, actual or constructive, to the pledge is necessary. If the person entitled to the security is in possession of the movable property, it is a pledge, carrying with it a power of sale on default of payment on the due date or if no date is fixed after notice. No particular formality is required to be done regarding creating charge on pledged movable property. 

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