Discussion
A Pledge by now owner is not valid is an universally accepted Principle of law but Section 178 of the Indian Contract Act, 1872 makes it valid if it was made by :
Answer: C
Section 178 validates a pledge made by a mercantile agent.
Ordinarily no one can pledge goods he does not own (the paper prints 'by now owner' for a non-owner). Section 178 of the Indian Contract Act makes an exception: where a mercantile agent is, with the owner's consent, in possession of goods or documents of title, a pledge he makes in the ordinary course of business is as valid as if the owner had authorised it, provided the pledgee acts in good faith and without notice of his lack of authority.
Factors, auctioneers and bankers are not the persons the section names; a factor may happen to be a mercantile agent, but the section is framed in terms of mercantile agents.
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