Bailment and Pledge Questions and Answers

Answer: D

The key gives Both (A) and (B).

Section 169 of the Indian Contract Act lets a finder sell the goods when the owner cannot with reasonable diligence be found, or refuses the finder's lawful charges, in two situations: when the thing is in danger of perishing or losing most of its value, and when the lawful charges of the finder amount to two-thirds of its value.

The key reads 'Both' as both of these situations being recognised grounds of sale. Either ground is enough on its own, so 'Either (A) or (B)' expresses the same law; the key prefers the option that names both grounds.

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.