Pledge of goods
The pledge or pawn is one of the oldest types of security known to the law. Its essential feature is that the debtor delivers goods to the creditor as security for the debt. The ownership of the goods remains in the debtor, but the creditor is said to obtain a ‘special property’ 1 or ‘special interest’ 2 in the goods. In modern terminology we should no doubt say that the creditor has a security interest in the goods, for the creditor has a right to retain the goods until the debt is paid and, as we shall see, has a power of sale in some circumstances.
The pledge is not governed by any statutory provision unless the creditor is a ‘pawnbroker’. ‘A pawnbroker is one whose business it is to lend money, usually in small sums, upon pawn or pledge’, and the statutory definition includes every person who carries on the business of taking goods and chattels in pawn. Where the creditor is a pawnbroker within the statutory definition and the sum borrowed is £50 or less the transaction is