- 6 Marks
Question
Mr. Agbons pledged his tricycle to secure a loan of N200,000 from Chief Osas, a moneylender. Mr. Agbons promised to repay the loan on December 31 and recover his tricycle from Chief Osas. However, Chief Osas sold the tricycle on December 28 when he learned that Mr. Agbons had relocated to his village to be a farmer and might not return again. On the morning of December 31, Mr. Agbons came to meet Chief Osas to repay the N200,000, only to learn that the tricycle had been sold by Chief Osas. Mr. Agbons is aggrieved and intends to sue Chief Osas for the replacement of his tricycle.
Required:
Advise Mr. Agbons, stating the legal principle involved.
Answer
The legal principle involved is the nature of a pledge as security for a loan. When Mr. Agbons pledged his tricycle, he transferred possession of the tricycle to Chief Osas as security while retaining ownership. Chief Osas does not have the right to sell the pledged property without the borrower’s consent or a legal basis.
In this scenario, Chief Osas acted unlawfully by selling the tricycle before Mr. Agbons had the opportunity to repay the loan. Therefore, Mr. Agbons is within his rights to sue Chief Osas for the recovery of his tricycle or its equivalent value.
- Tags: Legal Principles, Pledge, Security Interests
- Level: Level 1
- Topic: Contract Law
- Series: MAY 2023
- Uploader: Theophilus