A pledge agreement is a contract between the debtor and the creditor, as per which the debtor transfers a personal possession to the creditor in return of the loan sanctioned by the latter. This agreement reduces the financial risk that the creditors have to face.
Usually, a third party is involved in these types of agreements and acts as a middle man between the borrower and the lender. The pledge agreement is signed by both the pledgor and the pledgee, and outlines different essential information’s such as the details of the security deposit, the time period provided for repayment, the date of termination of the agreement and the conditions in case of failure in repaying the debt amount.
As per the terms and conditions, the pledge agreement cannot be amended and restated until the authorized signatory of the collateral agent. Any amendment would only be effective, if it is given with the authentic reasons and purposes.
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