According to the prevailing view, when a pledge is provided over fungible (and especially consumable) items, such as cash, precious metals, or bearer securities, the lender acquires ownership of the items, which the pledgor correspondingly loses. In this case, the term “anomalous pledge” is traditionally used. The present study examines the legal nature of the anomalous pledge and concludes that it does not constitute a pledge in the sense of the Civil Code, while from a doctrinal perspective it has no independent existence compared to a security transfer (when it concerns security over property) or a monetary guarantee (when it concerns security over money). The anomalous pledge does indeed constitute a special case of a security transfer or a monetary guarantee, but doctrinally its particular characteristics neither require nor permit any special legal treatment. The full set of rules that generally apply to security transfers or monetary guarantees also applies specifically to the anomalous pledge. Conversely, those Civil Code rules regarding pledges that do not apply (even analogically) to security transfers or monetary guarantees also do not apply to the anomalous pledge. However, beyond being unnecessary, the construct of the anomalous pledge is misleading and should be completely abandoned, even when used purely descriptively. This is because, under this construct, two essentially dissimilar forms of security — on the one hand, the security transfer of property and, on the other, the monetary guarantee — are inappropriately compressed into a single concept, even though their distinct legal nature and specific characteristics clearly require different treatment regarding the rules that govern them. Conversely, forms of security that are clearly similar are unjustifiably treated differently: Why should the delivery of physical money to secure a claim (anomalous pledge) be treated differently from the (far more common in practice) simple transfer of a credit to a bank account for the same purpose (monetary guarantee)? The present study demonstrates that the two cases should be treated uniformly, since both essentially constitute the provision of security over the pledgor’s claim against the pledgee for the return of the amount given as security.

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The following is the full study as published in the legal journal Chronicles of Private Law

Anomalous Pledge – Published version