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Section 178 permits a pledge by a mercantile agent (with possession and consent of the owner) provided that:

AThe owner is physically present during the pledge
BThe pledge is in writing and registered
CThe pawnor pays additional consideration to the principal
DThe pawnee acts in good faith and has no notice of the agent's lack of authority
Answer & Solution
Correct answer: D. The pawnee acts in good faith and has no notice of the agent's lack of authority
1. Section 178 deals with pledge by non-owners — specifically mercantile agents. 2. The agent must have the owner's consent to possess the goods or documents of title. 3. The pawnee's protection depends on acting in good faith and without notice of the agent's lack of authority. _Source: ICMAI BoS CMA Foundation Paper 1 (Business Laws), Module 2 §2.7 (Indemnity/Guarantee/Pledge/Agent), p. 91-99_
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