A general lien is a right of one person to retain any property or goods which are in his possession belonging to another person until the promise or liability is discharged.
It is a right to retain the property belonging to another for a general balance of the account.
A general lien is available to bankers, factors, attorneys of High Court and policy brokers.
Example of General Lien;
A has two accounts in a bank. In savings bank account, he has a credit balance of $500.
In current account, lie has an overdraft of $1,000. The bank can exercise the right of lien on the savings account for the amount due on the current account.
It should be noted that right of the lien will not apply to properties deposited for safe custody or a specific purpose.
- This right can be exercised against any property belonging to the other party in possession of the person exercising the right.
- This right can be exercised for a general balance of the account, i.e., for any amount due.
- This right is available only to bankers, factors wharfingers, attorneys of High Courts and policy brokers.
A lender of last resort is an institution which is willing to offer loans as a last resort. Such institution is usually a country’s central bank.
A central bank offers an extension of credit to financial institutions experiencing financial difficulties which are unable to obtain necessary funds elsewhere.
The main task in front of the lender of last resort is to preserve the stability of the banking and financial system by protecting individuals’ deposited funds and preventing panic-ridden withdrawing from banks with temporary limited liquidity.
For more than century and a half, central banks have been trying to avoid great depressions by acting as lenders of last resort in times of financial crisis.
This act provides liquidity at a penalty rate.
Subsequently, through open market operations, it lowers interest rates on safe assets. And finally, this process involves direct market support.
Commercial banks usually resort to lender’s help only in times of crisis because such actions indicate financial difficulties.
Loans may be granted not only to commercial banks but also to any other eligible financial institution, even private companies, which is considered highly risky.
There are wide-spread arguments against. Such extension of credit can, in fact, conceal the true financial state of an institution, and prolong its failure. Eventually, the body fails to cure the current financial crises and instead creates new ones.
A particular lien is available only against the particular property in respect of which the bailee has expended labor and skill.
A bailee is entitled to a particular lien only.
Example of Particular Lein
A gives two cars – An Ambassador and a Fiat, for repairs to B. B repaired only the Ambassador car.
A took delivery of the Ambassador car without making the payment of the repair charges. B cannot retain the Fiat car for the repair charges due in respect of the Ambassador car.
It should be noted that lien is possessory; hence if possession is lost, the lien is also lost.
Conditions for Exercise of Particular Lien
To exercise a particular lien, the following conditions are essential:
- The right of lien can be exercised only when the bailee has expended his labor and skill on the goods bailed. Therefore, mere custody of goods does not give a right of lien.
- The right of lien can be exercised only when the work has been completed in lime. If the work has not been completed in lime, the lien cannot be exercised.
- The right of lien can be exercised only if the payment is due. In case the payment is to be made on delivery, but at a future date, then the lien cannot be exercised.
Read: Types of Bank Credits