Definition of Bailment

What is a bailment, purposes of bailment, elements of a bailment, rights and responsibilities of a bailee, termination of a bailment, real life cases of responsibility under bailment, hotel loses guest’s valuable jewelry, related legal terms and issues.

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Rights and Duties of Bailee and Bailor in a Contract of Bailment.

assignment on contract of bailment

Definition of bailment – “A ‘bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’.”

According to section 148 there are two essentials of bailment;

  • Delivery of goods- Delivery of possession of goods from one person to another.
  • Return of goods after the purpose is achieved, or their disposal according to the bailor’s directions.

Section 149 deals with actual and constructive delivery-

Actual delivery – When there is a physical transfer of possession of the goods.

Constructive delivery – when there is no physical transfer of possession, but something is done which has the effect of putting them in possession of the bailee.

For instance, When X goes out of town, he requests his neighbor Z to keep an eye on his car and hands him the keys. Though Z does not actually hold the car in his premises, but the act of handling over of the keys constitute delivery of possession of goods from X to Z hence, creating a relationship of bailor and bailee.

Rights and Duties of Bailee and Bailor in a Contract of Bailment .

(A Bailor’s duty is a bailee’s right and a bailee’s duty is bailor’s right.)

Duties of bailee (Bailor’s right);

A bailee has to observe the following duties:

  • Duty to take reasonable care of the goods bailed. (Section 151-152)

According to section 151- A bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of same bulk, quality and value as the goods bailed.

This section lays down uniform duty of care for every kind of bailment, whether the same is for reward or gratuitous.

Given below are the cases in which bailee failed to take reasonable care and was held liable;

  • Union of India v. Udho ram & sons.

Facts- Certain goods were consigned by M/s Radha Ram Sohan Lal from Calcutta to Delhi by rail. Some of the articles out of this consignment, having been stolen during transit, the same were not delivered to the plaintiffs. The plaintiffs brought an action to recover compensation for the same. The trail court found that the wagon in which the goods were loaded was properly rivetted and sealed when the train left Howrah at 1:30 am, but seals and rivets of one of the doors of the wagon were found open when it reached Chandanpur station after 2 hours. The theft took place at an in-between point when the train stopped there for the home signal at 2:05 am for about 15 minutes. It was found that railway protection police were also there in the guard’s van.

Issues before the court –

  • Whether the railway authorities were liable for the loss of the goods in transit?
  • Whether the railway authorities were in the position of the bailee and liable to indemnify for the loss caused?

Judgement – It was held that the railway did not take due care. Firstly, they did not prove from record that the railway protection police which escorted the train was sufficient in strength, and secondly, that unlike a prudent man, the railway protection police did not keep an eye on wagons, particularly when the train stopped, to prevent the theft of the goods. Hence, the defendants were held liable.

  • Ultzen v. Nicholas.  

Facts- The plaintiff went to defendant’s restaurant for the purpose of dining there. When the plaintiff entered the restaurant, a waiter took the plaintiffs coat from him without being requested to do so, and hung it on a hook behind the plaintiff. When the plaintiff wanted to leave, he found that the coat has been lost.

Judgement – It was held that the defendant was the bailee of the coat as the servant had assumed the possession of the same and he was, therefore, liable for its loss which was due to his negligence.

  • Calcutta credit corporation ltd v. Prince peter of Greece.

  Facts- a car received for repairs by an automobile garage was damaged by fire. The garage was a pucca structure, walled by wooden planks. In garage were put not only vehicles containing petrol but also other combustibles like thinners and paints. The garage was portioned by wooden walls and a part of it was allowed to be used for cooking purpose. There was inadequate arrangement for extinguishing the fire. The room in which plaintiffs’ car was kept could not be opened for 15 minutes after the fire was noticed, as the keys of the rooms were not available.

Judgement – The defendants had not taken due care and they were held liable.

  • In this case the defendant i.e., Bailee cannot be excused by pleading that he had taken similar care of his own goods or his own goods have been lost or damaged along with those of the bailor or that the bailor had the knowledge that his goods were being kept in a negligent manner. The court held that the bailee has to take care as a man of prudence or reasonable care.

Section 152 – According this section if the bailee, has taken the amount of care described in section 151 than he cannot be held liable for any loss, destruction or deterioration of the thing bailed, unless there is any special contract.

Given below are the cases in which bailee took reasonable care and was not liable;

  • Gopal Singh Hira Singh v. Punjab National Bank.

Facts- The plaintiff firm pledged certain goods with the Jahania office of the defendant bank in 1946. After the partition of the country in August, 1947, that area where the branch was situated became part of Pakistan. The plaintiff firm bought an action for the recovery of more than 2 Lakh rupees, being the value of goods pledged and interest thereon, because the bank failed to return the goods pledged to the plaintiff firm, who had migrated to India. To avoid liability, the defendant bank pleaded that the goods pledged had been plundered and destroyed by the rioters in the course of riots which happened to be there at that time.

Judgement – The court found that as the conditions prevailed at that time on the partition of the country, there was insecurity of the life and property of the non-Muslim population under the compulsion of adverse circumstances, there was extraordinary breakdown of law and order machinery, and compulsive migration of mass of these persons from Pakistan to India. That was also true about institutions manned by Hindu staff, as was the defendant bank. It was held that under these circumstances, since the property with the bank had to be left uncared there, the bank could not be considered to be guilty of any negligence. It was observed that “the obligation of the bank to take care of the pledged goods must be seen in the context of the extraordinary situation that developed.”

  • Atul Mehra v. Bank of Maharashtra.

Facts- Atul Mehra had hired locker No. 75 on 15 th  January 1986 at Bank of Maharashtra. He had deposited jewellery in the said locker the value of which he claimed as Rs 4,26,160. The strong room in which the locker was located was broken in and the contents thereof were stolen by miscreants. On 9 th  January 1989 an FIR for the same was filed. It was stated in the FIR that all other 43 lockers in the strong room were also broken in and contents thereof stolen.

Judgement – The court held that exclusive possession of the goods is sine qua non for bailment. Therefore, mere hiring of a locker would not be sufficient to constitute a contract of bailment as provided under Section 148 of the Indian Contract Act, 1872. Further, the court said that the question of reasonable care and quantum of damages would arise only after it has been shown that actual exclusive possession of the property was given by the bailee to the bailor, i.e. the bank. Since the bank was not aware of the contents of the locker, hence it was impossible to know the quantity, quality or the value of the jewellery that was allegedly kept in the locker at the time when the robbery occurred. In this case, it was held that there was no exclusive possession to the bank hence no compensation was allowed to the plaintiff.

  • If the bailee has taken due care and the damage to the goods is because of the circumstances beyond his control, he will not be liable for the loss.
  • Sundar Lal v. Ram Swarup.

  Facts- A wooden shop was hired under a written agreement that the shop will be returned in the same condition, and the hirer will be liable to any loss or damage to it. The shop was burnt by the mob during the communal riots in the city.

Judgement- It was held that since the destruction of the shop was due to no negligence on the part of the hirer, he was not liable for the loss.

  • Duty not to make unauthorized use of the goods bailed. (section 153-154).

When the goods have been bailed for a particular purpose, the bailee is supposed to use them only for that purpose and none else. If he makes unauthorized use of the goods bailed, there are two remedies available to the bailor:

(i) The bailor may terminate the bailment;

According to section 153 If the bailee make unauthorize use of goods or uses the goods which is inconsistent with the conditions of bailment, then the bailor has the option to terminate the bailment and claim back the goods.

Illustration- A lets to B, for hire, a car for his own use. B lends the car to C for commercial purpose. A can terminate the bailment.

(ii) The bailor may recover compensation for the loss caused due to unauthorized use of goods;

According to section 154, If the bailee makes such use of goods which is contrary to the conditions of bailment, and there happens any damage to the goods due to such unauthorize use, the bailee is liable to compensate bailor for such loss.

Illustration- A hires a car from B for travelling to Delhi but instead went to Mumbai. The car met with an accident. A is liable to compensate B for loss.

  • Duty not to mix bailor’s goods with his own goods. (section 155-157).

Section 155- Mentions that Bailee, with the consent of the bailor, can mix bailor’s goods with his own goods and in such case, both shall have an interest in proportion to their respective shares, in the mixture produced.

If the bailee without bailor’s consent mixes bailor’s goods with his own goods, there arises two possibilities.

Section 156 – When the goods can be separated;

When the mix goods ca be separated, both remain the owners in accordance with there respective shares. The bailee has to bear the expenses of separation of goods and also for any damage arising from the mixture.

Section 157 – When the goods cannot be separated;

If the nature of the goods is such that the bailor’s goods cannot be separated from those of bailee’s, then it is deemed to be the loss of goods and bailor can recover compensation for the same.

  • Duty to return the goods upon the accomplishment of the purpose. (Section 160-161).

Section 160 – According to this section “It is the duty of the bailee to return, or deliver according to the bailor’s directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished.”

Section 161 – “If by the fault of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time.”

If the bailee is not in the position to return the goods bailed to him, for instance, when they are lost due to the fault of his servants or anybody, then it is bailee’s responsibility for such loss.

  • Duty to return the bailor the increase or profit on the goods bailed. (Section 163)  

According to this section “In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed.”

For example- A leaves a cat in the custody of B to be taken care of. The cat gives birth to 5 kittens. B is bound to deliver the kittens as well as the cat to A.

Rights of Bailee (Bailor’s duty)

The bailee of the goods has the following rights;

  • Right to recover necessary expenses incurred on bailment. (section 158)

Section 158 – Some numeration has to be paid to the bailee for services he renders in respect of them, he has a right to recover the same, or to exercise the right of lien in respect of such goods until he receives the necessary payment.

For instance, A leaves his horse with his neighbor, B, for safe custody foe one week. B is entitled to recover the expenses incurred by him in feeding the horse.

  • Right to recover compensation from the bailor. (section 164)  

“The bailor is responsible to the bailee for any loss which the bailee may sustain by reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions respecting them.”

  • Right of lien on the goods bailed. (section 170-171)

Lien is the right of the bailee under which the bailee can retain the goods of the bailor, and refuse to deliver them back, until the due remuneration or amount due is paid.

The Act recognizes two kinds of lien;

  • i) Particular lien; and
  • ii) General lien.

The right of ‘particular lien’ entitles the bailee to retain those very goods for the service regarding which the remuneration is due. The ‘general lien’ entitles the bailee to retain the goods of the bailor for a general balance of account.

         .        DR. RK BANGIA, INDIAN CONTRACT ACT, (15 TH Ed, ALA, 2009)

  • https://indiankanoon.org/doc/1240329/
  • Jahnvi Shah. Atul Mehra v. Bank of Maharashta- case study on Bailmrnt under Indian Contract act. 26/09/18. https://blog.ipleaders.in/bailment-under-the-indian-contract-act/

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assignment on contract of bailment

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Indian Contract Act

Home / indian contract act, contract of bailment,  02-nov-2023.

  • High Court Of Delhi
  • Indian Evidence Act,1872 (IEA)
  • Kerala High Court
  • Supreme Court

Introduction

  • Bailment is an agreement that could be oral or written mutually agreed upon between the person giving possession and the person taking possession, which might involve consideration.
  • For example, A delivering his car for service at the service center is an example of bailment.
  • Illustration: If A gives his car to B, his neighbor, for 10 days, but at the same time he keeps one key with himself and during this period of 10 days he used to take the car. Now this will not be a case of bailment as A is keeping control over the property bailed.

Essentials of Bailment

  • Actual delivery may be made by handing over something to the bailee .
  • Constructive or symbolic delivery may be made by doing something which has the effect of putting the goods in the possession of the intended bailee.
  • Delivery of goods should be made for some purpose and upon a contract that when the purpose is accomplished the goods shall be returned to the bailor.
  • Bailment of goods is always made for some purpose and is subject to the condition that when the purpose is accomplished the goods will be returned to the bailor or disposed of according to his mandate.

Kinds of Bailment

On the basis of reward

  • The bailment of products without any charges or reward is Gratuitous bailment. In this type, there is no requirement to pay any charges by the bailee for the bailment.
  • The bailment for some reward or charges is non gratuitous bailment . It is required to pay some charges to the bailor by the bailee.

On the basis of benefit

  • Bailment contract made for the exclusive benefits of the bailor.
  • Bailment made for the exclusive benefits of the bailee.
  • Bailment made for mutual benefits of both bailor and bailee.

Duties of Bailor

  • Disclose the Facts- The bailor must disclose all the facts of the goods delivered to bailee. It was defined under Section 150 of the Indian Contract Act of 1872.
  • To Bear all the Expenses - The bailor must pay the ordinary expenses to bailee. If there are any extra expenses, he is bound to pay the extraordinary expenses.
  • To Indemnify the Bailee- The duty to indemnify the bailee refers to the responsibility of the bailor to compensate the bailee for any loss, damage, or liability incurred during the period of bailment. It is an essential aspect of a bailment relationship, where the bailor entrusts their property to the bailee for a specific purpose.
  • Compensation for Premature Termination - It is the duty of the bailor to compensate the bailee if the bailor has terminated the bailment ; in case of incurring any loss, then it is the duty of the bailor to compensate.
  • To Take Back the Goods- The bailor must take back the goods from the bailee when the specific purpose has been fulfilled.

Duties of Bailee

  • Duty to take care of goods - Bailee must take care of the goods until he returns the goods to the bailor. It means bailee has to take reasonable care of the bailed property. This means the bailee has to protect the bailed property from damage, theft, and any harm that may occur during the period of bailment.
  • Duty to use the property for the agreed purpose - The bailee must use the bailed property only for its entrusted purpose. Without the consent of the bailor, if he deviates, it would lead to the liability of the bailee .
  • Duty to not mix the property - The bailee is responsible for not mixing the bailor's goods with the other goods. If the goods are mixed , he will be held liable if the goods are unable to separate. If the goods can be separated , the bailee will bear the expenses to separate the mixed goods.
  • Duty to return the property- If the purpose of the bailment is fulfilled upon the agreed period, the bailee must return the property to the bailor.
  • Duty to render Accounts - When the bailor approaches the bailee for information regarding the status of the property bailed and the condition of the property, the bailee must provide accurate reports of all transactions connected to the bailment and the bailee is required to maintain correct records.

Rights of Bailee

  • Right to Possession- One of bailee's rights is to have possession of the goods that are subject to the matter of the ailment. But the right to possession is limited. The Bailee has to use the goods only for a specific purpose, not for any other purpose, without the consent of the Bailor.
  • Right to Lien - The bailee has the right to lien, which means the bailee can take back the possession of the goods bailed by the bailor until the charges are paid in respect of the goods. This right would be applicable when there is a legal contract between the parties, i.e., a contract of bailment.
  • Right to Recover Compensation -If the bailor does not disclose any facts , then any expenses incurred by the bailee, the bailee has the right to compensate for the damages he incurred.

Rights of the Bailor

  • Right to terminate the contract - The bailor has the right to terminate the contract before the purpose of the bailment has been completed. But the bailor has to compensate the bailee for any loss incurred due to termination of bailment.
  • Right to take the goods back - The bailor has the right to take back the goods after the purpose of the bailment has been completed in a specified time if mentioned.
  • Right to Sue - The bailor has a right to sue the bailee in case of breach of contract. If the bailee fails to fulfill the contract terms , then the bailor can sue for the breach of contract.
  • In this case, the Supreme Court decided that one of the very requirements of bailment is the delivery of goods to the bailee , where there is no change of possession , there is no bailment.
  • This case is related to a parcel which was carrying some gold jewellery. The jewellery was well sealed and packed. When the parcel reached the destination some part of the jewellery was missing. In this case, the Delhi High Court held that the position of bank is of bailee.
  • The Kerala High Court held that where there is no obligation to return identical subject matter is an altered manner there is no bailment.
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assignment on contract of bailment

  • Contract Law
  • Contracts and Agreements

Bailment- Meaning and Introduction

assignment on contract of bailment

This article is written by Rachit Garg from the University of Petroleum and Energy Studies, Dehradun. This is an exhaustive article, aiming to give a brief introduction to the concept of bailment as per the Indian Contract Act, 1872.

Table of Contents

Introduction

There are many cases of bailment in our day to day life. For example, in the case of laundry, we give our clothes for getting washed. Once they are washed, they are to be returned back to us. We place the other person in temporary possession of our clothes for a specific purpose and there is an express or implied understanding between the two to return the good once the purpose has been fulfilled.

The word ‘bailment’, is derived from ‘ bailler’ , a french word which means ‘to deliver’. Bailment has been defined under the Section 148 of the Indian Contract Act, 1872, according to which Bailment involves the delivery of goods from one person to another for a specific purpose and upon a contract, when the purpose is fulfilled, the good has to be returned or dealt with on the direction of the person who has delivered the goods. 

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Who are the parties to the contract of Bailment?

There are generally two parties to the contract of Bailment. The person who is the owner and delivers the good is called ‘ bailor’ while the person to whom the goods are delivered is called ‘ bailee’ .

General rules relating to Bailment are mentioned in Chapter IX (Section 148-181) of the Indian Contract Act, 1872 . Bailment is a type of a special contract, so all essential elements of a valid contract like consent, competency, etc are required for it to be valid. But, a valid bailment can arise even without a valid contract between the two parties, for example, a lost good finder becomes a bailee and has the responsibility to return it to its owner, the bailer, even if no contract exists between them.

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How is Bailment different from the sale of the good?

Sales involve the transfer of the ownership of the good in exchange for something of value while on the other hand, Bailment involves the transfer of the possession of the good, not the ownership. 

What goods can be bailed?

Only the goods that are of movable nature can be bailed. However, current money or legal tender cannot be bailed and deposition of money will not be counted as bailment as money is not a good and the same money will not be delivered back to the client.

Essential Features 

Delivery of possession.

There must be a delivery of goods, which means, delivery of possession of the goods by the bailer to the bailee to fulfill the purpose of bailment. Possession refers to exercising control over the good and excluding any other person to do the same. 

Section 149 of the Indian Contract Act, 1872 talks about the same. The delivery of possession can either be actual or constructive. It means that either the good can directly be put in the actual physical possession of the bailee or put the bailee in a position of power over such goods that can be physically possessed later, if possible. In constructive delivery, the bailor gives the bailee means of accessing the custody of the good and not its actual delivery. 

For example, C has a rare coin locked safe deposit box. As the delivery of a safe deposit box is impossible, when C, bailor, gives the key of the deposit box for the bailment of the coin to A, bailee, it would be considered as constructive delivery.

It is important to note that mere custody of goods is not equivalent to the possession of goods. In Reaves v. Capper, it was held that a servant can be in the custody of the goods because of the nature of his job but that does not mean he is in possession of the goods. For example, a servant holding his master’s umbrella is not a bailee.

Delivery upon Contract

There must be a contract between the bailor and the bailee for such transfer or good and its return. If there is no contract, there cannot be bailment. Moreover, the contract can either be expressed or implied.

Exception: If the good is lost, the finder of good will be seen as the bailee even if there was no contract of Bailment or delivery of goods under a contract. A finder of goods is a person who found a lost good belonging to someone else and keeps it under his possession until the owner of the good is found. This leads to an involuntary form of Bailment contract between them. The finder has all rights and duties that of a bailee.

Delivery must be for some purpose

It is essential that there must be a purpose for which the delivery of the goods takes place. If after the completion of the purpose of bailment the good is not accounted for, then bailment cannot arise. This is an important feature as it separates it from other relations like agency, etc..

Return of goods

After the completion of the purpose, the good must be delivered to the bailor or dealt with as per his instructions. If he/she is not bound to return the good then there is no bailment. Even if there is an agreement to return an equivalent and not the same good, it will not amount to bailment. 

assignment on contract of bailment

For example, a tailor receives a saree for stitching as he is the bailee. After the saree has been stitched, the tailor is supposed to return it to the bailor. 

Moreover, it is necessary for the bailee to follow the instruction given by the bailor for the purpose of the return of the good if any. 

In Secy of state v. Sheo Singh Rai , a man, for the purpose of cancelling and consolidating nine government promissory notes into a single note of Rs. 48000, went to a Treasury Officer. Later, the notes were misappropriated by a servant at the treasury and the man filed a suit against the State to hold it responsible as a bailee. He failed as there is no Bailment without delivery of good and a promise to return the same and the government was not bound to return the same notes or deal with them in accordance with the wishes of the man.

Classification of Bailment

Bailment can be broadly categorized into two types:

On the basis of Remuneration

Gratuitous bailment.

When a bailment is made without any consideration of benefit to the bailor or to the bailee, it is referred to as gratuitous bailment. In simple terms, it is a bailment without any consideration.

For example, when one lends a book to a friend free of cost.

Non-Gratuitous Bailment

When generally there is a consideration for bailment between the bailor and the bailee then it is referred to as non-gratuitous bailment.

For example, when someone gets a book issued from a library in exchange for a fee.

On the basis of benefits to the parties

For the exclusive benefit of the bailor.

In this case, the bailor delivers his/her good to the bailee for safe custody. There is no benefit/benefit for the bailee.

For example, leaving a pet with a neighbour when going out.

For the exclusive benefit of the bailee

In this case, the bailor delivers a good for the benefit of the bailee. For example, a friend borrowing our car for a week.

For the mutual benefit of them both

In this case, the bailor deliver his good to the bailee for consideration and both the parties get benefit out of bailment, 

For example, giving a bike for repair to a mechanic, for which the mechanic gets paid.

Duties/Rights of Bailor and bailee

Duties of bailor, disclose known faults.

It does not matter whether the goods are gratuitously or non-gratuitously bailed, the bailor has a duty to disclose all the known faults about that good that is being bailed to the bailee. Failing to do so would make the bailor liable to indemnify the bailee for all the damages caused to him directly from this fault. However, it is important to note that in the case of non-gratuitous bailment, the bailor is responsible even for those faults from which he/she is not aware. 

Examples:  

  • A lends his bike to B. A is aware of the fact that the bike’s brakes are not working properly and fails to inform the same to B. B met with an accident and is severely injured. A is liable to pay B for the damages sustained.
  • Raj hires a racing car from Shyam to participate in a racing competition. During the race, the car caught fire. Raj was unable to extinguish it as the fire-fighting equipment was out of order, due to which he sustained injuries. Therefore, Shyam is responsible to pay Raj even if he was not aware of the fact that fire-fighting equipment was out of order.

Bear expenses of bailment

In case of non-gratuitous bailment.

Bailor is expected to bear all the extraordinary expenses but the bailee is bound to bear all the ordinary and reasonable expenses of the bailment.

Example: A leaves his dog with B, a professional dog trainer, for a week as he is going out of town. B is being paid for the same so A is not required to bear the ordinary expenses. However, the dog suffered from high fever and B had to call a doctor. A has to repay all the medical expenses born by B.

In case of Gratuitous Bailment

The bailor is required to pay all the necessary expenses incurred by the bailee for the purpose of bailment for the delivered goods.

Example: A lends his dog to B, a close friend, for a week as he is going out of town. A is not paying anything to B to take care of his dog so he needs to pay him for all the ordinary expenses born by B to feed the dog for a week. However, if the dog gets sick and suffers from high fever, A has to pay B for all the additional medical expenses incurred by him.

Indemnify Bailee

According to Section 159 , in case of gratuitous bailment, the bailor can terminate bailment at any time even if the bailment was for a specific time or purpose. However, the bailor is required to indemnify the bailee if the losses incurred by him due to the premature termination exceed the benefits he derived out of the bailment.

Example: A lends his car to B, a friend for a week as B has to go out of town for a family gathering. As B has not paid any charges for bailment, he fills 30 litres of petrol in the car for the drive. Suddenly after 4 days, A calls B to give his car back. So, B can demand from A value of petrol remaining in the car after 4 days.

Indemnify the bailee when he suffers due to the title of bailor to the goods being defective

According to Section 164 , the bailor has to indemnify the bailee if even after knowing that he is not entitled to the good and makes bailment due to which, the bailee suffers losses.

Example: A lends his car to B, a customer for a week as B has to go out of town for a family gathering. B has already paid an advance of Rs 5000 to A. However, after 4 days, the police seized the car from B as it was stolen and belonged to C. B had to arrange a new car for the same purpose and has to pay a higher rent. B can claim from the amount he has already paid and also the higher rent he had to pay for the new car.

Receive back the goods

After the expiration of the term of the bailment or when the purpose is fulfilled, the bailor has a duty to receive the goods back from the bailee. However, if the bailor refuses to do the same, he will be entitled to pay the bailee compensation for the necessary expenses of custody and care.

Example: A bailed his dog to B for one week at the daily charge of Rs. 100. A visited B to receive his dog after 25 days. He has to pay the additional charges for 18 pays. However, if this had been a gratuitous bailment, A would have been required to pay the ordinary and extraordinary expenses for 18 extra days.

Duties of the Bailee

Take reasonable care of the goods bailed.

As per Section 151 , irrespective of the fact that the bailment is gratuitous or non-gratuitous, the bailee has a duty to take reasonable care of the goods bailed similar to a man of ordinary prudence would. However, according to Section 152, if even after reasonable care the goods are damaged or destroyed, the bailee is not liable for the loss of the bailed goods.

Example: A bailed his dog to B for a week at a daily charge of Rs. 100. As A came to B to reserve the dog after a week, he finds out the dog was stolen from B. If it is proved by B that he took reasonable care of the dog but still the dog was stolen, then he will not be held responsible, but, if however, A proves that B didn’t take reasonable care, say left the dog unchained, B would be responsible for the same.

No Unauthorized use of goods

As per the Section 154 , if due to the fact that the bailee uses the good bailed in a manner inconsistent with the terms of the contract then he will be held liable in case there is any damage to the good, even if he was not negligent or the damage resulted from an unforeseeable accident.

Example: A lends his car to B for him to drive only. B allows C, her cousin to drive the car. C rides the car with care but still ends up in an accident, damaging the car. B is liable to compensate A for the damages caused to the car.

Not mix goods bailed with own goods

The bailee must not mix the bailed goods with his own goods and must keep them separately. If however, he mixes the bailed goods with his own then:

  • According to Section 155 , if mixed with the consent of the bailor, both of them will have a proportionate interest in the mixture produced. 
  • As per Section 156 , if mixed without the consent of the bailor, and if it can be mixed/divided, the bailor has to bear all the expenses for the same and damages caused due to the mixture.
  • According to Section 157 , if mixed without the consent of the bailor, and if the mixture is beyond separation, the bailee is required to compensate the bailor for the loss of the goods.

Return any Accretion to the goods

In the absence of any contract for the same, any profit which may have accrued from the goods bailed, the same must be delivered to the bailor.

Example: A bailed his cow to B for a week. The cow gave birth to a calf during this period. The bailee must deliver the calf along with the cow to A at the time of delivery.

Return the goods

After the time for which the good has bailed is expired, or the purpose has been fulfilled, the bailee must return it to the bailor as per his direction.

Rights of the Bailor

Enforcement of rights.

The bailer, by suit, can enforce all the liabilities or duties of the bailee.

Avoidance of Contract

According to Section 153 , if the bailee does anything which is inconsistent with the terms of bailment, then, the bailor can terminate the bailment.

Example: A bailed his horse to B for his own riding only. B allowed C to ride the horse, violating the terms of bailment. A can terminate bailment.

Return of goods lent gratuitously

In case the goods are lent gratuitously, the bailor has the right to demand their return whenever he sees fit, even though they were lent for a specific period of time or purpose. However, he needs to indemnify the bailee in case the losses exceed the benefit derived from the use of such a good due to premature termination of bailment.

Compensation from a wrong-doer

If the bailee is wrongfully deprived by any third party of the use or possession of goods bailed and does them any injury, the bailor or the bailee has the right to bring a suit against the third person for the injury.

Rights of the Bailee

Delivery of goods to bailor without title.

According to Section 166 , if the bailor has no title to the goods bailed, then the bailee, in good faith, can deliver them back to the bailor according to his directions, if any, the bailee will not be responsible for such delivery.

Can apply to a court to stop delivery

According to Section 167 , if there is a situation in which a third person claims the goods bailed to the bailee, then the bailee can stop the delivery of such goods to the bailor by applying to the court and decide the title of the goods.

Right against trespass

According to Section 180 , if the bailee is deprived of the use of the goods bailed by any third party, the bailee has the right to bring an action against the third party.

Bailee’s lien

When the bailee is not paid charges with respect to the goods bailed he has the right to retain the goods. This right is referred to as ‘particular lien’.

Contract of bailment involves the transfer of possession of the good from the bailor to the bailee for the specific purpose and both, the bailor and the bailee, have been confronted with some rights and duties which are necessary for them to follow whenever seem suitable. Also, for the contract of bailment to be valid, all the essential features need to be fulfilled. Moreover, bailment of goods is different from the sale of goods as bailment is involved with the transfer of possession while the sale is involved with the transfer of ownership.

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Contract of Bailment

Bailment: meaning.

  • Mr. Shaurya hires a bike for travelling to Delhi.
  • Mr. Bhavesh delivers his mobile for repairing.
  • Mr. Aviral gives his suit to a shop for drycleaning.

Elements of a bailment

  • There must exist an expressed or implied agreement between the bailee and bailor
  • A car delivered for repair to a workshop dealer is an actual delivery.
  • The key of a car delivered to a workshop dealer for repair of the car is a constructive delivery.
  • In a bailment the ownership remains with the bailor and is not transferred to the bailee or anyone as because if the ownership is transferred then it is not a bailment contract. It becomes a contract of sale.
  • Bailment is only for movable goods and not for immovable goods.
  • There should be a purpose for the delivery of goods like safe custody,use and transportation of the goods, repair etc.
  • If the bailed goods are changed like a raw material is converted into a product still the contract remains the same as a bailment.
  • The goods shall be returned to the bailor or disposed off according to his direction

Kinds Of Bailment

Gratuitous bailment:, non gratuitous bailment:.

  • Bailment Contract made for the exclusive benefits of the bailor
  • Bailment made for the exclusive benefits of the bailee
  • Bailment made for mutual benefits of both bailor and bailee

Duties of Bailor

  • Duty to disclose all known defects-( sec 150): It is the duty of the bailor to disclose any known defects occurred in the goods.In case if there is failure of disclosing the defects and there occurs some loss from the end of bailee,the compensation will be beared by the bailor.  
  • Duty to bear necessary and extraordinary expenses (Sec 158): In case of gratuitous baiment,the bailee must be repaid with all the expenses which he has incurred already for bailment,by the bailor.  
  • Duty to indemnify loss for premature termination of bailment-Sec(159): The bailor would be liable to indemnify the bailee for any loss incurred which the bailee has paid to the original owner,if the title to deliever the goods does not falls within the bailor's reach.  
  • Duty to indemnify the bailee against the defective title of the bailor (Sec164): if any loss is occurred to the bailee by reason that the bailor was not entitled to make the bailment, or to receive back the goods.In that case,bailor will be responsible for the losses.  
  • Duty to bear a loss (Sec162): If the bailee has taken all the necessary and reasonable care to protect the bailed goods from occurance of any possible damage or loss and still any loss or damage is occurred then it is the duty of bailor to bear the damages or loss of the things bailed.

Rights of Bailor

  • Right to claim damages in cases of negligence from the bailee [section 152]: It is the right of the bailor to be compensated for the damages of the goods which are bailed if the bailee has failed to take all the necessary due care to abstain that damage or losss according to the direction.  
  • Right of termination of the contract in case of unauthorized use of goods [sec 153]: If there is an unauthorized use of goods by the bailee,the bailment contract can be terminated before its completion.  
  • Right of compensation in case of the unauthorized use of goods [ICA sec 154]: If the use of goods is not done by the bailee as per the terms and conditions of the bailment contract, the bailor has a right to claim compensation from bailee for any damages arising to the said goods.  
  • Right to claim compensation in case of the unauthorized mixture of the goods which cannot be separated" [section 157]: If the bailee without the consent of the bailor mixes goods of the bailor with his own goods and they cannot be separated, the bailor has right to claim compensation from bailee for loss of the goods.  
  • Right to claim separation of the goods in case of unauthorized mixture of goods[section 156]: If bailee, without consent of the bailor mixes with his own goods the goods of the bailor and goods can be separated, the bailor has right to claim his own goods after separation.  
  • Right to demand return of goods [section160]: The bailor has a right to demand return of goods after the completion of purpose or after expiry of the period of bailment.  
  • Right to claim compensation in case of unauthorized retention of goods (section 161): If the bailee does not either return or deliver the goods according to bailor's directions, even after accomplishment of the purpose or after expiry of period of bailment, the bailor has a right to claim compensation for any loss, destruction and deterioration of goods from that time.  
  • Duty to deliver any accretion to goods: It is the duty of the bailee to deliver the respective goods to the bailor and any natural increase or profit accruing from goods bailed, unless there exists a contract to the contrary.

Duties of Bailee

  • Duty to take due care of the respective goods delivered to him: [ICA Sec 151] In all cases of bailment,It is necessary for the bailee to take the maximum amount of care to the goods delivered to him.  
  • Duty to not make unauthorized use of the respective goods entrusted to him: In ICA Sec 154, the bailee must use the respective goods strictly under the terms of the bailment. If he makes unauthorized use of the respective goods, he's at risk of being liable to compensate the make for any damage arising to the respective goods from or during such use of them. This liability is absolute.  
  • Duty to not combine mix bailed along with his own the respective :[ICA sec 155 to 157] goods: duty of bailee that he shouldn't mix his own goods with those of the it's also the bailor, without bailor's consent. If the respective goods area unit mixed with the consent of the bailor, there's no breach of duty and therefore the bailor and the bailee shall have an interest, in proportion to their respective shares, within the mixture thus produced.  
  • Duty to return the goods: [ICA Sec 160] lays down this duty within the following terms: It is that the duty of the bailee to come, or deliver, according to the bailor's directions the respective goods bailed, without demand, as soon because the time for which they were bailed has expired, or the aim that they were bailed has been accomplished.  
  • Duty to deliver any accretion to goods: It is the duty of the bailee to deliver the respective goods to the bailor and any natural increase or profit accruing from goods bailed, unless there exists a contract to the contrary  

Rights of a bailee

  • Right to claim the damages [ICA sec 150]
  • Right to claim reimbursement of expenses if any [ICA sec 158]
  • Right to get indemnified if termination of gratuitous bailment takes place [ICA sec 159]
  • Right to give bailed goods to any of the bailors in case of joint bailment [ICA sec 165]
  • Right to recover damages for the losses in case bailor refuses to take the goods back [ICA sec 164]
  • Right to deliver the goods to the bailor in case of the title of bailor is defective [ICA sec 166]
  • Right to recover damages for the loss in case title of bailor is defective[ICA sec 164]

Termination of bailment

  • After the fulfillment of the purpose
  • When use of goods become inconsistent
  • When the subject matter of bailment gets destroyed
  • Death of any party occurs
  • When bailor terminates the bailment contract
  • Kavita Trehan V. Balsara Hygiene Product Ltd. ( AIR 1992 Delhi 103): In this case it was decided that one of the very requirement of bailment is the delivery of goods to the bailee, where there is no change of possession there is no bailment.  
  • Jagdish Chandra Trikha V. Punjab National Bank (AIR 1998 Delhi 266): This case is related to parcel which was carrying some gold jewellery. The jewellery was well scaled and packed. When the parcel reached the destination some part of the jewellery was missing. In this the court held that the position of bank is of bailee.  
  • Annamalai Timber Trust Ltd. V. Thrippunithura Dewas (1954): The court held that where there is no obligation to return identical subject matter is an altered manner there is no bailment
  • Haatmal Bhutaria V. Dominion of India (AIR 1961 Kolkata 54): In this case it was decided that sec. 148 makes it clear that a seller can become a bailee if he contracts to hold the goods as bailee in the absence of such contract he cannot be awarded as bailee.

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Bailment and Pledge under Indian Contract Act, 1872

  • Contract Act Subject-wise Law Notes
  • July 22, 2020

Contract law

Bailment and pledge are two very different kinds of contracts mostly mixed up with each other.

What is bailment?

Section 148 of the Indian Contract Act, 1872 defines “bailment” as ‘ the delivery of goods from one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished be returned, or otherwise disposed of according to the directions of the person delivering them’.  

Illustrations – A gives his laptop to B to repair.

X gives her blazer to Y for dry cleaning.

Here, in both the situations goods are delivered from person to another for a specific purpose and would be returned once the purpose is accomplished.

Parties to the contract

Bailor – The person delivering the goods is called the bailor.

Bailee – The person to whom the goods are delivered is called the bailee.  

Essentials of the contract of Bailment

  • Delivery of possession – To constitute a bailment change of possession is necessary. In Kavita Trehan vs. Balsara Hygiene Products Ltd [1]. SC held that the delivery of possession to the bailee is sine quo non (an essential condition) of bailment.
  • Delivery of goods should be upon a contract – In the State of Gujarat vs Memon Mahomed Haji Hasam [2], SC held that it can’t be said that bailment cannot originate without a contract. A bailment is governed by Contract act only if it arises from a contract. Bailment is a unique relationship between bailor and bailee, where bailor delivers the possession of goods to the bailee for a particular purpose.
  • Delivery of goods should be for a specific purpose -Delivery of goods from bailor to bailee should be for a specific purpose. For example, A delivers his car to B’s garage for washing.
  • Return of Goods – The bailee is duty-bound to return the goods on the expiration of time or accomplishment of purpose. (Section 160). The goods returned should be the same goods and not any other goods. Exception – Money deposited in the bank will not count as bailment as the money returned by the bank will not be the same notes. And it is one of the essentials that the same items be returned.

Duties and Liabilities of a bailor:  

Bailor should disclose to the bailee any fault in the goods bailed, of which he is aware.

Note: If bailor fails to disclose the material defaults, then he is responsible for any damage arising out of such faults. (Section 150)

Exception – When the goods are given on hire, then in such a case even if the bailor is aware of the defect in the goods or not will be held responsible for the damage that has been caused owing to the existence of such defect.

Case- Hymen vs. Nye & Sons[3] – The plaintiff rented (on hire) a vehicle from the defendant but the vehicle was not suitable for travel and the plaintiff was later injured. The court said that whether the defendant was aware of such shortcomings or not, he would be held liable.

In a situation, where some work is to be carried out on the goods by the bailee, then the bailor should repay the necessary expenses to bailee incurred by him. (Section 158)

Rights of a bailor

  • If the bailee fails to take care of the bailed goods and acts in a negligent manner.
  • If the bailee uses the goods for an unauthorized purpose.
  •  If the bailee mixes his goods with the bailed goods.
  •   Right to claim the increase or profit in the goods – A bailor has a right to claim any increase or profit which may have accrued from the bailed goods. (Section 163)
  • Right to Terminate – A bailor has a right to terminate the contract if the Bailee acts contrary to the conditions of bailment.
  • Right to demand – A bailor has a right to demand the return of his goods from the bailee.

  Duties and Liabilities of Bailee:

  • The bailee is duty-bound to take care of the pledged goods as a man of ordinary intelligence, in similar circumstances, takes of his goods of similar quantity and value. (It was held in Kavitra Tehran vs. Balsara Hygiene Products Ltd.)
  • If the bailee utilizes the goods bailed which is not per the terms of bailment, then he is liable to pay compensation to the bailor for any damage caused during such use. (section 154)
  • If the bailee mixes the goods of bailor with his own, without his consent,

1. When the goods can be separated – the bailee is liable to bear the expenses incurred to separate the goods or any damage caused due to the mixture of goods. (section 156)

Illustration – A bails 1000 masks marked with a particular mark to B. B, without A’s consent, mixes the 1000 masks with other masks of his own, bearing a different mark. A is entitled to have his 1000 masks back, and B is liable to bear all the expenses incurred in separation.

2. When the goods can’t be separated – The bailee is liable to pay compensation to the bailor for the loss of goods. (section 157)

Illustration – X bails a container of milk having 5L of milk to Y. Y without X’s consent mixes the milk with 2L water of his own. Y must compensate for the loss.

  • If the bailee fails to return the goods on time, then he is liable to pay for any loss or damage caused to the bailor owing to the delay. (section 161)
  • A bailee is liable to deliver to the bailor any increase or profit which may have accrued from the bailed goods. (section 163)

Illustration – C leaves a dog in the care of D. The dog has a pup. D is liable to deliver the pup as well as the dog to C.

FAQ – What if the goods get lost by the fault of bailee?

In case goods are lost by the bailee and not returned at the appropriate time, then he is liable to compensate to the bailor for the loss caused.

Rights of Bailee:

  • Right to know the defects – A bailee has full right to know the material defects in the goods bailed, which can expose him to any risk or damage. (Section 150)
  • Right to claim expenses – In a situation, where some work is to be carried out on the goods by the bailee, then the bailee has the right to claim the necessary expenses incurred by him for the purpose of bailment. (Section 158)
  • Right to lien – When the bailee has provided any service involving the use of his labour and skill in respect of goods bailed, he has a right to retain such goods until he is paid for his services. (Section 170 – 171). It is of two types:

1. Particular lien

2. General lien

In Surya Investment Co. v. S.T.C [4] it was held that if any expenses are incurred by the bailee for the protection and maintenance of goods, then it should be borne by the bailor. Bailee is entitled to retain the goods till he is paid for his services.

Termination of bailment

Bailment can be terminated in two situations:

  • As per section 153 of the Indian Contract Act – A Contract of bailment is voidable at the option of bailor if: Bailee does any act with the goods that is contrary to the conditions of bailment. Illustration – A gave his blazer to B for dry cleaning but on the contrary B gave his Blazer to C, so that C can wear it on his fresher’s party. This is an unauthorized use of  the blazer bailed.
  • As per section 162 Bailment can also be terminated by the death either of the bailor or of the bailee.

What is Pledge?

It is a kind of bailment defined in section 172 of the Indian Contract Act. It implies bailment of goods as security for payment of a debt or performance of a promise.

Illustration – Y took a loan from the bank against the security of his house property papers. Here, Y is a pawnor, the bank is a Pawnee and documents are the pledged goods.

Parties to the contract:

Pawnor – The bailor, in this case, is the Pawnor.

Pawnee – The bailee, in this case, is the Pawnee.

Essential elements of Pledge:

  • Delivery of goods – The goods should be delivered from pawnor to Pawnee. ( there is a change in possession of goods)
  • Purpose of delivery is always security for payment of a debt – The goods should be bailed as security against the payment of debts or performance of a promise.

Illustration – Like in the above case Y (Pawnor) delivered his valuable documents to the Bank (Pawnee) as security against the debts (purpose).

  • Property pledged should be movable.

Rights of Pawnee-

  • Right to retain – Pawnee has the right to retain the goods for the interest of the debt and all the expenses incurred by him on the goods pledged.
  • Right to expenses – Pawnee has the right to receive any extraordinary expense incurred by him on the maintenance and protection of the goods pledged. (section 175)
  • Right to sue or sell – In case when the pawnor makes default in the payment, then the pawnee has the right to:
  • Institute a suit against the pawnor and retain the goods pledged as collateral security.
  • Sell the goods on giving a notice of sale to the pawnor.

In Sunderlal saraf vs. Subas Chand Jain [5], it was held that “It is not essential that the notice under this section should state the date, time or place of the planned sale. The only thing needed is, sending a reasonable notice of sale.

FAQ – What if the amount received against the sale is less than the amount of debt?

The pawnor is liable to pay the balance and if the reverse happens, then the Pawnee is liable to pay the surplus to the pawnor.

Conclusion for Bailment and Pledge

‘Every pledge is a bailment but every bailment is not a pledge’. It implies that pledge is a unique kind of bailment in which the goods are pledged for one single purpose i.e. as a security against the payment of debts. The pledge has a very little reach in comparison to the bailment. In a nutshell it can be said that ‘If bailment is a universe then pledge is one of its planets’.

References:

Ø Universal’s Indian Contract Act, 1872 Bare Act

Ø Avatar Singh’s Law of Contract and Specific Relief

Ø Lawtimesjournal.in

Ø Keydifferences.com

Ø Srdlawnotes.com

Ø Indiankanoon.org

Ø Casemine.com

[1] AIR 1992 Del 103

[2] 1967 SCR (3) 938

[3] (1881) 6 Q.B.D 685

[4] AIR 1986 Cal 46

[5] AIR 2006 MP 35

Author Details: Nishant Gulyani (School of Law, UPES – Dehradun)

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Contract of Bailment:- Contract Act Notes

Contents of Article

MEANING OF CONTRACT OF BAILMENT (Sec. 148)

A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.

BAILMENT – Contract Act Notes

  • Exclusive benefit of Bailor : J, neighbour of K, agrees to look after K’s per while he is out of station. K is benefited.
  • Exclusive benefit of Bailee : Z lends a book to Y for reading. Y is benefited.
  • Mutual Benefit of both : A hires furniture from B, by payment of hire charges, Both A and B are benefited
  • Gratuitous Bailment : Neither      Bailor nor Bailee gets any remuneration, e.g. A lends his book to his are friend.
  • Non gratuitous Bailment : Bailor or Bailee gets remuneration e.g. G gives his television set for repair to H, a technician. H gets paid for the job

ESSENTIALS OF A VALID CONTRACT OF BAILMENT (Sec.148)

  • There must be a contract.
  • The contract may be expressed or implied.
  • Bailment can be made of goods only.
  • Delivery There must be delivery of goods by one person to another person.
  • The goods must be delivered for some purpose.
  • The purpose may be expressed or implied.
  • The delivery of goods must be conditional
  • returned (either in original form or in any altered from); or
  • disposed of according to the directions of the bailor, when the purpose is accomplished.
Essentials of a Valid Contract| The Indian Contract Act 1872 Notes|

MODES OF DELIVERY (Sec. 149) The Indian Contract Act 1872 Notes

  • Actual delivery Transfer of physical possession of goods from one person to another .
  • Physical possession of goods is not actually transferred.
  • A person does some act resulting in transfer of possession to any other person.
  • Delivery of keys of a car to a friend
  • Delivery of a railway receipt.
  • A person is already in possession of goods of owner.
  • Such person contracts to hold the goods as a bailee for a third person. Then – Such person becomes the bailee, and the third person becomes the bailor.

CLASSIFICATION OF BAILMENT

  • Gratuitous bailment
  • No hire charges are paid by bailee; and
  • No custody charges are paid by bailor.
  • Hire charges are paid by bailee; or
  • Custody charges are paid by bailor.

DUTIES OF A BAILOR  (Sec. 150, 158, 159 and 164)

  • Disclose faults in goods [Sec. 150]: Bailor is bound to disclose to Bailee, faults in the goods bailed, of which he has knowledge. He should also disclose such information which – (a) materially interferes with the use of goods, or (b) expose the Bailee to extraordinary risk.

Liability for Defects in Goods

Bailor is liable only for those losses which arise due to non – disclosed risks.Bailor is liable for damages whether or not he was aware of the existence of faults.

Example: A owning a motorcycle, allows B, his friend, to take it for a joy ride. A knows that its brakes were not proper but does not disclose it to B. B meets with an accident. A is liable to compensate B for damages. But when A had lent the motorcycle on hire, he is liable to B even if he did not know of the failure of his brakes.

  • Bear expenses [Sec.158]

Expenses of Bailment

Bailor     shall     repay    to    Bailee,     all necessary expenses incurred by him for the purpose of Bailment.Bailor is liable to repay only extra – ordinary expenses, and not the ordinary expenses.

Example: M lends his car to N and it runs out of petrol. N can recover the amount paid for refueling (ordinary expenses). If in case, the car suffers a breakdown, N can recover such charges as are paid by him in bringing it back to condition (extra – ordinary expenses). He M hired the car to N, he shall be liable only for the repair charges, being extra ordinary expenses.

  • Indemnify the bailee for defective title The bailor shall indemnify the bailee for any loss caused to bailee due to defective title of bailor.
  • the bailment is gratuitous ; and
  • for a specific period.
  • the bailor may compel the bailee to return the goods before expiry of the peiod of bailment; but
  • the bailor shall indemnify the bailee for any loss incurred by the bailee.
  • It is the duty of the bailor to receive back the goods, when returned by bailee.
  • If the bailor wrongfully refuses to receive back the goods, he shall be liable to pay ordinary expenses of custody of goods incurred by the bailee.

DUTIES OF A BAILEE (Sec.151 to 157)

  • The bailee must take such case of goods as a man of ordinary prudence would take care of his own goods.
  • he is not negligent; or
  • the loss was caused due to an act of God or other unavoidable reasons.
  • The bailee must not make any unauthorized use of the goods.
  • the bailment becomes voidable at the option of the bailor; and
  • the bailee shall be liable for any loss or damage even if such loss is caused due to an act of God or other unavoidable reasons.
  • Not to mix goods Goods are mixed with bailor’s consent The parties shall have a proportionate interest in such mixture.

Goods are mixed without bailor’s consent, but the goods are separable

  • The bailee shall pay the expenses of separation.
  • The bailee shall pay damage incurred by the bailor.

Goods are mixed without bailor’s consent, and goods are not separable The bailee shall compensate the bailor for any loss caused to him.

  • the time specified in the contract has expired ; or
  • the purpose specified in the contract is accomplished.
  • the goods shall be at the risk of the bailee;
  • the bailee shall be liable for any loss or damage, even if such loss is caused without any fault or negligence of the bailee or due to an act of God or other unavoidable reasons.
  • Return accretion to goods The bailee must return to the bailor any accretion (i.e., addition) to the goods bailed.
  • Not to set up an adverse title The bailee has no right to allege that the bailor had no authority to bail the goods.

RIGHTS OF A BAILOR (Sec. 153, 159, 163, 180, 181)

  • Terminate the bailment If – The bailee does any act inconsistent with the terms and conditions of the contract of bailment. Then – The bailment becomes voidable at the option of the bailor.

To know more about Voidable agreement visit here

  • the bailor may compel the bailee to return the goods before expiry of the period of bailment; and
  • A third party who does any damages to the goods; or
  • A third party who deprives the bailee from using the goods
  • Sue the bailee The bailor may sue the bailee to enforce his duties.

RIGHTS OF A BAILEE (Sec. 165, 166, 167, 170, 180)

  • The bailor has no title to the goods; and
  • As a consequence, the bailee suffers some loss.
  • It is the duty as well as the right of the bailee to return the goods to the bailor.
  • In case of joint bailor, the goods may be returned to any of joint bailors.
  • The bailor is liable to pay the extraordinary expenses.
  • The bailee may recover the extraordinary expenses paid by him.
  • Ordinary expenses If the bailment is gratuitous, the bailor is liable to pay the ordinary necessary expenses, i.e., the bailee has the right to recover the ordinary necessary expenses incurred by him.
  • Suit for deciding the title The bailee may apply to the Court for deciding the title to goods, if a person other than the bailor claims that the goods belong to him.
  • A third party who deprives the bailee from using the goods.
  • Right of lien The bailee has the right to retain the goods delivered to him until the charges due to him are paid by the bailor.

DISTINCTION BETWEEN BAILEE’S PARTICULAR AND GENERAL LIEN

TERMINATION OF BAILMENT (Sec.153, 159 and 162)

Situation Explanation Example
1. Expiry of specified period When bailment is for specific period it terminates on the expiry of the specified period Z lends a moped to Y for a period of 3 months Aprill- June. The Bailment terminates by the end of June
2. Accomplishment of specified purpose

Where bailment is for a specified purpose, it terminates when such purpose is accomplished. G hires tables and chairs, utensils, etc. from H for organizing his son’s engagement. G shall return them once the engagement
functions are over.


3. Bailee’s act inconsistent with conditions

When bailee does some act which is inconsistent with the terms and conditions of bailment, the Bailor may terminate the bailment. J gives his car to K keeping it in K’s garage. K gives it to his son for racing. J can terminate the bailment.

4. Destruction of subject matter
When goods bailed are destroyed, Bailment comes to an end. K hires a cycle from L. When the cycle is damaged beyond
repair in an accident, bailment ends.

5. Gratuitous Bailment

Where premature termination of bailment by the Bailor, causes loss to the Bailee exceeding the benefits derived by him, the Bailor shall indemnify the Bailee.

FINDER OF GOODS (Sec. 71, 168 and 169)

  • Finder of lost goods [Sec 71] A person, who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a Bailee.
  • Implied Agreement There is an agreement, implied by law between finder and owner of goods.
  • To take initiative to find the real owner of the goods,
  • To take reasonable care of the goods found,
  • Not to put the goods found for his personal use, and
  • Not to mix the goods found with his own goods.
  • Rights of Finder:
Finder of goods is not entitled to sue that owner for compensation for trouble and expenses voluntarily incurred in – (a) preserving the goods, or (b) finding out the owner. However, he is entitled to –

Lien: Retain the goods against the owner till he receives such compensation
Suit: Sue the owner for payment of any specific reward offered by the owner for the return of goods lost, and retains the goods till payment of such reward.
If a thing which is commonly the subject of sale is lost, and Owner cannot be found with reasonable diligence, [or]Owner, if found, does not pay the lawful charges of the Finder.
Then, Finder of Goods is entitled to sell the same when –
the thing is in danger of perishing, or
the thing is in danger of losing the greater part of its value, or
The lawful charges of finder, amount to 2/3 of the value of the thing lost and found.

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assignment on contract of bailment

StrictlyLegal

Bailment (Section 148-171 of Indian Contract Act, 1872)

assignment on contract of bailment

Table of Contents

Meaning of Bailment:

Bailment is derived from the French word ‘bailer’ means ‘to deliver a thing under a control’ its a relationship in common law where physical possession but not ownership of personal property, is transferred from one person to another for a specific reason or purpose with a condition to return goods when the purpose is over otherwise disposed of according to the direction of the owner.

The person who delivers the goods is known as the ‘Bailor’ and the person who receives the goods is known as ‘Bailee’ and the transaction is known as ‘bailment’ and the relation between them is defined in Section 148 of the Indian Contract Act. Bailment is a voluntary delivery of goods for a temporary purpose ‘on the understanding that they are to be returned in specie in the same or substitute form.

Section tion148: ‘BAILMENT’,’BAILOR’ and BAILEE’ definition:

‘Bailment’, ‘Bailor’ and ‘Bailee’ defined.—A ‘Bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘Bailor’. The person to whom they are delivered is called the ‘Bailee’. —A ‘Bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘Bailor’. The person to whom they are delivered is called the ‘Bailee’.”

Explanation .—If a person is already in possession of the goods of other contracts to hold them as a Bailee, he thereby becomes the Bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of Bailment.

A seller of goods becomes a bailee if the goods continue to be in his possession after sale is complete. Here the original possession of goods was with the seller as the owner of the said goods and after the sale, his possession is converted into a contract of bailment.

Requirements of Bailment:

One of the requirements of bailment is the delivery of goods to the bailee. Delivery of possession to the bailee is ‘sine qua non’ of bailment. In order to constitute a bailment change of possession is necessary.

Illustration of Bailment: Mr. B rents his car to A, to pick up his goods and drop it to A’s house. Here B is the bailor or owner of the car, and the car is the movable property and A is the bailee who subsequently has possession of that movable property.

What are the objects or goods that can use in a Bailment?

Bailment is only acted on movable property. Current money or legal tender cannot be bailed. Deposition of money in a bank is not bailment as money is not ‘goods or property’ and it cannot be returned to the client. But the currencies that are no longer legal tender and are the objects of curiosity of antiques, can be bailed.

Essential features of Bailment:

There are three essential elements to constitute a contract of bailment:

  • Delivery of Goods i.e. Delivery of Possession
  • Delivery should be upon Contract
  • Delivery should be upon some purpose and Return of Goods

Delivery of Goods i.e. Delivery of Possession:

Here the delivery of goods means delivery of possession which is essential for bailment. The transfer of possession of the bailed goods from bailor to bailee for whatever is the purpose of bailment must be distinguished from mere custody. One who has custody without possession of goods is not a bailee.

As per  Section 149 , the delivery can also be made to the bailee by doing anything which has the effect of putting the bailed goods in the possession of the intended bailee or any person authorized by him for this purpose. Thus, the delivery of possession may be of two types:

1. Actual Delivery:

Also known as physical delivery, where the delivery takes place when the goods are physically handed over by the bailor to the bailee.

illustration: X, the bailor gives his car in the service center to Y the bailee. Here, there is actual delivery of possession by X.

2. Constructive delivery:

when some action is taken to mean handing over of the physical possession of goods, though in fact no physical transfer of goods is made at that time.

Example: delivery of railway tickets, or bill of lading amounts to constructive delivery.

Mere custody of goods is not the same as the delivery of possession. A guest who uses the goods of the host during a party may not consider a bailee. Similarly, it was held in Reaves vs. Capper [1838 5 Bing NC 136 ] that a servant in the custody of certain goods by the nature of his job is not a bailee. Similarly, a servant holding his master’s umbrella is not a bailee but a custodian. Similarly, hiring and storing goods in a bank locker by itself is not bailment thought there is the delivery of goods to the bank premises. The goods are in no way entrusted to the bank. A bank cannot be presumed to know what goods are stored in any given locker at all times. If a bank is given actual and exclusive possession of the property inside a locker by the person who hired the locker, only then bailment under Section 148 can be assumed.

Delivery should be upon Contract:

In bailment, the delivery of goods is upon a contract and once the purpose is done, such goods shall be returned to the bailor. This means there should be a contract between two parties for transaction of delivery and subsequent return. If there is no possession of goods obtained by someone other than contract, there should be no bailment.

The contract giving rise to bailment can be  express or implied ; In express where the parties agree to be bound are declared either orally or in writing, in implied where the parties formed a contract on a no-verbal contract.

The exception to the delivery upon contract:

  • A finder of goods is treated as a bailee even if there is no contract of Bailment or delivery of goods under a contract. (section 71)
  • A finder of the goods is a person who finds the goods belonging to some other person and keeps them under his protection until the actual owner of the goods is found.
  • An involuntary contract of bailment arises and the finder automatically becomes bailee even in the absence of bailment by the bailor – the owner of the lost goods. Since the person is in the position of a bailee, he has all the rights and duties of a bailee

Delivery should be upon some purpose and Return of Goods:

In a contract of Bailment where the goods are delivered(in the sense of possession) from one person to the another, on some purpose. Once the purpose of bailment has been completed it is mandatory for a bailee to return the property to the bailor, or be disposed of as per bailor’s instructions depending upon the terms and conditions of the contract. If through no fault of bailee own, the return of the property is delayed or become impossible to return for example if the property is lost during bailment or get destroyed by natural calamities- the bailee will not be held liable for non-delivery on demand. In other situations, the bailee will be held responsible for the Tort of conversion for unjustifiable failure to redeliver the property as well as its unauthorized use.

CLASSIFICATION OF BAILMENT

Section 150 of the Indian Contract Act 1872, The bailment can be broadly classified into two heads:

  • Classification based on Reward.
  • Classification based on Benefit.

Classification based on Reward:

1. gratuitous bailment :.

Gratuitous bailment is one where no consideration passes between the bailor and the bailee. No mutual benefits will be acted upon by both parties in the contract.

2. Non – Gratuitous Bailment :

non-gratuitous bailment is one where consideration passes between the bailor and the bailee. In this case both parties get mutual benefits.

Classification based on Benefit:

1. bailment for the exclusive benefit of the bailor :.

A bailment in which goods are delivered by the bailor to the bailee only for the exclusive benefit of the bailor himself.

illustration : A give his valuable goods to his relative B for safe custody without any charges. This is a bailment for the exclusive benefit of the bailor ‘A’.

2. Bailment for the Exclusive benefit of the Bailee :

This is a bailment in which goods are delivered by the bailor to the bailee only for the exclusive benefit of the bailee.

illustration : X lent his car to his friend Y, for the temporary use without any charges. This is the bailment for the exclusive benefit of the bailee ‘Y’.

3. Bailment for the Mutual Benefit of the Bailor and the Bailee :

illustration : P gave his car keys to Q to drop his as well as Q’s kid to their respective home. This is the bailment for the mutual benefit of both the bailor ‘P’ and the bailee ‘Q’ as both of them are benefitted.

Duties of a Bailor:

Duties of a bailor are as follows:

  • It is the duty of a bailor to disclose all flaws. If the bailor fails to disclose such flaws then he will be responsible for the damage caused to bailed goods or loss suffered by the bailee. (For Example, Mr. X lends a horse, which he knows to be vicious, to Mr. Y, he does not disclose the fact that the horse is vicious. The horse runs away. Mr. Y is thrown and injured. Here Mr.X is responsible for Mr.Y for damage sustained.)
  • Also, the bailor is under the duty to pay the extraordinary expenses acquired by the bailee for such bailment. ( Section 158 )
  • It is the duty of the bailor to accept the goods after the purpose for which such bailed goods were bailed is accomplished.
  • It is the duty of the bailor to indemnify the bailee for the cost incurred due to the defective title of goods bailed to the bailee. For example, Mr. A. lends his horse to Mr. B., a friend, for a few days. While the feeding charges are to be paid by ‘B’. But if the horse meets with an accident ‘A’ will have to repay ‘B’ medical expenses incurred by Mr. B

Rights of Bailor:

 The rights of Bailor are as follows:

  • Right to claim damages if bailee makes wrongful use ( Section 154 )
  • Right to claim a proportionate share in mixed bailed goods ( Section 155 )
  • Right to claim the return of bailed goods ( Section 160 , 161 )
  • Right to claim damages due to mixing up of bailed goods ( Section 156 , 157 )

Duties of a Bailee:

The duties of Bailee are as follows:

  • Take proper reasonable care of goods bailed( Section 151 )
  • Not to make any unauthorized use of goods ( Section 153 )
  • Not to mix the goods bailed with his own goods
  • Not to set up an adverse title on bailed goods
  • Return the goods along with any increase or profit accruing to the goods to the bailor (For example, if Mr. A lent his pet hamsters to Mr. B and if those hamsters gave birth to a pup then both the hamsters along with their pups have to be returned to Mr. A.)
  • To return the goods

Rights of Bailee:

The rights of Bailee are as follows:

  • Delivery of goods to one of several joints bailor of goods;
  • Delivery of goods to bailor without a title;
  • rights to apply to the court to stop delivery;
  • Rights of action against trespassers
  • Bailee’s lien

Explain Bailee’s particular lien ?

From Section 170 of the Indian Contract Act, 1872, the bailee has a lien on the goods that he receives under the contract of bailment. When the bailor bails the goods to the bailee for a particular purpose and the bailee expands skill and labor on these goods, he has a right to retain the goods until the bailor pays him his charges in respect of skill and labor.

However, the right of lien arises only when the bailee uses skill and labor on the goods to confer an additional value on the goods.

Section 171 states the provisions for a general lien which deals with the right to detain any property belonging to another person which is in the possession of the person performing the lien, in respect of any payment lawfully due to him.

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DIFFERENCE BETWEEN BAILMENT AND PLEDGE

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Home » Law and Ethics » CONTRACT OF BAILMENT

CONTRACT OF BAILMENT

There are many cases of bailment in our day to day life. For example, in the case of laundry, we give our clothes for getting washed. Once they are washed, they are to be returned back to us. We place the other person in temporary possession of our clothes for a specific purpose and there is an express or implied understanding between the two to return the good once the purpose has been fulfilled.

The word ‘bailment’, is derived from ‘ bailler’ , a french word which means ‘to deliver’. Bailment has been defined under the Section 148 of the Indian Contract Act, 1872, according to which Bailment involves the delivery of goods from one person to another for a specific purpose and upon a contract, when the purpose is fulfilled, the good has to be returned or dealt with on the direction of the person who has delivered the goods.

Who are the parties to the contract of Bailment?

There are generally two parties to the contract of Bailment. The person who is the owner and delivers the good is called ‘ bailor’  while the person to whom the goods are delivered is called ‘ bailee’ .

General rules relating to Bailment are mentioned in Chapter IX (Section 148-181) of the Indian Contract Act, 1872. Bailment is a type of a special contract, so all essential elements of a valid contract like consent, competency, etc are required for it to be valid. But, a valid bailment can arise even without a valid contract between the two parties, for example, a lost good finder becomes a bailee and has the responsibility to return it to its owner, the bailer, even if no contract exists between them.

How is Bailment different from the sale of the good?

Sales involve the transfer of the ownership of the good in exchange for something of value while on the other hand, Bailment involves the transfer of the possession of the good, not the ownership.

What goods can be bailed?

Only the goods that are of movable nature can be bailed. However, current money or legal tender cannot be bailed and deposition of money will not be counted as bailment as money is not a good and the same money will not be delivered back to the client.

Essential Features 

Delivery of Possession

There must be a delivery of goods, which means, delivery of possession of the goods by the bailer to the bailee to fulfill the purpose of bailment. Possession refers to exercising control over the good and excluding any other person to do the same.

Section 149 of the Indian Contract Act, 1872 talks about the same. The delivery of possession can either be actual or constructive. It means that either the good can directly be put in the actual physical possession of the bailee or put the bailee in a position of power over such goods that can be physically possessed later, if possible. In constructive delivery, the bailor gives the bailee means of accessing the custody of the good and not its actual delivery.

For example, C has a rare coin locked safe deposit box. As the delivery of a safe deposit box is impossible, when C, bailor, gives the key of the deposit box for the bailment of the coin to A, bailee, it would be considered as constructive delivery.

It is important to note that mere custody of goods is not equivalent to the possession of goods. In  Reaves v. Capper,  it was held that a servant can be in the custody of the goods because of the nature of his job but that does not mean he is in possession of the goods. For example, a servant holding his master’s umbrella is not a bailee.

Delivery upon Contract

There must be a contract between the bailor and the bailee for such transfer or good and its return. If there is no contract, there cannot be bailment. Moreover, the contract can either be expressed or implied.

Exception:  If the good is lost, the finder of good will be seen as the bailee even if there was no contract of Bailment or delivery of goods under a contract. A  finder of goods  is a person who found a lost good belonging to someone else and keeps it under his possession until the owner of the good is found. This leads to an involuntary form of Bailment contract between them. The finder has all rights and duties that of a bailee.

Delivery must be for some purpose

It is essential that there must be a purpose for which the delivery of the goods takes place. If after the completion of the purpose of bailment the good is not accounted for, then bailment cannot arise. This is an important feature as it separates it from other relations like agency, etc..

Return of goods

After the completion of the purpose, the good must be delivered to the bailor or dealt with as per his instructions. If he/she is not bound to return the good then there is no bailment. Even if there is an agreement to return an equivalent and not the same good, it will not amount to bailment.

For example, a tailor receives a saree for stitching as he is the bailee. After the saree has been stitched, the tailor is supposed to return it to the bailor.

Moreover, it is necessary for the bailee to follow the instruction given by the bailor for the purpose of the return of the good if any.

In  Secy of state v. Sheo Singh Rai ,  a man, for the purpose of cancelling and consolidating nine government promissory notes into a single note of Rs. 48000, went to a Treasury Officer. Later, the notes were misappropriated by a servant at the treasury and the man filed a suit against the State to hold it responsible as a bailee. He failed as there is no Bailment without delivery of good and a promise to return the same and the government was not bound to return the same notes or deal with them in accordance with the wishes of the man.

Classification of Bailment

Bailment can be broadly categorized into two types:

On the basis of Remuneration

Gratuitous Bailment

When a bailment is made without any consideration of benefit to the bailor or to the bailee, it is referred to as gratuitous bailment. In simple terms, it is a bailment without any consideration.

For example, when one lends a book to a friend free of cost.

Non-Gratuitous Bailment

When generally there is a consideration for bailment between the bailor and the bailee then it is referred to as non-gratuitous bailment.

For example, when someone gets a book issued from a library in exchange for a fee.

On the basis of benefits to the parties

For the exclusive benefit of the bailor

In this case, the bailor delivers his/her good to the bailee for safe custody. There is no benefit/benefit for the bailee.

For example, leaving a pet with a neighbour when going out.

For the exclusive benefit of the bailee

In this case, the bailor delivers a good for the benefit of the bailee. For example, a friend borrowing our car for a week.

For the mutual benefit of them both

In this case, the bailor deliver his good to the bailee for consideration and both the parties get benefit out of bailment,

For example, giving a bike for repair to a mechanic, for which the mechanic gets paid.

Duties/Rights of Bailor and bailee

Duties of Bailor

Disclose known faults

It does not matter whether the goods are gratuitously or non-gratuitously bailed, the bailor has a duty to disclose all the known faults about that good that is being bailed to the bailee. Failing to do so would make the bailor liable to indemnify the bailee for all the damages caused to him directly from this fault. However, it is important to note that in the case of non-gratuitous bailment, the bailor is responsible even for those faults from which he/she is not aware.

Examples:  

  • A lends his bike to B. A is aware of the fact that the bike’s brakes are not working properly and fails to inform the same to B. B met with an accident and is severely injured. A is liable to pay B for the damages sustained.
  • Raj hires a racing car from Shyam to participate in a racing competition. During the race, the car caught fire. Raj was unable to extinguish it as the fire-fighting equipment was out of order, due to which he sustained injuries. Therefore, Shyam is responsible to pay Raj even if he was not aware of the fact that fire-fighting equipment was out of order.

Bear expenses of bailment

In case of Non-Gratuitous Bailment

Bailor is expected to bear all the extraordinary expenses but the bailee is bound to bear all the ordinary and reasonable expenses of the bailment.

Example: A leaves his dog with B, a professional dog trainer, for a week as he is going out of town. B is being paid for the same so A is not required to bear the ordinary expenses. However, the dog suffered from high fever and B had to call a doctor. A has to repay all the medical expenses born by B.

In case of Gratuitous Bailment

The bailor is required to pay all the necessary expenses incurred by the bailee for the purpose of bailment for the delivered goods.

Example: A lends his dog to B, a close friend, for a week as he is going out of town. A is not paying anything to B to take care of his dog so he needs to pay him for all the ordinary expenses born by B to feed the dog for a week. However, if the dog gets sick and suffers from high fever, A has to pay B for all the additional medical expenses incurred by him.

Indemnify Bailee

According to Section 159, in case of gratuitous bailment, the bailor can terminate bailment at any time even if the bailment was for a specific time or purpose. However, the bailor is required to indemnify the bailee if the losses incurred by him due to the premature termination exceed the benefits he derived out of the bailment.

Example: A lends his car to B, a friend for a week as B has to go out of town for a family gathering. As B has not paid any charges for bailment, he fills 30 litres of petrol in the car for the drive. Suddenly after 4 days, A calls B to give his car back. So, B can demand from A value of petrol remaining in the car after 4 days.

Indemnify the bailee when he suffers due to the title of bailor to the goods being defective

According to Section 164, the bailor has to indemnify the bailee if even after knowing that he is not entitled to the good and makes bailment due to which, the bailee suffers losses.

Example: A lends his car to B, a customer for a week as B has to go out of town for a family gathering. B has already paid an advance of Rs 5000 to A. However, after 4 days, the police seized the car from B as it was stolen and belonged to C. B had to arrange a new car for the same purpose and has to pay a higher rent. B can claim from the amount he has already paid and also the higher rent he had to pay for the new car.

Receive back the goods

After the expiration of the term of the bailment or when the purpose is fulfilled, the bailor has a duty to receive the goods back from the bailee. However, if the bailor refuses to do the same, he will be entitled to pay the bailee compensation for the necessary expenses of custody and care.

Example: A bailed his dog to B for one week at the daily charge of Rs. 100. A visited B to receive his dog after 25 days. He has to pay the additional charges for 18 pays. However, if this had been a gratuitous bailment, A would have been required to pay the ordinary and extraordinary expenses for 18 extra days.

Duties of the Bailee

Take Reasonable Care of the Goods Bailed

As per Section 151, irrespective of the fact that the bailment is gratuitous or non-gratuitous, the bailee has a duty to take reasonable care of the goods bailed similar to a man of ordinary prudence would. However, according to Section 152, if even after reasonable care the goods are damaged or destroyed, the bailee is not liable for the loss of the bailed goods.

Example: A bailed his dog to B for a week at a daily charge of Rs. 100. As A came to B to reserve the dog after a week, he finds out the dog was stolen from B. If it is proved by B that he took reasonable care of the dog but still the dog was stolen, then he will not be held responsible, but, if however, A proves that B didn’t take reasonable care, say left the dog unchained, B would be responsible for the same.

No Unauthorized use of goods

As per the Section 154, if due to the fact that the bailee uses the good bailed in a manner inconsistent with the terms of the contract then he will be held liable in case there is any damage to the good, even if he was not negligent or the damage resulted from an unforeseeable accident.

Example: A lends his car to B for him to drive only. B allows C, her cousin to drive the car. C rides the car with care but still ends up in an accident, damaging the car. B is liable to compensate A for the damages caused to the car.

Not mix goods bailed with own goods

The bailee must not mix the bailed goods with his own goods and must keep them separately. If however, he mixes the bailed goods with his own then:

  • According to Section 155, if mixed with the consent of the bailor, both of them will have a proportionate interest in the mixture produced.
  • As per Section 156, if mixed without the consent of the bailor, and if it can be mixed/divided, the bailor has to bear all the expenses for the same and damages caused due to the mixture.
  • According to Section 157, if mixed without the consent of the bailor, and if the mixture is beyond separation, the bailee is required to compensate the bailor for the loss of the goods.

Return any Accretion to the goods

In the absence of any contract for the same, any profit which may have accrued from the goods bailed, the same must be delivered to the bailor.

Example: A bailed his cow to B for a week. The cow gave birth to a calf during this period. The bailee must deliver the calf along with the cow to A at the time of delivery.

Return the goods

After the time for which the good has bailed is expired, or the purpose has been fulfilled, the bailee must return it to the bailor as per his direction.

Rights of the Bailor

Enforcement of rights

The bailer, by suit, can enforce all the liabilities or duties of the bailee.

Avoidance of Contract

According to Section 153, if the bailee does anything which is inconsistent with the terms of bailment, then, the bailor can terminate the bailment.

Example: A bailed his horse to B for his own riding only. B allowed C to ride the horse, violating the terms of bailment. A can terminate bailment.

Return of goods lent gratuitously

In case the goods are lent gratuitously, the bailor has the right to demand their return whenever he sees fit, even though they were lent for a specific period of time or purpose. However, he needs to indemnify the bailee in case the losses exceed the benefit derived from the use of such a good due to premature termination of bailment.

Compensation from a wrong-doer

If the bailee is wrongfully deprived by any third party of the use or possession of goods bailed and does them any injury, the bailor or the bailee has the right to bring a suit against the third person for the injury.

Rights of the Bailee

Delivery of goods to bailor without title

According to Section 166, if the bailor has no title to the goods bailed, then the bailee, in good faith, can deliver them back to the bailor according to his directions, if any, the bailee will not be responsible for such delivery.

Can apply to a court to stop delivery

According to Section 167, if there is a situation in which a third person claims the goods bailed to the bailee, then the bailee can stop the delivery of such goods to the bailor by applying to the court and decide the title of the goods.

Right against trespass

According to Section 180, if the bailee is deprived of the use of the goods bailed by any third party, the bailee has the right to bring an action against the third party.

Bailee’s lien

When the bailee is not paid charges with respect to the goods bailed he has the right to retain the goods. This right is referred to as ‘particular lien’.

Contract of bailment involves the transfer of possession of the good from the bailor to the bailee for the specific purpose and both, the bailor and the bailee, have been confronted with some rights and duties which are necessary for them to follow whenever seem suitable. Also, for the contract of bailment to be valid, all the essential features need to be fulfilled. Moreover, bailment of goods is different from the sale of goods as bailment is involved with the transfer of possession while the sale is involved with the transfer of ownership.

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Contract of Bailment, Rights And Duties of Bailor and Bailee, License, Sale

Contract of Bailment, Rights And Duties of Bailor and Bailee, License, Sale

  • Introduction
  • Essential Features of Bailment

Difference between Bailment and License

Difference between Bailment and Sale

  • Duties of Bailor and Bailee
  • Rights of Bailor and Bailee

Introduction-

The word “ bailment ” has been derived from the French word “ ballier ” which means “ to deliver ”. In general, Bailment means the delivery of goods of a person to whom permission is given to have the goods of another person.

The contracts of bailment come under a special class of contract and are dealt under Sections 148 to 181 of the Indian Contract Act, 1872 . Though the Contract Act covers the general principles related to contracts of bailment but it does not deal with all types of bailment. The Carriers Act, 1865, The Carriage Act of Goods by Sea Act, 1925 and The Railways Act, 1890 , are the few Acts which deal with special types of bailment.

According to Section 148 of the Contract Act, “ Bailment means the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them”.

The person delivering the goods is called the “ bailer ” and the person to whom they are delivered is called the “ bailee ”.

Illustrations-

  • Sanju delivers a piece of cloth to Manju, a tailor, to be stitched into a suit. There is a contract of bailment between Sanju and Manju.
  • ‘Z’ lends a novel to ‘Y’ to be returned after a month. There is a contract of bailment between ‘Z’ and ‘Y’.
  • Najuk sold some goods to Komal who left them in the possession of Najuk. The relationship between Najuk and Komal.

Essential Features of Bailment-

  • Agreement: Bailment is always created by an agreement between the bailer and the bailee. It can be either express or implied.
  • Delivery of Goods: Bailment involves the change of possession without giving ownership. The possession means the right to keep control over the delivered goods.
  • Movable Property: Goods in Bailment involves all types of movable goods except money. Thus, bailment of immovable goods cannot be done.
  • Definite Purpose: Goods are delivered for a definite purpose. For ex. repairing, tailoring, security, etc.
a) The concept of Bailment is governed by the   Indian Contract Act, 1872. a) The concept of License is governed by the Easement Act, 1882.
b) Section 148 of the Contract Act, defines Bailment as b) Section 52 of the Easement Act defines Licenses as “ ”
c) Bailment is in regard to movable property. c) License is in regard to immovable property.
d) Bailment always requires consideration except in certain circumstances. d) License may or may not require consideration.
e) In the case of bailment, the goods are delivered by the bailer to bailor for a certain purpose with a condition that on fulfillment of such conditions, the goods shall be returned back. e) In case of license, the licensee is authorized to do or continue to in or upon immovable property of the grantor.
a) The concept of Bailment is governed by the   Indian Contract Act, 1872. a) Sale is covered under Sale of Goods Act and Transfer of Property Act.
b) The parties involved in a Contract of Bailment are “bailor” and “bailee.” b) The parties involved in Sale are “vendor” and “purchaser.”
c) Bailment is in regard to movable property. c) Sale can be in respect of movable as well as immovable property.
d) In case of bailment, the goods are delivered by the bailer to bailor for a certain purpose and the goods can be used by the bailee only as per the instructions of the bailor. d) In case of sale, the goods or the property are transferred by the seller to buyer. Thus, the buyer can use the goods the way he wants.
e) Bailment may be without any consideration (gratuitous) or with consideration (non-gratuitous). e) Sale always requires consideration.
f) Ownership is not transferred in case of bailment. f) Ownership is transferred in case of sale.
g) Registration is not mandatory for the contract of bailment. g) A sale of immovable property which is of more than one hundred rupees, the sale must be in writing, registered and attested.

Duties of Bailor and Bailee-

Duties of bailor:.

1) Disclosure of known faults (Section 150): Bailor is supposed to disclose the known faults in the goods bailed to the bailee and if he fails to do so, he will be held liable for the damage casued to the bailee due to such faults. If the bailor bails goods for hire, he will be liable for even the faults which he isn’t aware of. However, in a bailment for consideration, he can be held responsible only for the faults which he is aware of and failed to disclose them.

2) Bear unordinary expenses of bailment (Section 158): The bailor has to bear any unordinary expenses incurred under contract of bailment. In case of bailment for consideration, when the goods are required to be carried or kept or some work is done in relation to them by the bailee, the bailor is required to repay all the expenses incurred by the bailee to him.

3) Indemnification of bailee for incurring loss when bailment is terminated prior to its term (Section 159): A bailment for consideration can be terminated at any time by the bailor even when the bailment was for a specific purpose or time. Any loss accrued to the bailee from such termination shall not more than the benefit derived from the bailment. In case the loss is more than the benefit, the bailee shall be indemnified by the bailor.

4) Receive back the goods: The bailor shall receive the goods back when the bailee returns them after the expiry of term or fulfillment of purpose of bailment. If the bailor denies the receipt of goods, the bailee shall receive compensation from bailor for the expenses incurred due to custody of such goods.

5) Indemnification of the bailee (Section 164): If the bailor’s title to the goods is defective and he is not entitled to make bailment and the bailee suffers any loss or damage as a consequence, the bailor will be liable for such loss or damage.

Duties of Bailee-

1) reasonable care of the goods (section 151): the bailee has a duty to take care of the goods bailed as any reasonable man would take of his own goods under similar circumstances. the burden of proof that he exercised reasonable care negligently when he fails to return the goods or return them in a damaged condition lies on the bailee. if the goods are destroyed or damaged even after bailee’s reasonable care, then the bailee is not responsible for such loss under section 152..

2) Not use the goods inconsistently with the contract (Section 154): A bailee shall be liable for the loss incurred due to use of goods inconsistent with the terms of contract even if he did not act negligently and the damage has resulted due to an accident.

3) Not to mix the goods bailed with his own goods (Section 155, 156): The bailee has a duty not to mix his goods with the goods of the bailor and shall keep them separate. If he does so:

  • with the consent of the bailor, the bailor and the bailee shall have an equal proportion of interest in this mixture of goods.
  • without the consent of the bailor, the bailee has to bear the expenses of division and separation and the damages arising from such mixture, if the goods can be divided/separated.
  • without the consent of the bailor, the bailee shall compensate the bailor for the loss if the goods mixed cannot be separated.

4) Not to set up an adverse title (Section 117): The bailee shall not hold the goods for the bailor on behalf of him as per Section 117 of the Evidence Act, 1872. The bailee cannot deny the rights of the bailor to have the goods and receive them back. The bailor is bound to prove that the other person had a right to goods as against the bailor if he delivers them to person other than the bailor.

5) Return accretion to the goods (Section 163): The bailer shall deliver any increase or profit accredited from the goods bailed to the bailor except as otherwise provided in the contract.

6) Return the goods (Section 161): The bailee has a duty to return or deliver the goods bailed according to the bailor’s directions when the time of the bailment expires or the purpose of bailment has been fulfilled.

Rights of Bailor and Bailee-

Rights of bailor.

1) Enforcement of Rights: The bailor has a right to sue the bailee for enforcing all the liabilities and duties of him.

2) Avoidance of Contract (Section 153): The bailor has a right to terminate the bailment if the bailee doesn’t any act inconsistent with the terms of the bailment with regard to the goods bailed.

3) Return of goods (Section 159): When the goods are lent for consideration, the bailor has a right to demand their return as and when he wants even if he lent them for a specific period of time or purpose.

4) Compensation from wrongdoer (Section 180): If a bailee is deprived of the use or possession of the goods bailed by a third person wrongfully or if the goods are damaged, the bailee or bailor has a right to sue the third person for such damage or deprivation.

Rights of Bailee-

1) Delivery to one of several joint bailors of the goods bailed (Section 165): If goods of several joint owners are being bailed, the bailee may deliver them back to one joint owner without the consent of all owners when there is no agreement to the contrary.

2) Delivery of goods to bailor without title (Section 166): If any person other than the bailor claims the goods bailed, the bailee has a right to apply to Court to prevent the delivery of goods to the bailor and to decide the title of such goods.

3) Right to take action against trespassers (Section 180): If any third person deprives the bailee wrongfully of the possession or use of goods bailed to him, the Bailee can file a suit against that person in respect of the goods bailed.

4) Bailee’s Lien: When the charges incurred by the bailee in regard to the goods bailed are not paid to him, he has a right to lien i.e. right to retain the goods with him.

Conclusion-

On the basis of above discussion, it can be analyzed that bailment is a contract in which a delivery of possession of specific goods is given to another person for a specific purpose and it is different from the concept of license and sale. The bailee and the bailor have to perform in accordance with the provisions of the Indian Contract Act, 1872 and the contract of bailment.

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Contract of Bailment

Chapter IX (section 148 to section 181) of the Indian Contract Act talks about bailment. Contract of bailment is defined under section 148 of the Act.

A bailment is the delivery of goods by one person to another for some purpose; upon a contract that they shall, when the purpose is accomplished, the property must be returned back or otherwise disposed off according to the directions of the person delivering them.

Bare Act PDFs

  • The person who delivers the goods (movable property) is called the bailor .
  • The person to whom the goods are delivered is called the bailee .
  • And the contract between the bailor and bailee is called the contract of bailment .

The contract of bailment is created only about movable property.

Rights and Duties of Bailee

Bailee has some rights that he can enjoy as well as some duties to follow.

Rights of Bailee

1. Right to get compensation.

2. Right to terminate the contract of bailment: If the terms and conditions are decided by the parties while making a contract and the goods are not according to terms and conditions of the contract, then the bailee has right to terminate the contract.

3. Right to get expenses: If the expenses are incurred by the bailee regarding the goods bailed, then afterwards the bailee is entitled to get the expenses.

Duties of Bailee

1. Duty to take care of the goods.

2. Duty to return goods: After the accomplishment of purpose, it is the duty of the bailee to return the goods to the bailor.

3. To make proper use of goods bailed: The use of the goods which are mentioned under the contract, the use must be according to the contract.

4. Duty not to mix his own goods with the goods of bailor.

5. Duty not to question the title of the bailor.

6. Duty of bailee to pay increase or profit from goods bailed. For Example , A gives a cow to B on bailment and after the bailment cow gives birth to a calf. It is the duty of the bailee to return cow as well as the calf to the bailor.

Rights and Duties of Bailor

Bailor has certain rights and also some duties that he has to follow. They are:-

Rights of Bailor

1. Right to get his goods back.

2. Right to get the increase or profit from the goods bailed.

3. Right to get compensation.

4. Right to terminate the contract.

Duties of Bailor

1. It is the duty of bailor to disclose faults in goods bailed: It is the paramount duty of the bailor to express the fault of the goods to the bailee.

2. Duty of the bailor to give compensation to the bailee.

3. Duty to give expenses.

You may like to read : Essential Elements of a Valid Contract.

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Bailment: Essentials, Duties of Parties and Case Laws

The article 'bailment' aims to demystify the concept of bailment by explaining the essentials of bailment and the duties of parties, along with citing the relevant case laws..

Bailment: Essentials, Duties of Parties and Case Laws

The article 'Bailment' by Milind Garg aims to demystify the concept of bailment by explaining what are the essentials of bailment, and the duties of parties along with citing the relevant case laws.

Contracts are of immense importance for society as they legally bind the parties together and they help in the fulfilment of legal promises and help in the facilitation of business trade. In this article, the author has discussed bailment. It is a special type of contract that involves delivering the possession of goods to another for some purpose. Here only possession is transferred and not the ownership of property. In our day-to-day life, we encounter different instances of Bailment. For example, we give our watch for repair, our motorbike for services, our clothes for alterations, etc. All these constitute Bailment as goods or chattels are delivered only for a specified purpose like repair, alteration, and service. Other examples of Bailment can be putting the goods in a cloakroom, entrusting your car to valley parking, or giving your laptop for repairs.

Bailment has to be distinguished from mere custody. In custody, the goods are transferred for look after only and custody can be with a servant or a guest. There is no specific purpose or usage for which goods are transferred unlike in Bailment. Here the person giving the goods is called the bailor and the person receiving the same is called the bailee. Bailment laws define the duty and rights of each party and specify the role that they play. In the absence of them, a party may enjoy the goods at the cost of the other. It says that goods can be used for only a specified purpose only upon which they were delivered.

What is Bailment?

Chapter IX (Section 148-181) talks about the provisions of bailment in the Indian Contract Act, 1872 . The word ‘bailment’, is derived from ‘bailer’, a French word which means ‘to deliver’.

Section 148 of the Indian Contract Act defines Bailment as follows,

" A ‘bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’.

So, the essentials can be:

1) Delivery of goods by the Bailor to Bailee

2) Delivery of the goods must be made for some purpose

3) There should be a valid contract between the parties

4) On the fulfil of purpose, goods are to be returned or disposed of by the bailee.

An illustration of bailment can be delivering of a watch for repairs to a shopkeeper. The purpose of bailment here is the repair of the watch.

In the case of M/S Rasiklal Kantilal & Co v. Board Of Trustee of Port of Bombay , the court held

“Title to the goods is irrelevant even in the cases of a bailment arising under a contract. Any person who is capable of giving physical possession of goods can enter into a contract of bailment and create a bailment. It can be seen from Section 148 of the Contract Act that bailment is (ordinarily) a contractual relationship and bailment can be created by any person who is in possession/custody of goods but not necessarily the owner of the goods. When the purpose of bailment is accomplished, the goods are to be returned or otherwise disposed of according to the directions of the person (bailor) delivering them”.

Types of Bailment

On the basis of remuneration, the bailment may be classified as a) Gratuitous Bailment & b) non-gratuitous bailment . In case of gratuitous bailment, the bailee or bailor is to receive no benefit from the goods bailed. It is a bailment without any consideration. In non-gratuitous bailment, the bailment is for some reward. Here there is a consideration for bailment. An example can be lending a horse for some fee.

Delivery of Goods

An essential element in a bailment is the delivery of the goods. Section 149 of the Indian Contract Act, 1872 talks about how the delivery is to be made. It says,

“The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorized to hold them on his behalf.”

Delivery of goods can be actual or constructive. In actual delivery, the goods are physically delivered to the bailee. Transferring possession of a car in a garage can be an example of actual delivery. In constructive delivery, possession can be transferred without any alteration in the ownership or custody of the goods. A person holding goods on behalf of another can be an example of constructive delivery.

In the case of Governor General of India in Council v. Jubilee Mills, Ltd. , the Bombay high court held that. “So far as the railway administration itself was concerned, there was clear evidence on the record that it had accepted the custody of the goods, the same having been brought in with the consent and authority of the station master and having been stacked on the down platform at his instance. All the conditions therefore were satisfied and the goods were in fact delivered to the railway administration for carriage within the meaning of section 72 of the Railways Act and the liability of the railway company as bailee of the goods came into existence.”

Duties of Bailor

There are five duties of the bailor as mentioned in the Contract Act. The duties are

A. Duty to disclose all known defects (Section 150)

In Section 150, where the bailment is gratuitous, the bailor has to disclose to the bailee the only defaults in the goods which are known to him. But if the bailment is not gratuitous, i.e., bailor for reward, the bailor is responsible for damage to the bailee, whether he was or he was not aware of the defects in the goods.

For e.g., A takes B’s car for a trip upon the fulfilment of which he would return the car to him. B made A aware of the possible defect in the front right tyre of the car. Soon when B went on his trip, the brakes of the car failed and A rammed into a truck as a result of which he was injured. Here B is not liable as the bailment was gratuitous and B was not aware of the fact.

B. Duty to bear necessary and extraordinary expenses (Section 158)

According to Section 158, the bailee is entitled to the necessary cost which is incurred by him for the purpose of bailment. In the case of gratuitous bailment where no remuneration is made, the bailee is entitled to the necessary costs. But in gratuitous bailment, the goods are used for the purpose of the bailee, and then he can ask for no expenses. For instance, if A takes B’s car for a trip for his own purpose, then he himself has to bear the cost of fuel and other expenses.

C. Duty to indemnify loss for premature termination of bailment (Section 159)

Where some goods are gratuitously lent by the bailor to the bailee, the bailor may ask for the restoration of the goods even before the stipulated period hasn’t expired. But Section 159 also says that where the bailee acted on the faith of the time period and made subsequent advances or plannings and as a result of the return of goods he may face loss, he is entitled to be indemnified for the loss which exceeds the benefit from the bailor.

D. Duty to indemnify the bailee against the defective title of the bailor (Section 164)

Section 164 says that where the bailor was not entitled to make bailment, and as a result of which the bailee suffers losses the bailee is entitled to recover the same from the bailor.

E. Duty to receive back the goods

When the purpose of the bailment is finished the bailor must get back his property. If the bailor fails to retain back his property as a result of which the bailee has to keep it for an extended period, the bailor is liable for the necessary expenses for the maintenance of the things bailed. For instance, if the bailor fails to retrieve back his horse after the period of bailment is over, and the bailee is made to keep the goods for two more months, then the bailee is entitled to receive the necessary expenses that occurred in the maintenance of the horse.

Duties of Bailee

There are five duties mentioned for the bailee in the contract act.

A. Duty to take care of the good (Section 151)

The bailee is to take care of the goods bailed to him as a man of ordinary prudence would take if his own goods of the same bulk, quantity or value. It is no justification that the bailee may use the goods bailed in any way he wants. He must exercise due care while handling the goods as a reasonable person would.

For example, A gave his bike on hire to B. B drove it negligently and crashed the front portion. Here B was not making use of the bike as a person of ordinary prudence would, and he may be made liable for the same.

In the case of Taj Mahal Hotel v. United India Insurance Co. Ltd. , the respondent, upon reaching the hotel, gave his car key for valley parking which bears a tag that hotel management is not responsible for any loss as the car is parked at the owner's risk. The court refuted this contention and held that “The guest has an implicit expectation that the repute and standards of 5-star hotels would entail adequate safety of the vehicles handed over for valet parking. Thus, in such a scenario, if the hotel is allowed to exclude its liability for negligence by way of a contract, the standard of care imposed under Section 151 will become illusory and virtually redundant, rendering consumers vulnerable without any remedy. The required to be taken by the hotel as a bailee under Section 151 is sacrosanct and cannot be contracted out of.”

Another case in this regard can be Union of India v. Udho Ram & Sons , M/s Radha Ram-Sohan Lal of Calcutta consigned certain goods to herself in Delhi. Of the consignment, certain articles were not delivered to M/s Udho Ram & Sons, the plaintiffs, in whose favour the railway receipt had been endorsed by the consignor. Having failed to receive the compensation for the loss suffered on account of the articles not being delivered, the suit giving rise to this appeal was instituted. The case was whether the railway was negligent in handling the goods. The court held the railway administration guilty of not handling the goods carefully as mentioned in Section 151 of the act. There is no evidence on record that the railway protection police who escorted the train were adequate in strength for the purpose of seeing that the goods were not interfered with in transit.

B. Duty not to make any unauthorized use of goods (Section 154)

This section makes the bailee liable for any loss to the goods if any unauthorized use is being made by the bailee contrary to the conditions of the bailment. For e.g., if a woman gives her dress to a tailor for alteration and the tailor wears the same in a public gathering upon which some permanent food stains are left on the dress, the tailor is to make compensation to the bailor of the dress.

C. Duty not mix bailors goods with his own goods without bailor’s consent (Section 156-157)

The bailee is not entitled to mix the goods of the bailor with his own, without consent to the contrary. When the goods are mixed by the bailee and the goods can be separated, the property in them remains in the parties. But when the goods are inseparable the bailee is to compensate the bailor for the loss of goods. In the former case, the bailee has to himself bear the cost of separation as it occurred at his fault. For e.g., if A mixes B’s high-grade apples with A’s inferior ones and they cannot be separated upon proper inspection, A is to make good the loss to B.

D. Duty to return the goods (Section 160-161)

Without the demand of goods by the bailor, the bailee is to deliver the goods to the bailor upon the fulfilment of the purpose of the bailment or upon the expiry of the period for which the goods were bailed, whichever is earlier.

Also, when the goods are not returned by the bailee at a proper time after expiration or fulfilment, the bailee is responsible for all the damages or deterioration of the goods that may occur as a result.

E. Duty to return accretions to the goods (Section 163)

The bailee is bound to return the bailor any accretions on the goods bailed to him.

Rights of Bailor

A. Section 154 says that the bailor is entitled to be compensated for any damage that occurred on any unauthorized goods by the bailee.

B. The bailor may avoid the bailment if the bailee makes any use of the bailed good if it is inconsistent with the conditions of bailment. Section 153 makes a remark about the same. For example, if A gave his laptop to B for educational purpose and B uses it to watch a movie, the contract is voidable at the option of A.

C. The bailor is entitled to any accretions or profits on the goods bailed.

Rights of Bailee

A. The bailee is entitled to get compensated for any loss suffered by him by the defects of the bailed if the bailment is for reward.

B. The bailee is entitled to receive a loss which exceeds the profit that which the bailee derived when goods lent gratuitously were retrieved back by the bailor before the expiration of the bailment period.

C. The bailee is entitled to necessary extraordinary expenses incurred by him. For example, A bailed his dog to B. Soon the dog developed some allergy on his face as a result the bailee had to incur the expenses of the medication. The bailee is entitled to recover the expenses by the bailor.

[1] Indian Contract Act, 1872

[2] Dr Avtar Singh: Law of Contract & Specific Relief, Eastern Book Company, Lucknow

[3] Dr R. K. Bangia: Contract, Allahabad Law Agency, Allahabad

[4] M/S Rasiklal Kantilal & Co v. Board Of Trustee Of Port Of Bombay, (2017) 11 SCC 1

[5] Governor General of India in Council v. Jubilee Mills, Ltd., 1952 SCC OnLine Bom 10

[6] Taj Mahal Hotel v. United India Insurance Co. Ltd., (2020) 2 SCC 224

[7] Union of India v. Udho Ram & Sons, (1963) 2 SCR 702

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  • Employees’ Compensation Act, 1923
  • Payment of Gratuity Act, 1972
  • Apprentices Act, 1961
  • Payment of Bonus Act, 1965

I. Law of Contract

1. nature and kinds of contracts.

  • Agreement under Contract Law: Meaning, Essentials, Types and FAQs
  • Contract : Meaning, Elements, Types and Purpose
  • Types of Contract | Based on Validity, Formation and Performance
  • Law of Contracts : Elements, Purpose and FAQs
  • Doctrine of Privity of Contract: Meaning, Exceptions and FAQs
  • Doctrine of Restitution: Meaning, Exceptions and FAQs
  • Difference between Agreement and Contract
  • Franchising Agreements: Meaning, Components, and Types
  • Master Service Agreement (MSA): Significance, Merits, Clauses and FAQs
  • Pre-Incorporation Contracts: Meaning, Legality and FAQs
  • Balfour Vs. Balfour: Case Analysis
  • How to Read a Contract in 7 Easy Steps?
  • Rental Agreements: Important Clauses and Format
  • Rental Agreements : Meaning, Importance, Procedure and Documents
  • Types of Legal Agreement
  • Difference between Under Contract and Pending Contract
  • Essentials of a Strong Contract : A Checklist
  • All about Termination of Employment Contracts in India

2. Offer and Acceptance

  • Proposal or Offer: Meaning, Legal Rules and Revocation
  • Acceptance: Meaning, Legal Rules and FAQs
  • Communication of Offer, Acceptance and Revocation

3. Consideration

  • Consideration: Meaning, Essentials and FAQs
  • No Consideration, No Contract : Exceptions and FAQs

4. Capacity of Parties

  • Capacity of Parties : Capacity to Contracts and Legal Requirements
  • Minor: Meaning, Minor's Agreements and Exception
  • Person of Unsound Mind: Meaning, Cases and Effects
  • Disqualified Persons under Law: Meaning and Disqualifications

5. Free Consent

  • Free Consent : Meaning, Elements and FAQs
  • Coercion under Indian Contract Act : Case Laws and Effects
  • Undue Influence : Meaning, Presumption and Effects
  • Difference between Coercion and Undue Influence
  • Misrepresentation : Meaning, Cases & Effects (Indian Contract Act)
  • Fraud: Meaning, Cases and Effects
  • Difference between Fraud and Misrepresentation
  • Mistake under Indian Contract Act, 1872

6. Legality of Object and Consideration

  • Consideration: Meaning and Unlawful Considerations
  • Unlawful Consideration in Part & Illegal Agreements (Indian Contract Act)

7. Void Agreements

  • Void Agreements : Meaning and Expressly Declared Void Agreements
  • Difference between Void and Voidable Contract
  • Difference between Void and Illegal Agreement

8. Contingent Contract

  • Contingent Contract: Meaning, Elements and Enforcement

9. Performance of Contracts

  • Performance of Contract under Indian Contract Act
  • Doctrine of Frustration : Meaning, Applicability, Conditions, and Effects

10. Discharge of Contract

  • Discharge of Contract : Meaning, Modes and Exceptional Cases

11. Quasi-Contracts

  • Quasi Contracts: Meaning, Features and Types

12. Remedies for Breach of Contract

  • Remedies for Breach of Contract: Meaning, Legal Remedies and FAQs
  • Consequences of Breach of Confidentiality

13. Indemnity and Guarantee

  • Contract of Indemnity: Meaning & Features (Indian Contract Act)
  • Contract of Guarantee: Meaning & Features (Indian Contract Act)
  • Difference between Contract of Indemnity and Guarantee
  • Difference between Guarantee and Warranty

14. Bailment and Pledge

Contract of bailment : meaning, features, duties and rights.

  • Contract of Pledge : Meaning, Features, Duties and Rights
  • Contract of Pledge: Meaning and Important Cases
  • Difference between Contract of Bailment and Contract of Pledge
  • Agent: Definition, Meaning, Rules and Kinds
  • Contract of Agency : Meaning, Characteristics, Methods and Types
  • Extent of Agent's Authority: Indian Contract Act
  • Duties & Rights of Agent: Indian Contract Act 1872
  • Rights, Duties & Liabilities of Principal: Indian Contract Act 1872
  • Termination of Agency : Indian Contract Act, 1872
  • Difference between Agent and Servant

II. Law of Sale of Goods

16. contract of sale of goods.

  • Contract of Sale of Goods: Meaning, Definition and Essentials
  • Difference between Sale and Agreement to Sell
  • Kinds of Goods under the Sale of Goods Act, 1930

17. Conditions and Warranties

  • Conditions under Sale of Goods Act, 1930
  • Warranty: Meaning, Elements and Types
  • Difference between Condition and Warranty

18. Transfer of Property

  • Transfer of Property under Sale of Goods Act 1930
  • Transfer of Title by Non-Owners: Meaning and Rules

19. Performance of Contract of Sale

  • Delivery : Meaning, Modes & Rules (Sale of Goods Act)

20. Rights of Unpaid Seller

  • Rights of Unpaid Seller : Sale of Goods Act 1930
  • Buyer's Rights Against Seller and Auction Sale

III. Law of Partnership

21. definition and nature of partnership.

  • Indian Partnership Act, 1932: Meaning, Essential Requirements and Kinds
  • Partnership | Meaning and Features of Partnership

22. Formation of Partnership

  • Partnership Deed : Aspects and Registration
  • Types of Partnership
  • Non- Registration of Partnership Firm: Effects and Exceptions

23. Rights, Duties and Liabilities of Partners

  • Rights & Duties of Partners (Law of Partnership)
  • Relations of Partners to Third Parties (Law of Partnership)

24. Dissolution of Partnership Firm

  • Dissolution of a Partnership Firm: Meaning, Modes of Dissolution & Modes of Settlement (Section 48)

IV. Law of Negotiable Instruments

25. negotiable instruments.

  • Negotiable Instruments Act 1881 : Definition, Kinds & Features
  • Promissory Note: Features and Parties
  • Bills of Exchange: Meaning, Features, Parties, and Advantages
  • Difference between Bills of Exchange and Promissory Note
  • Types of Bills of Exchange
  • What is a Cheque – Types, Features, Chequebook, Advantages
  • Dishonour of Cheque : Meaning, Essentials, and Legal Implications
  • Types of Instruments under Negotiable Instruments Act
  • Maturity of Negotiable Instruments : Meaning, Rules, and Payment

26. Parties to Negotiable Instruments

  • Holder and Holder in Due Course: Meaning, Conditions and Privileges
  • Capacity of Parties under Negotiable Instruments Act
  • Liability of Parties to Negotiable Instruments: Negotiable Instruments Act, 1881

27. Presentment of Negotiable Instruments

  • Presentment For Acceptance: Negotiable Instruments Act
  • Presentment for Sight & Payment: Negotiable Instruments Act

28. Negotiation of Negotiable Instruments

  • Negotiation of Negotiable Instruments: Definition, Meaning and Modes
  • Negotiation by Unauthorised Parties: Negotiable Instrument Act, 1881

29. Dishonour and Discharge of Negotiable Instruments

  • Dishonour of Negotiable Instruments: Types, Effects & Notice
  • Discharge of Negotiable Instruments : Meaning, Types and Concepts
  • Difference between Dishonour and Discharge of Negotiable Instrument

30. Crossing and Bouncing of Cheques

  • Crossing of Cheques (Negotiable Instruments Act)
  • Bouncing of Cheques: Meaning, Remedies, Offences and Case Laws

V. Law of Information Technology

31. information technology act, 2000.

  • Information Technology Act, 2000: Elements, Applicability and Amendments
  • Difference between Electronic Signature and Digital Signature
  • Electronic Governance : Information Technology Act, 2000
  • Electronic Contracts: Meaning, Legal Validity and Kinds
  • Electronic Payment System: Types, Advantages, Disadvantages and Regulatory Bodies
  • Legal Issues and Consideration in E-commerce
  • Digital Signature, Electronic Signature & Authentication of Electronic Records

VI. Law of Consumer Protection

32. consumer protection act, 1986.

  • Consumer Protection Act 2019 : Features, Significance, Rights and Provision

VII. Law of Insurance

Viii. law of insolvency, 37. objects and scope of the insolvency law.

  • SARFAESI Act: Introduction, Procedure, Penalties and FAQs

38. Procedure of Insolvency

  • Adjudication - Meaning, Definition, Process and Examples

IX. Law of Arbitration and Conciliation

41. general provisions regarding arbitration.

  • Alternative Dispute Resolution (ADR): Meaning, Types and FAQs

42. Arbitral Tribunal

  • Arbitral Tribunal: Appointment, Composition, Jurisdiction and FAQs
  • List of 7 Famous Arbitrators Who Made an Impact

44. Conciliation

  • Difference between Mediation and Conciliation

Other Topics

  • Payment of Bonus Act, 1965 : Applicability, Calculation, Offences and Penalties
  • Banking Regulation Act, 1949: Features, Objectives and Provisions
  • Factories Act, 1948: Provisions, Advantages, Disadvantages and FAQs
  • Employees' Compensation Act, 1923: Rights, Liability, and Compensation
  • Maternity Benefit Act, 1961: Objectives, Provisions, Impact and Challenges
  • The Apprentices Act 1961: Meaning, Obligations, Legal Status and FAQs
  • Payment of Gratuity Act, 1972: Features, Advantages, Disadvantages and FAQs
  • Industrial Disputes Act, 1947 : Objectives, Amendments, Provisions & FAQs
  • Provident Fund: Types, Applicability, Eligibility and FAQs
  • Child Labour Legislation in India: Features, Evolution, Amendments, and Ongoing Challenges
  • Difference between Payment of Wages Act, 1936 and Minimum Wages Act, 1948
  • Difference between Strict Liability and Absolute Liability
  • 10 Common Signs of Child Abuse : What to Look For
  • Internet Safety for Kids: 10 Legal Tips for Parents
  • 10 Steps to file an FIR
  • 10 Steps to Apply for Mutual Consent Divorce
  • 10 Top Law Colleges in India in 2024
  • Legal Aspects of Buying a Home : 10 Step-by-Step Guide
  • 10 Factors Property Owners Must Consider
  • 10 Must Have Skills to get a Good Legal Job in India
  • 10 Best Certificate Courses for Law Students in India
  • 7 Child Custody Tips for Parents Going Through Divorce
  • Top 7 Career Options in Law in India in 2024
  • 5 Steps to Take if You Are a Victim of Domestic Violence
  • Juvenile Delinquency | Meaning, Causes, Types and FAQs
  • Professional Ethics in Law: Legal Framework and Advantages
  • Nidhi Companies: Meaning, Benefits, Rules & Registration
  • Medical Malpractice: Signs, Prevention & Legal Recourse
  • How to Send a Legal Notice?
  • How to Start Studying Law : Step-by-Step Guide for Indian Students
  • Role of Cryptocurrencies in Money Laundering : Myth vs Reality
  • How can you become Advocate on Record (AOR) in Supreme Court of India?

Bailment is defined in the Indian Contract Act, 1872 under Section 148 as “A Bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them”. Bailment is a legal agreement that occurs when one person known as the Bailor , gives personal property to another, known as the Bailee , for a set amount of time or a specific reason. In a Bailment arrangement, the property is temporarily given to the Bailee, but the Bailor owns it. For a specific amount of time, the property is given to the bailee’s care, possession, and control. Once that time has passed, the item is returned to the bailor.

Geeky Takeaways:

  • The person who delivers the goods is known as Bailor.
  • The person who receives the goods for a specific purpose is called a Bailee.
  • It is covered under Chapter IX of the Indian Contract Act, 1872 and is a special type of contract.
  • Bailor gives property to the Bailee for a specific amount of time and once that time is completed, the item is returned to the bailor.

Table of Content

What is a Contract of Bailment?

Essential features of a contract of bailment, duties of the bailor and bailee, rights of the bailor and bailee, case law: taj mahal hotel v. united india insurance ltd., 2019, frequently asked questions (faqs).

Contract of Bailment is a legal agreement where the bailor temporarily gives the bailee possession of personal property for a predetermined period. Under this agreement, the bailee is responsible for the property’s safekeeping, usage, or transportation for the predetermined amount of time, while the bailor maintains ownership of the item. The goal, length of time, and circumstances under which the property is given, as well as the level of care required from the bailee, are usually specified in the provisions of the Contract of Bailment. To provide clarity and legal enforceability in treating the entrusted property, this contractual structure is guided by principles defining the rights and obligations of the parties concerned.

1. Valid Contract: A contract of bailment needs the consent of both parties, just like any other type of agreement . For a contract to be enforceable, there must be a legitimate offer, acceptance, consideration, legal capacity, and legality of purpose.

2. Delivery of Possession: The property must be physically transferred from the bailor to the bailee. This delivery, which initiates the contractual connection, is a crucial component of bailment. The bailee assumes management for a limited time without gaining ownership.

3. Delivery upon Contract : Delivery of possession must take place inside the parameters of an enforceable contract. The terms and conditions of the bailment must be understood by the bailor and bailee, whether by express agreement or implied agreement.

4. Purpose of Bailment : The reason for giving the property to the bailee must be clear in the contract. Common uses include safekeeping, repair, transportation, and storage. It is important to specify the purpose of the bailment; i.e., whether it is for the benefit of both parties or just one.

5. Return of Goods : The terms under which the property will be restored to the bailor must be spelled out in the contract. This could involve specified deadlines, the accomplishment of a stated goal, or the happening of a certain event. One crucial component of the bailment agreement is still the requirement to return the items.

Duties of the Bailor and Bailee

A. Duties of the Bailor

  • Transfer of Ownership: Following the terms of the agreement, the bailor is required to deliver the property to the bailee and transfer physical custody.
  • Complete Disclosure: It is the bailor’s responsibility to give full and correct information regarding the kind and state of the property being transferred. This covers any recognized flaws or unique factors that might have an impact on how the property is used.
  • Title Warranty : By granting custody to the bailee, the bailor essentially guarantees that they are the property’s legitimate owner.
  • Defend against Losses: If the bailee is not aware of any faults or concealed conditions of the property, the bailor is liable for compensating the bailee for any losses or damages.

B. Duties of the Bailee

  • Acknowledgment of Ownership: According to the conditions of the bailment agreement, the bailee is in charge of taking possession of the property.
  • Use for Agreed Goal: The property must be used by the bailee for the intended use alone, as stated in the bailment agreement, and not for any unauthorized purposes.
  • Return of Property: The bailee is required to return the property to the bailor in the same condition as when it was received after the purpose of the bailment is completed or the predetermined time has passed.
  • Notification of Problems: Generally, the bailee has to notify the bailor if they become aware of any problems or concerns about the property, such as damage or prospective damage.

A. Rights of the Bailor

  • Right to Terminate the Bailment: If the bailee violates the conditions of the agreement or the bailment’s goal is accomplished, the bailor is entitled to end the agreement.
  • Right to Demand Return: When the agreed-upon length of the bailment expires or the objective of the bailment is fulfilled, the bailor is entitled to seek the return of the property.
  • Right to Compensation: If compensation is part of the bailment agreement, the bailor has the right to obtain the agreed-upon sum from the bailee.
  • Right to be Informed: If the bailee has any problems with the property or if any situation could influence the bailment, the bailor has the right to be informed regarding the same.

B. Rights of the Bailee

  • Right to Possession: As stated in the bailment agreement, the bailee is entitled to possess and use the property for the designated purposes.
  • Right to Compensation: The right of the bailee to obtain the agreed-upon money from the bailor exists if compensation is included in the bailment agreement.
  • Right to Terminate: If both parties agree to end the bailment or if the bailor violates the conditions of the arrangement, the bailee may terminate the agreement.
  • Right to Lien: Under some conditions, the bailee may be able to place a lien on the asset and refuse to give up until the bailor pays any unpaid fees or damages.

Facts of the Case:

  • On 1st August 1998, a Maruti Suzuki Zen was parked in the respondent’s hotel and the owner gave his car for the parking in the valet service.
  • When the owner returned to get back his car, he learned that his car was stolen.
  • A complaint was lodged against the thief, but the car could not be found.
  • Respondent’s hotel valet parking service stated that the car was at the owner’s risk and outside the hotel premises and in case of theft, loss, or damage, the hotel will not be liable.
  • The plaintiff company paid a sum of ₹2,80,000 to the car owner to settle the insurance claim.
  • The plaintiff company sued the respondent hotel for negligence.

Issues Involved in the Case

  • Whether this case was a case of bailment?
  • Was the hotel liable in this case for negligence under the law of bailment?
  • Was the car owner eligible for compensation due to the absence of consideration between the two parties?

Judgement by the Court

  • Supreme Court in this case held that the theft of the car was a result of the respondent’s negligence and the respondent would be liable.
  • The court stated that the respondent cannot exclude its liability for negligence towards the vehicle parked in the parking of the respondent.
  • The consideration would be free parking for the customer for using the respondent’s services.
  • Hence, it can be concluded that if the general rule of bailment is applied, the bailee (hotel) will be liable if there is a loss of goods (vehicle) due to negligence.

A Contract of Bailment is a formal contract that transfers temporary ownership of personal property for a specified period between a Bailor and a Bailee. A legitimate contract of bailment must have three fundamental components; a purposeful transfer of possession, an intention to create a bailment, and the voluntary delivery of the goods. It creates a short-term relationship with well-defined rights and obligations, guaranteeing impartiality and clarity in the division of personal property ownership.

1. In a relationship including bailment, what rights does the bailee have?

The bailee’s rights include the ability to keep the property in their possession, use it for the intended purpose, receive payment if agreed upon, and in certain situations, to have a lien placed on unpaid fees.

2. Does a Contract of Bailment necessarily include payment?

No, a bailment agreement does not usually include payment. The conditions agreed upon by the bailor and the bailee will determine this.

3. Is a bailor responsible for losses resulting from hidden flaws in the property they have bailed?

Yes, the bailor may be held accountable for the losses sustained by the bailee if the bailor conceals known faults in the property that cause damages.

4. What differentiates bailment apart from other types of agreements concerning private property law?

In contrast to lease, sales and other legal arrangements, bailment includes the transfer of possession without a transfer of ownership.

5. What obligations does a Contract of Bailment place on the bailor?

Delivering the property, revealing its condition, guaranteeing its ownership and covering damages resulting from hidden flaws are among the bailor’s responsibilities.

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IMAGES

  1. 20+ SAMPLE Bailment Agreement in PDF

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  2. Draft Bailment Agreement

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  4. What is the Contract of Bailment

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  5. 9.Contract of Bailment

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VIDEO

  1. Contract of Bailment Part 1

  2. What is Bailment

  3. BAILMENT AND AGENCY

  4. BAILMENT: ANSWER TO QUESTION -3

  5. CONTRACT OF BAILMENT AND PLEDGE

  6. Contract Of Bailment- Bailment Meaning, Definition and Essential Elements

COMMENTS

  1. Contract of bailment and pledge

    As per Section 153 of the Act, "A contract of bailment is voidable at the option of the bailor, if the bailee does any act with regard to the goods bailed, inconsistent with the conditions of the bailment." ... Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework ...

  2. Commercial, Sample Agreement

    Bailment Agreement (Annotated) Editor's Note: A bailment involves the transfer of personal property by its owner to the possession and control of another for a stated purpose. This sample agreement is between two commercial parties, a manufacturer/seller of goods and its customer. The customer owns equipment that is necessary to produce the ...

  3. Bailment

    The term bailment refers to the transfer of personal property to another person for safekeeping, or for the other person to control or use temporarily. A bailment is a form of contractual relationship, even if no contract has been signed. The person receiving the property (the "bailee") has possession and control over the property for a specific period of time, during which he or she is ...

  4. Rights and Duties of Bailee and Bailor in a Contract of Bailment

    Definition of bailment - "A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the 'bailor'. The person to whom they are delivered is called the ...

  5. What is the Contract of Bailment?

    Bailment as defined in section 148 of the Indian contract act 1872 is the delivery of goods by one person to another for some specific purpose, upon a contract that these goods are to be returned when the specific purpose is complete. For example, A delivering his car for Service at the service center is an example of bailment.

  6. Contract of Bailment in Contract Law

    Introduction. Bailment is an agreement that could be oral or written mutually agreed upon between the person giving possession and the person taking possession, which might involve consideration.; Bailment as defined in Section 148 of the Indian contract Act, 1872 is the delivery of goods by one person to another for some specific purpose, upon a contract that these goods are to be returned ...

  7. Bailment- Meaning and Introduction

    Bailment is a type of a special contract, so all essential elements of a valid contract like consent, competency, etc are required for it to be valid. But, a valid bailment can arise even without a valid contract between the two parties, for example, a lost good finder becomes a bailee and has the responsibility to return it to its owner, the ...

  8. Contract of Bailment under Indian Contract Act

    Manner of Creation of Contract of Bailment. Contract: -according to section 2(h) of the Indian Contract Act, 1872 a contract is an agreement creating and defining an obligation between two or more persons by one or more to acts or forbearance on the part of others.Bailment arises out of a settlement. The contract can be expressed or implied. Sometimes, bailment arises with no explicit ...

  9. Contract of Bailment

    In a bailment the ownership remains with the bailor and is not transferred to the bailee or anyone as because if the ownership is transferred then it is not a bailment contract. It becomes a contract of sale. Bailment is only for movable goods and not for immovable goods. There should be a purpose for the delivery of goods like safe custody,use ...

  10. Bailment and Pledge under Indian Contract Act, 1872

    Section 148 of the Indian Contract Act, 1872 defines "bailment" as ' the delivery of goods from one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished be returned, or otherwise disposed of according to the directions of the person delivering them'. Illustrations - A gives his laptop ...

  11. Contract of Bailment:- Contract Act Notes

    the bailment becomes voidable at the option of the bailor; and. the bailee shall be liable for any loss or damage even if such loss is caused due to an act of God or other unavoidable reasons. Not to mix goods. Goods are mixed with bailor's consent. The parties shall have a proportionate interest in such mixture.

  12. Bailment (Section 148-171 of Indian Contract Act, 1872)

    The person who delivers the goods is known as the 'Bailor' and the person who receives the goods is known as 'Bailee' and the transaction is known as 'bailment' and the relation between them is defined in Section 148 of the Indian Contract Act. Bailment is a voluntary delivery of goods for a temporary purpose 'on the understanding ...

  13. CONTRACT OF BAILMENT

    There are generally two parties to the contract of Bailment. The person who is the owner and delivers the good is called ' bailor' while the person to whom the goods are delivered is called ' bailee'. General rules relating to Bailment are mentioned in Chapter IX (Section 148-181) of the Indian Contract Act, 1872.

  14. Bailment

    Right to terminate the bailment. A contract of bailment is voidable at the option of the bailor, where the bailee does any act with regard to the bailed goods, which is inconsistent with the conditions of the bailment. 16. Right to claim of goods. 13 Section 101 Contracts Act 14 Section 97 Contrats Act 15 Section 95 Contracts Act

  15. Contract of Bailment, Rights And Duties of Bailor and Bailee ...

    Bailment. License. a) The concept of Bailment is governed by the Indian Contract Act, 1872. a) Sale is covered under Sale of Goods Act and Transfer of Property Act. b) The parties involved in a Contract of Bailment are "bailor" and "bailee.". b) The parties involved in Sale are "vendor" and "purchaser.". c) Bailment is in regard ...

  16. Contract of Bailment Assignment

    Contract of Bailment Assignment - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. This document discusses the legal concepts of bailment and pledge under contract law. It defines bailment as the delivery of goods by one person to another for a specific purpose, upon terms requiring the goods to be returned or accounted for when the purpose ...

  17. Rights and Duties of Bailor and Bailee

    Contract of Bailment. Chapter IX (section 148 to section 181) of the Indian Contract Act talks about bailment. Contract of bailment is defined under section 148 of the Act.. A bailment is the delivery of goods by one person to another for some purpose; upon a contract that they shall, when the purpose is accomplished, the property must be returned back or otherwise disposed off according to ...

  18. Bailment: Essentials, Duties of Parties and Case Laws

    What is Bailment? Chapter IX (Section 148-181) talks about the provisions of bailment in the Indian Contract Act, 1872.The word 'bailment', is derived from 'bailer', a French word which means 'to deliver'. Section 148 of the Indian Contract Act defines Bailment as follows, " A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that ...

  19. Bailment Agreements Sample Clauses

    Sample 1. Bailment Agreements. Seller and Purchaser agree to use their best efforts to arrange for and enter into whatever OEM bailment, pool, and converter agreement consents to assignment as are necessary. Seller shall use its best efforts to assist Purchaser in obtaining such assignment of any such Business OEM agreements to Purchaser.

  20. Contract Of Bailment & Pledge, Rights & Duties Of Bailor & Bailee

    In the Contract of pledge, the goods are kept as a security for a debt. Section 172 of the Indian Contract Act 1872 defines 'the bailment of the goods as security for a payment of a debt or performance of a promise is called pledge'. In this case, the bailor is known as the pawnor, and the bailee is called the pawnee.

  21. Contract of Bailment : Meaning, Features, Duties and Rights

    Bailment is defined in the Indian Contract Act, 1872 under Section 148 as "A Bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them". Bailment is a legal agreement that occurs when one person known as the ...

  22. Contract Assignment On Bailment

    Contract Assignment on Bailment - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. The document discusses the concept of bailment under Indian contract law. It defines bailment as the delivery of goods by one person (the bailor) to another (the bailee) for a specific purpose, with the understanding that the goods will be returned or disposed ...

  23. Scribfree

    But this ingredient, though, is not essential." Referring to this, Shelat J 3 observed as follows, "Bailment is dealt with by the Contract Act only in cases where it arises from a contract, but it is not correct to say that there cannot be a bailment without an enforceable contract.

  24. Minors (Property and Contracts) Act 1970 No 60

    (a)a conveyance, transfer, assignment, appointment, settlement, mortgage, delivery, payment, lease, bailment, reconveyance or discharge of mortgage, (b)the creation of a trust, (c)the release or surrender of any property, and Minors (Property and Contracts) Act 1970 No 60 [NSW]