Introduction
Bailment is such a relationship between two parties in which the personal property of one party goes into the possession of another party temporarily. A few examples of bailment include delivering a car, mobile, watch, or other valuable items to some friends. Delivering gold to a goldsmith for making ornaments, and delivering garments to a dry cleaner, are also some familiar situations that create the relationship of bailment.
Relevant Provisions
Sections 148, 150-154, 157-160, 162-166, 170, 180, and 181 of the Contract Act, 1872.
Definition of Bailment
Bailment is defined in Section 148 of the Contract Act 1872 in the following manner;
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.
Example: A delivers a book to B to read. There is a contract of bailment between A and B. A is bailor and B is a bailee
Essentials of Bailment
The essentials of bailment are discussed below.
1. Delivery of Goods
Delivery of movable goods from one to another is the most important feature of bailment. Mere custody of goods does not create a relationship between the bailor and the bailee. Delivery of possession is of two kinds.
Actual Delivery: When the bailor physically hands over the possession of goods to the bailee, then it is called actual delivery.
Constructive delivery: In case, there is no change of physical possession, goods remain where they are, but some actions have been done that have the effect of putting them in bailee’s possession, it is called constructive delivery.
2. Presence of a Contract
There must be a contract between the bailor and the bailee. The delivery of goods is always made under a contract officially. If the goods are delivered without any contract e.g. mistake, there is no bailment. It should also possess all the essentials of a valid contract. The contract may be expressed or implied.
3. Delivery for a Specific Purpose
The bailment of goods is always made for some specific purpose and is subject to the condition according to the directions of the bailor.
Example: A gives his bike to ‘B’ for repair. This is a bailment.
4. Return or Disposal of Property
when the purpose of bailment is accomplished, the goods must be returned in original form or in changed form or disposed of according to the directions of the bailor.
Types of Bailment
Some types of bailment are discussed below.
1. Deposit
The goods are delivered for the purpose of keeping in this kind.
2. Commandatum
Where the goods are lent to a friend without any consideration, it is called Commandatum.
3. Hire
When the goods are delivered to the bailee for hire, it is the bailment of hire.
4. Pawn / Pledge
The goods are delivered to another creditor by way of security for money borrowed. It is also called a pledge.
Termination of Bailment
Following are some conditions in which bailment can be terminated.
1. Expiry of Time
If the bailment is for a specified time, it will be terminated after that specific time period.
Example: A stores 10 kg of Guava in the cold storage of B for one month. After one month, the bailment expires.
2. Fulfillment of Purpose
When the purpose of bailment will be accomplished, the bailment will have no effect after that.
Example: ‘A’ gives his TV to ‘B’ for repairs. ‘B’ repairs and returns the TV. The bailment is over.
3. Unauthorized Use; U/s 153
If the bailee does any inconsistent act with the terms of the bailment, the bailment may be terminated by the bailor even though the term of bailment has not expired or the purpose of bailment has not been accomplished.
Example: ‘A’ bails a cycle to ‘B’ for 7 days for his personal use. ‘B’ allows his friend C’ to use the same ‘A’ can terminate bailment before 7 days.
4. Death U/s 162
All the gratuitous bailments are terminated by the death of either the bailor or the bailee.
Example: ‘A’ borrows a book from his friend ‘B’ for 15 days. ‘A’ dies, and the bailment terminates.
5. Termination by Bailor U/s 159
A gratuitous bailment can be terminated by the bailor at any time, even before the stated time if the termination causes no loss to the bailee. However, if the bailee suffers a loss due to termination, the bailor is liable to recover the loss.
Example: ‘X’ lends his camera to ‘Z’ for two months. ‘X’ can demand the return of the camera before the expiry of the bailment period.
6. Destruction of Subject Matter
If the subject matter of the bailment is destroyed or due to a change in its nature, it becomes incapable of use for the purpose of bailment, the bailment is terminated.
Example: ‘A’ delivered a charger to ‘B’ for safe custody for a period of three months. After one month, the particular cow died. The bailment is terminated.
BAILOR
Duties of Bailor
Following are the duties of a bailor that he must fulfill during bailment.
1. To disclose the fault U/s 150
It is his duty to disclose the fault in the goods
2. To repay necessary expenses U/s 158
It is the duty of the bailor to repay necessary expenses.
Example: A delivers a cow to ‘B’ for safe custody. The cow becomes sick and B spends Rs 500/- on medical and Rs. 100/- on feeding, ‘A is liable to pay B Rs 600/-.
3. To repay extra-ordinary expenses U/s 158
In case of any kind of bailment, it is the duty of the bailor to bear extraordinary expenses, if any, incurred by the bailee regarding the goods bailed. In non-gratuitous bailment, the bailor is not liable to bear the ordinary expenses,
Example: B hires A’s camel for his carriage. The camel becomes sick and ‘B’ spends Rs 500/- on medical and Rs. 100/- on feeding “A” is liable to pay ‘B’ Rs 500/-, the extraordinary expenses only.
4. To indemnify for pre-mature receiving of goods U/s 159
If the bailor who has sent goods gratuitously for a specified time, asks the bailee to return the goods before that particular time, he must indemnify the bailee for the loss caused to him in excess of the benefit already enjoyed by the bailee from such goods.
Example: ‘A’ sends an old bike to ‘B’ gratuitously for 3 months. B’ spends Rs 500/- on its repairs. If A asks for the return of the bike after one month, he will be liable to compensate B’ for expenses incurred by him, in excess of the benefit enjoyed by him.
5. To compensate the bailee for the defective title U/s 164
The bailor is bound to indemnify the bailee for any loss, which the bailee may suffer because of the defective title of the goods bailed.
Example: ‘A’ gives his neighbor’s motorcycle to ‘B’ for use without the neighbor’s permission. The neighbor sues ‘B’ and receives compensation. A is bound to indemnify B for losses.
6. To receive back the goods
After the accomplishment of the purpose of bailment, it is the duty of the bailor to receive the goods back from the bailee. If the bailor refuses to take delivery of goods at the proper time, the bailee can claim compensation for all necessary expenses incurred in lieu of safe custody of goods.
Rights of Bailor
Following are the rights of a bailor that he must fulfill during bailment.
1. To claim damages U/s 151, 154
The bailor has a right to recover damages from the bailee if any damage is caused to the goods, bailed due to the bailee’s negligence.
2. To demand the return of goods U/s 160
The bailor can demand the return of goods as soon as the purpose of bailment is accomplished. If the bailee makes defaults in returning the goods at the decided time and place, the bailor is entitled to compensation arising from such a situation.
3. To claim profit U/s 163
According to Section 163, the bailor is entitled to claim any profit, which may have accrued from the goods bailed.
4. To terminate bailment U/s 153
It is the right of the bailer to terminate the bailment if the bailee does any act, which is against the terms of the contract, though the term of bailment has not expired, or the purpose of bailment has not been accomplished.
5. To Sue U/s 180
The bailor may sue the bailee for breach of the contract if the goods are not returned or disposed of as directed by the bailor. He may also maintain actions for negligence, destruction, and unlawful retention or conversion when the bailee is guilty of such conduct. The bailor may sue third persons who damage or take the bailed property from the bailee’s possession.
BAILEE
Duties of Bailee
The duties of the bailee are discussed below.
1. To take reasonable care of goods
The bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would take of his own goods of the same quality and value as the goods bailed.
2. NOT to make unauthorized use of goods
It is the duty of the bailee to use the goods strictly according to the terms of the bailment. If the bailee makes unauthorized use of the goods bailed, he is liable to make compensation to the bailor for any damage.
3. Not to mix the goods
It is also one of the fundamental duties of a bailee not to mix the goods without the consent of the bailor.
4. To return the goods
It is the duty of the bailee to deliver and return the goods according to the bailor’s direction the goods bailed, without a demand.
When the bailee fails to return the goods at the proper time, he becomes responsible to the bailor for any loss.
5. To return the profit
In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor any natural increase or profit which is accrued from the goods bailed.
Example: ‘M’ leaves a cow in the custody of ‘N’ to be taken care of. The cow has a calf. ‘N’ is bound to deliver the calf as well as the cow to ‘M’.
6. Not to setup adverse title
The bailee cannot set up adverse titles in favor of any third person. He cannot set up the defense of Jus Terti.
Rights of Bailee
The rights of a bailor are the following.
1. To claim damages U/s 150
The bailee can recover damages from the bailor if he suffers any injury resulting from the undisclosed defects of the goods bailed.
2. To recover expenses U/s 158
The bailee can recover all necessary expenses incurred by him for the purpose of the bailment, from the bailor.
3. To deliver goods to one of the joint owners U/s 165
If the goods have been bailed by several joint owners, the bailee has a right to deliver them back to one joint owner without the consent of all.
4. To return goods to the bailor U/s 166
If the bailor has no title to the goods, and the bailee, in good faith delivers them back to or according to the directions of the bailor, the bailee is not responsible to the owner in respect of such delivery.
5. Right To Sue
If a person wrongfully deprives the bailee of the use or possession of the goods bailed or causes injury to the goods, the bailor or bailee is entitled to sue that person.
6. Right to lien
The bailee has a right to retain particular property in respect of which he has rendered some services and his charges are due but if the bailee does not complete the work within the agreed time or the reasonable time, he will not be entitled to any lien.
Lien may be of the following kinds;
Particular Lien: It is the right to retain only that particular property in respect of which charge is due.
General lien: It is the right to retain all goods of another party until all claims of the holder against that party are satisfied.
Final Note
It is concluded that bailment is a delivery of a thing in trust for some special object. The bailment is the transfer of possession of goods from one person i.e. bailor to another i.e. bailee.
Bailment has different kinds with respect to benefits and rewards. Mere custody without possession is not bailment, nor is the change of ownership bailment.
FREQUENTLY ASKED QUESTIONS
Define bailment. What are the rights and duties of a bailee?
(2015-5, 2015-A, 2014-8, 2012
Define a contract of Bailment. Discuss the rights and duties of a bailor.
(2010-A
Discuss the rights and duties of a bailee in a contract of bailment.
(2008-A)
What are the essential features of bailment? State the duties of the bailee.
(2007-S)
REFERENCES
- The Contract Act, 1872
- N-Series by M.A. Chaudhary
- Law of Contract by Avtar Singh
