Contract of Bailment : Indian Contract Act, 1872

This article is written by Krishnaraj Choudhary, Student of Dr. Anushka Law College Udaipur. The author in this article has discussed the concept of Bailment

Contract of Bailment

Definition

• The word bailment is derived from the French word 'bailor", which means to deliver.
• A contract of bailment is a contract in which one person deliver some goods to another for some
purpose and when the purpose is accomplished ,the goods are returned or otherwise disposed of
according to the directions of the person delivering them.

Section 148 :- '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.

Bailor : The person delivering the goods is called bailor.
Bailee : The person to whom they are delivered is called the bailee.

Examples

• Suman delivers a piece of cloth to a tailor to be stitched into a coat. Here, there is a contract of
bailment, between Suman and the tailor. Suman is the "bailor', and the tailor is the bailee, and the purpose of delivering the cloth is to get a coat stitched. The tailor will return the cloth to Suman after stitching.
• if Anita delivers some clothes to a washerman for washing.
• If Rakesh gives his television for repair to a mechanic.

Parties to the Contract of Bailment

There are two parties to the contract of Bailment:

Bailor : The person who deliver the goods to another person for some purpose.
Bailee : The person to whom goods are delivered for some purpose.

Characteristics of Bailment

Bailment is a contract
Bailment is of movable goods
Bailment involves transfer of possession of goods.
The transfer under bailment is temporary.
The goods must be delivered to the other person.
The bailor has the right to the return of goods

Types of Contract of Bailment

1. From Reward Point of view
a) Bailment for reward or non-gratuitous bailment
b) Gratuitous bailment
2. From Object Point of view
a) Bailment for use

b) Bailment for safe custody

c) Bailment for carriage

d) Bailment for alteration in shape

e) Bailment for repair

NOTE : -

Gratuitous bailment
In gratuitous bailment, no consideration passes between the bailor and the bailee.
• Example, if A lends his bicycle to his friend B. he doesn't expect to be paid for it, and it will be a case of
gratuitous bailment.

Types of Bailments
Deposit:- It is the simple bailment of goods by one man to another for a particular use.
For example, A gives his computer to B for 7 days, it will be a case of a deposit

Hire:- It includes goods delivered to the bailee for hire.
For example, A gives his car to B for 7 days on rent of Rs. 700 per day, it will be a case of a hire

Pawn/ Pledge:- when goods are delivered to another person by way of security for money borrowed.
For example, A takes a loan from the Bank and keeps his papers of the house with a bank as security, it will be a case of pledge

Section 149 Delivery to bailee how made. —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 authorised to hold them on his behalf.

Duties of Bailor :

Section 150 Bailor’s duty to disclose faults in goods bailed.-

It is duties of bailor to disclose any fault in the goods bailed to bailee. If the bailor fails to make such Disclose he will responsible for any Damage caused.
The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults. If such goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of the existence of such faults in the goods bailed.

Section 153 Termination of bailment by bailee's act inconsistent with conditions. —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.

Section 163 Bailor entitled to increase or profit from goods bailed. —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.

Liabilities of Bailor

Section 164 Bailor's responsibility to bailee. —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's Of Bailee :

Section 152 Bailee when not liable for loss, etc., of thing bailed. —The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in section 151.

( Not liable for loss if Section 151 is completed)

Section 158 Repayment, by bailor, of necessary expenses.—Where, by the conditions of the bailment, the goods are to be kept or to be carried, or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment. —Where, by the conditions of the bailment, the goods are to be kept or to be carried, or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment."

Section 166 Bailee not responsible on re-delivery to bailor without title. —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.

Section 170 Bailee’s particular lien.—Where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.

Liabilities of Bailee

Section 151 Care to be taken by bailee. —In all cases of bailment the 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 the same bulk, quantity and value as the goods bailed.

Section 154 Liability of bailee making unauthorized use of goods bailed. 154. If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.

Section 160 Return the goods of bailor - 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. "

When Return the goods of bailor

Section 159 Restoration of goods lent gratuitously. —The lender of a thing for use may at any time require its return, if the loan was gratuitous, even though he lent it for a specified time or purpose.
Section 165 Bailment by several joint owners. —If several joint owners of goods bail them, the bailee may deliver them back to, or according to the directions of, one joint owner without the consent of all in the absence of any agreement to the contrary.

Section 161 Bailee's responsibility when goods are not duly returned. —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.

Section 155 Effect of mixture, with bailor's consent, of his goods with bailee's. —If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, the bailor and the bailee shall have an interest, in proportion to their respective shares, in the mixture thus produced.

Two Condition of mixture of Goods

With Consent of Bailor
Without Consent of Bailor

Section 156 If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, and the goods can be separated or divided, the property in the goods remains in the parties respectively; but the bailee is bound to bear the expense of separation or division, and any damage arising from the mixture.

Goods are separable in Nature

Bailee's Liability (1) Seprate and devide

(2) He will bear the expences incured for seperation.

(3) Damages - Loss to bailor

Section 157 If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, in such a manner that it is impossible to separate the goods bailed from the other goods, and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods.

Goods are not separable in Nature

Bailee's Liability (1) Bailee pay compensation to bailor

Section 162 Termination of gratuitous bailment by death. —A gratuitous bailment is terminated by the death either of the bailor or of the bailee. —A gratuitous bailment is terminated by the death either of the bailor or of the bailee.

Section 167 Right of third person claiming goods bailed. —If a person, other than the bailor, claims goods bailed he may apply to the Court to stop delivery of the goods to the bailor, and to decide the title to the goods.

Stop the delivery of goods
Decide the title of goods

Right of Finder of Lost Goods :

Section 168 allows the finder retain the goods against the owner until he receives compensation for trouble and expense. Further where the owner has offered a specific reward for the return of the goods lost, the finder may sue for reward and may retain the goods until he receives it.

Section 169 When finder of thing commonly on sale may sell it.—When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it— —When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it—"

(1) when the thing is in danger of perishing or of losing the greater part of its value, or

(2) when the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.

Retain the goods untill remmbertion in paid
Ex - Unpaid Seller , Agent , Finder of lost goods

Section 171 General lien of bankers, factors, wharfingers, attorneys and policy-brokers.

Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect

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Written By : KR Choudhary