“ A bailment is the delivery of the 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 off according to the directions of the person delivering them.”
Bailment means to deliver or to hand over .
Custody of goods without possession does not constitute Bailment.
The person delivering the goods is called the bailor . The person to whom they are delivered is called the bailee . The transaction is called bailment (Section 148).
A delivers cloth piece to B , a tailor, to be stitched into a suit. This is bailment.
If a person already in possession of the goods of another contracts to hold them as a bailee, he thereby becomes the bailee and the owner becomes the bailor of such goods.
Contract: Delivery of goods is upon a contract between the bailor and the bailee.
Delivery of goods and change of possession: Mere custody of goods w/o parting with its possession doesn’t constitute a bailment.
Specific purpose: Delivery of goods must be for some specific purpose.
Only for Movable Goods: Money not included as a movable good.
Return of specific goods: Bailee must return the specific goods as soon as the specific purpose is accomplished.
Kinds of Bailment
Gratuitous bailment: Goods given to a friend or any one else, to be used by him without any (unnecessary) reward or remuneration or consideration.
Bailment for reward or remuneration: For example, goods given on hire, goods given for repair against charges, etc.
Pawn or Pledge: Goods delivered to another as a security for money borrowed.
Bailor: Rights, Duties & Liabilities
Termination of bailment (Section 153): For example, A lets to B for hire a horse for his own riding. B drives the horse in his carriage. A can terminate the bailment.
Return of goods (Sections 160 & 161): Bailor has the right to get back the goods from the bailee as soon as time for which they were bailed has expired.
Right to claim compensation (Section 154): For wrongful use of goods by bailee.
Claim in case of mixture of goods by the bailee (Section 155-157):
(i) With the consent of bailor. Bailor can claim proportionate share in mixed goods.
(ii) Without consent of bailor . But goods can be separated . Bailor can claim expenses of separation & any damage arising from the mixture.
(iii) Without consent of bailor. But goods cannot be separated . Bailor is fully entitled to compensation for the loss of the goods.
Right to receive any increase or profit from goods bailed.
Put bailee into possession (Section 149).
Disclose faults in the goods bailed (Section 150). Not disclosing is a liability for bailor.
Repay necessary expenses (Section 158). To repay to bailee who receives no remuneration.
To indemnify gratuitous bailee (Section 159). Indemnifying for any loss due to earlier demand by bailor.
Responsible for any loss due to defect in title (Section 164).
To take back the goods.
Bailee: Rights, Duties & Liabilities
Particular Lien (Section 170): For example, A delivers a rough diamond to B , a jeweller, to be cut and polished, which is accordingly done. B is entitled to retain the stone till he is paid for the services rendered.
To know faults in the goods bailed (Section 150).
Claim proportionate share in goods mixed (Section 155).
Claim expenses of bailment (Section 158).
Claim losses for defect in title of bailor (Section 160).
Gratuitous bailee can claim indemnity (Section 159).
To take reasonable care of the goods bailed (Section 151).
No unauthorized use of goods bailed (Section 154).
Return of goods (Section 160 & 161).
To deliver any increase or profits accrued on the goods (Section 163).
To pay damages: if he fails to take care of the goods; damage due unauthorized use; mixing w/o consent of bailor; commits default in returning goods.
Effect of mixture of goods.
The bailment of goods as security for payment of a debt (or performance of a promise) is called Pledge .
The bailor in this case is called Pawnor . The bailee is called Pawnee .
The transaction is called pledge or pawn .
Bailor is also called Pledgor and the bailee is called Pledgee .
Pledge is therefore a kind of bailment.
A borrows Rs.4000 against security of his jewellery. The bailment of jewellery is a pledge.
Rights of Pawnee
To retain the goods for payment of the debt or the performance of the promise (Sec.173 & 174).
To recover extraordinary expenses (Sec. 175).
Right on pawnor’s default by (Section 176):
Bringing a suit on the pawnor;
Retaining the goods pledged as collateral security;
Selling the goods pledged after reasonable notice.
Note: Liabilities of a pawnee for loss of goods are similar to that of a bailee.
Rights of Pawnor
Right of redemption (Section 177): This right cannot be taken away by the pawnee by any contract or otherwise.
Preservation and maintenance: Pawnor can enforce preservation and proper maintenance of the goods pledged.
To receive back the goods: On the payment of the debt or on performance of the promise.