Case: Goods and ContractsA person gives his furniture to a person to transportto his new house in another town.A person gives his jacket to a drycleaner.A company hires out public address system to aperson organising a music function.What is common to the contracts?
… CondA person gives his furniture to a person to transportto his new house in another town. (Carriage)A person gives his jacket to a drycleaner. (Service)A company hires out public address system to aperson organising a music function. (hire)
BailmentOwner gives the custody and possession of hisgoods to another person as a part of the contract.The goods would need to be returned back to him.
Case: Lost BaggageAn airlines had put up the terms to the intendingpassengers that in the case of loss of baggage, theairlines would compensate the passengers for thebaggage at a standard rate of Rs. 300 per Kg. Thepassengers were advised to buy an insurance tocover additional loss.A passenger lost his baggage which weighed 15Kgs. The Airlines gave him Rs. 4500. Thepassenger is demanding Rs. 12, 000, the full valueof the lost baggage.
Case: DrycleanerA person gives his jacket to a dry cleaner.Would it be acceptable to the customer if thedrycleaner did not return back the jacket by justsaying, “Sorry, it is lost” or “It must have gone toanother customer” or “It is misplaced”?
SummaryThe person to whom goods are given is responsibleand must take care of the goods and return it backto the owner.
Case: Washing for RepairA person gave his washing machine for repairing toa shop. As the shop did not have space inside, itleft the washing machine outside in its corridor.There was no security or attendant for guarding thepremises. The washing machine was stolen.Is the shop responsible for the loss of the washingmachine to the owner?
… CondA person gave his washing machine for repairing.The shop had stored it properly and safely.However, an unprecedented rain created a delugeand all the washing machines in the shop as well asall the expensive testing equipment of the shop gotdamaged.Is the person responsible for the loss of thewashing machine?
SummaryThe owner who gives his goods in called BailorThe person receiving the goods is called BaileeThe giving of goods is called BailmentIf the parties have provided on loss or damage tothe goods, the terms would apply.In other cases, the bailee is responsible but notabsolutely.
Section 148: BailmentBailment bailor and bailee defined.- A "bailment"is the delivery of goods by one person to anotherfor some purpose, upon a contract that they shall,when the purpose is accomplished, be returned orotherwise disposed of according to the directions ofthe person delivering them. … … The persondelivering the goods is called the "bailor". Theperson to whom they are delivered is called the"bailee ".
Section 152: Liability of BaileeSection 152. Bailee when not liable for loss, etc.,of thing bailed.- The bailee, in the absence of anyspecial contract, is not responsible for the loss,destruction or deterioration of the thing bailed, if hehas taken the amount of care of it described insection 151.
Section 151: Degree of Care Section 151. Care to be taken by bailee.- Inall cases of bailment the bailee is bound to take asmuch care of the goods bailed to him as a man ofordinary prudence would, under similarcircumstances, take of his own goods of the samebulk, quality and value as the goods bailed.
Section 152 and 151The bailee, in the absence of any special contract,is not responsible for the loss, destruction ordeterioration of the thing bailed, if he has taken …(as much care of the goods … as a man ofordinary prudence would, under similarcircumstances, take of his own goods of the samebulk, quality and value…)
Summary of the Provisions1. Is there any ‘special contract’? That is, have theparties provided on the bailment aspect itself. Ifyes, the terms will apply. If not2. Was the extent of care adequate? Test: Anowner of ordinary prudence would take care of hisown goods, of the same bulk, quality and value asthe goods bailed.
Case: Lost Courier PacketRamesh sent a courier containing an expensivebook. The courier company lost the packet.Ramesh had signed the customer’s request. Thesigned sheet had several terms. The terms were asfollows: Relevant Terms4. City Express will not provide any insurancecoverage for any consignments sent, even if thevalue of the consignment is declared by the senderor required to be declared by City Express.
… Cond5. The liability of City Express for any loss ordamage to the shipment is limited to Rs. 100/- foreach consignment. Further, City Express will not beresponsible for any consequential losses.
R.S. Deboo v. M.V. Hindlekar
FactsR. S. Deboo: Drycleaner- M/s Leach and WaBomyCustomer: Hindlekar and familyThere was a fire in the factory and the clothes gotdestroyed.The drycleaner offered to pay 20 times thedrycleaning charges as this was stipulated on theback of the receipt limiting the liability of thedrycleaner.
Judgement: High CourtTerms and conditions printed on the reverse of areceipt issued by the owner of the laundry or anyother bailee do not necessarily form part of thecontract of bailment in absence of the signature ofthe bailer on the document relied upon. In absenceof signature of the bailer on the document reliedupon, the onus is on the bailee to prove that theattention of the bailer was drawn by the bailee tothe alleged special conditions before the contractwas concluded and the bailee had consentedthereto expressly or by necessary implication as acontractual term.
… CondIt cannot be just assumed that the printedconditions appearing on the reverse of the receiptautomatically become a contractual term or part ofthe contract of bailment. It is to be found onevidence in each case as to whether the allegedprinted condition on the reverse of the receiptformed a part of the contract of bailment or notdepending upon the conduct of the parties. ….
… CondIt is necessary for the Court to consider in eachcase as to whether the alleged special term wasreasonably and properly communicated by thebailee to the bailer and as to whether the bailer infact assented thereto expressly or by necessaryimplication.(The Court did not consider this to be a ‘specialcontract’)
… Cond: On Reasonable CaseThe burden of proof is always on the bailee (drycleaner) to prove that the bailee took reasonablecare of the goods entrusted to him as a man ofordinary prudence would have exercised. … it is forthe bailee to prove that the suit articles were in factlost as a result of fire and there was no negligenceon the part of the defendants (dry cleaner) whichresulted in the goods being destroyed by fire. Thequestion of negligence is always a question of factor at the most a mixed question of fact and law.
… CondIn a case governed by Sections 151 and 152 of theContract Act, the non-return of article … by itself isprima facie proof of negligence of the bailee. It isnot for the bailer to lead positive evidence provingthe negligence of the bailee in respect ofunreturned articles entrusted by the bailer to thebailee. It is for the bailer to prove that the bailee isduly exempted from his liability to pay thereasonable amount of compensation for the valueof the articles not returned or that his liability isrestricted or reduced one and that the allegedstipulation is binding on the bailer under the law ofthe land.
… Cond: Insurance and BailmentIf a bailee receives an insurance amount in respectof value of the goods bailed to him, the bailee isbound to account for the said insurance amount tothe bailor as all such cases, the bailee is merely atrustee for the insurance amount obtained inrespect of goods belonging to bailers.No bailee is entitled to unjustly enrich himself byretaining the insurance amount recovered by thebailee in respect of his customers articles.
N.R. Srinivasa Iyer v. New India Assurance Co. Ltd. Madras
FactsMr. Iyer’s car was insured by the New IndiaInsurance. The car met an accident and was takento P. S. N. Motors Ltd., Trichur for repairing. Theinsuarance company was intimated of the accidentand that the car was given to the P. S. N. Motors forrepair with a request to discharge its obligationunder the policy of insurance. The P. S. N. Motorssubmitted an estimate to the insurance company.
… CondAfter a several correspondence, the two settled onan estimate. Mr. Iyer was thus, informed: We have pleasure to inform you that the revised estimate of M/s. P. S. N. Motors Ltd., Trichur has been approved by our head office, and they have been advised to proceed with the repairs and send us their final bill together with the discharge voucher duly filled in and signed by you for making the payment.
… CondBefore the car could be delivered to Mr. Iyer, a fireoccurred in the workshop of the PSN Motors andthe car was destroyed. The garage was not insured.Is the insurance company bailee of Mr. Iyer’s car,on whose behalf the car has been sent to thegarage?
Judgement: Supreme CourtIn a contract of insurance, there are mutual rightsand obligations both of the Insurer and the Insured.Once the motor car is damaged it is the duty of thecar owner to take it to nearest repair shop. This isdone on behalf of the insurance company whichpays for such removal as well as the repairs. … theInsurer took charge of the damaged car from thescene of accident and got it moved to the nearestrepairer. The car virtually came into the custody ofthe Insurer and the repairer took the custody forand on behalf of the Insurer.
… CondWhen the Insurer has the option to replace theMotor Car, it can take over the damaged car andthe Insured is bound to submit to the same. If theInsurer on the other hand, exercised the option ofrepairing the car, it is entitled not merely to choosethe repairer but also to determine the charges forrepairs to be negotiated and settled between theInsurer and the repairer and the Insured has hardlyanything to do with it.
… Cond: Sub-BaileeThe Insurer became the bailee and the repairermay have been initially pointed out by the bailor butwith whom the Insurer entered into negotiation,arrived at a contract and agreed to get the carrepaired in discharge of an obligation under thecontract of insurance. Therefore, for this additionalreason the custody of the repairer is that of a sub-bailee.
… Cond: Morris Case"Once a man has taken charge of goods as a baileefor reward, it is his duty to take reasonable care; tokeep them safe; and he cannot escape that duty bydelegating it to his servant. If the goods are lost ordamaged, whilst they are in his possession, he isliable unless he can show - and the burden is onhim to show - that the loss or damage occurredwithout any neglect or default or misconduct ofhimself or of any of the servants to whom hedelegated his duty."
… CondWhen the car was in the custody of the sub-bailee,it was destroyed by fire that occurred in therepairers workshop. The sub-bailee was bound totake the same care as a man of ordinary prudencewould take in regard to his own goods of the samequality and value as was expected of the bailee.Now no evidence has been led by the defendants toexplain what amount of care the bailee or the sub-bailee took in respect of the car. When the custodyis of the bailee or the sub-bailee, the burden is onthem to show how they handled the car.
State of Gujarat v. Memon Mahomed Haji Hasan
FactsCustom authorities had seized a truck and left itunattended for a long time in an open space whilethe case was pending. The parts of the car gotpilfered.
Judgement: Supreme CourtBailment is dealt with by the Contract Act only incases where it arises from a contract but it is notcorrect to say that there cannot be a bailmentwithout an enforceable contract.… it is not necessary to incorporate it into the law ofcontract and to prove a consideration.
… CondThere can, therefore, be bailment and therelationship of a bailor and a bailee in respect ofspecific property without there being an enforceablecontract. Nor is consent indispensable for such arelationship to arise. A finder of goods of anotherhas been held to be a bailee in certaincircumstances.
Trustees of the Port of Bombay v. Premier Automobiles Ltd.
FactsPremier Automobiles Ltd. imported machinery fromItaly to Bombay. The Bombay Port Trust, under theBombay Port Trust Act took charge of the goods onlanding and took it to its warehouses from wherethe goods could be collected. While the machinerywas being carried on a trolley by the employees ofthe Board, it fell down and got damaged.There was no contract between the Port Trust andPremier Ltd. The Board was performing a functionvested in it by the law.
Judgement: Supreme CourtIt is well settled that the essence of bailment ispossession. It is equally well settled that a bailmentmay arise, as in this case, even when the owner ofthe goods has not consented to their possession bythe bailee at all…
… CondA bailment is not therefore technically andessentially subject to the limitations of anagreement, and the notion of Privity used cannot beintroduced in an area where it is unnecessary, forbailment, as we have said, arises out ofpossession, and essentially connotes therelationship between a person and the thing in hischarge. It is sufficient if that possession is within theknowledge of the person concerned. It follows thata bailment may very well exist without the creationof a contract between the parties and it essentiallygives rise to remedies which, in truth andsubstance, cannot be said to be contractual.
What is learnt?• A bailment is the delivery of goods, by one person to another, for some specified purpose, and upon a contract that they shall, when the purpose is accomplished, be returned otherwise disposed of according to the directions of the person delivering them.• The person delivering the goods is called as the Bailor.• The person to whom they are delivered is called Bailee.• Essential elements of contract of bailment – There must exist express or implied contract between bailor and bailee, – Delivery of goods – The possession of goods must change, though temporarily – Ownership of goods is retained by the bailor – The delivery of the goods is for some specified purpose ( as security for debt, for repair, or for conversion of form etc.)
contd – When the purpose for which the bailment is created, is accomplished, the goods are to be returned or disposed according to the instruction of the bailor, the goods returned should be same ones which were bailed. – Bailment is possible only of goods i.e., of movable property and chattels and not of immovable property. Duties of the bailor 1. To disclose faults in goods bailed 2. Repayment of(extraordinary) expenses 3. To receive back the goods
contd• Rights of bailor – Restoration of goods lent gratuitously – Entitled to increase of profits to goods bailed – Enforcement of rights – Claim for compensation – Right of termination• Rights of bailee – Right to compensation – Right to remuneration – Right of particular lien• Duties of bailee – Duty of reasonable care of goods bailed – Not to make unauthorised use of goods bailed – Not mix the goods – Return the goods without demand