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  1. 1. Bailment <ul><li>“ 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.” </li></ul><ul><li>Bailment means to deliver or to hand over . </li></ul><ul><li>Custody of goods without possession does not constitute Bailment. </li></ul>
  2. 2. <ul><li>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). </li></ul><ul><li>A delivers cloth piece to B , a tailor, to be stitched into a suit. This is bailment. </li></ul><ul><li>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. </li></ul>
  3. 3. Essentials <ul><li>Contract: Delivery of goods is upon a contract between the bailor and the bailee. </li></ul><ul><li>Delivery of goods and change of possession: Mere custody of goods w/o parting with its possession doesn’t constitute a bailment. </li></ul><ul><li>Specific purpose: Delivery of goods must be for some specific purpose. </li></ul><ul><li>Only for Movable Goods: Money not included as a movable good. </li></ul><ul><li>Return of specific goods: Bailee must return the specific goods as soon as the specific purpose is accomplished. </li></ul>
  4. 4. Kinds of Bailment <ul><li>Gratuitous bailment: Goods given to a friend or any one else, to be used by him without any (unnecessary) reward or remuneration or consideration. </li></ul><ul><li>Bailment for reward or remuneration: For example, goods given on hire, goods given for repair against charges, etc. </li></ul><ul><li>Pawn or Pledge: Goods delivered to another as a security for money borrowed. </li></ul>
  5. 5. Bailor: Rights, Duties & Liabilities <ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>Right to claim compensation (Section 154): For wrongful use of goods by bailee. </li></ul>
  6. 6. <ul><li>Claim in case of mixture of goods by the bailee (Section 155-157): </li></ul><ul><li>(i) With the consent of bailor. Bailor can claim proportionate share in mixed goods. </li></ul><ul><li>(ii) Without consent of bailor . But goods can be separated . Bailor can claim expenses of separation & any damage arising from the mixture. </li></ul><ul><li>(iii) Without consent of bailor. But goods cannot be separated . Bailor is fully entitled to compensation for the loss of the goods. </li></ul><ul><li>Right to receive any increase or profit from goods bailed. </li></ul>
  7. 7. <ul><li>Put bailee into possession (Section 149). </li></ul><ul><li>Disclose faults in the goods bailed (Section 150). Not disclosing is a liability for bailor. </li></ul><ul><li>Repay necessary expenses (Section 158). To repay to bailee who receives no remuneration. </li></ul><ul><li>To indemnify gratuitous bailee (Section 159). Indemnifying for any loss due to earlier demand by bailor. </li></ul><ul><li>Responsible for any loss due to defect in title (Section 164). </li></ul><ul><li>To take back the goods. </li></ul>
  8. 8. Bailee: Rights, Duties & Liabilities <ul><li>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. </li></ul><ul><li>To know faults in the goods bailed (Section 150). </li></ul><ul><li>Claim proportionate share in goods mixed (Section 155). </li></ul><ul><li>Claim expenses of bailment (Section 158). </li></ul><ul><li>Claim losses for defect in title of bailor (Section 160). </li></ul><ul><li>Gratuitous bailee can claim indemnity (Section 159). </li></ul>
  9. 9. <ul><li>To take reasonable care of the goods bailed (Section 151). </li></ul><ul><li>No unauthorized use of goods bailed (Section 154). </li></ul><ul><li>Return of goods (Section 160 & 161). </li></ul><ul><li>To deliver any increase or profits accrued on the goods (Section 163). </li></ul><ul><li>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. </li></ul><ul><li>Effect of mixture of goods. </li></ul>
  10. 10. Pledge <ul><li>The bailment of goods as security for payment of a debt (or performance of a promise) is called Pledge . </li></ul><ul><li>The bailor in this case is called Pawnor . The bailee is called Pawnee . </li></ul><ul><li>The transaction is called pledge or pawn . </li></ul><ul><li>Bailor is also called Pledgor and the bailee is called Pledgee . </li></ul><ul><li>Pledge is therefore a kind of bailment. </li></ul><ul><li>A borrows Rs.4000 against security of his jewellery. The bailment of jewellery is a pledge. </li></ul>
  11. 11. Rights of Pawnee <ul><li>To retain the goods for payment of the debt or the performance of the promise (Sec.173 & 174). </li></ul><ul><li>To recover extraordinary expenses (Sec. 175). </li></ul><ul><li>Right on pawnor’s default by (Section 176): </li></ul><ul><li>Bringing a suit on the pawnor; </li></ul><ul><li>Retaining the goods pledged as collateral security; </li></ul><ul><li>Selling the goods pledged after reasonable notice. </li></ul><ul><li>Note: Liabilities of a pawnee for loss of goods are similar to that of a bailee. </li></ul>
  12. 12. Rights of Pawnor <ul><li>Right of redemption (Section 177): This right cannot be taken away by the pawnee by any contract or otherwise. </li></ul><ul><li>Preservation and maintenance: Pawnor can enforce preservation and proper maintenance of the goods pledged. </li></ul><ul><li>To receive back the goods: On the payment of the debt or on performance of the promise. </li></ul>