Bailment Act

1. The Contract Act 1872

2. Definition

According to sec. 148 of contract act,
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.

3. Bailment is delivery of goods on condition
that the recipient shall ultimately restore the
goods to the bailor or dispose of them
according to his direction
Bailor – the person delivering the goods
Bailee – the person to whom the goods are
delivered

4. Subject matter

Movable property
Not money, however, notes or currency
deposited in a box for safe custody can be
subject matter of bailment

5. Characteristics

It consists in the delivery of goods of movable
property only.
 The delivery must be for some temporary purpose,
e.g., safekeeping, repair, carriage, gratuitous use
by the bailee or pawn.
 The delivery is made upon a contract, express or
implied.
 The contract is to the effect that the goods delivered
shall be specifically returned or otherwise disposed
of according to the direction of the bailor, when the
purpose of the bailment is over.

6. Essentials

Delivery of goods – actual or constructive
For some purpose – delivery by mistake
without any purpose – no bailment
Delivery is subject to the conditions attached
to the bailment agreement

7. Kinds of Bailment

Bailment for exclusive benefit of the bailor
Bailment for exclusive benefit of the bailee
Bailment for mutual benefit of the bailor and
bailee
Gratuitous bailment – no remuneration.
Example: loan of a book to a friend
Non-gratuitous – bailment for reward; either
bailor or bailee is entitled to remuneration; eg.
Motor car let out for hire

8. Kinds of Bailment(Cont)

The Bangladeshi law provides for the following
two kinds of bailments:
1. Bailment for safe custody: when the subject
matter is kept for the purpose of saving.
2. Bailment for use: when the subject matter is
kept for the purpose of using it only.
Whether the bailment is for safe custody or for use,
the bailee can either charge for his services or
render them free.

9. Sale and bailment

- In sale ownership is transferred to the buyer
- The buyer under no obligation to transfer the
goods
- In bailment, no transfer of ownership
- Bailor is under obligation to return the goods

10. Bailment and license

In a contract of license, one party is permitted
to place his goods in the premises belonging
to the other party
No delivery of goods to the licenser
No obligation to look after the goods

11. Rights of Bailee

A bailee is entitled to recover damages from
the bailor if he suffers any injury resulting
from the defects of the goods bailed.
He is also entitled to be reimbursed for all
legitimate expenses incurred for the purpose
of the bailment.
He can also recover compensation from the
bailor for any loss cause to him due to any
defect in the bailor’s life.

12. Rights of Bailee(Cont...)

 Bailee’s particular lien. Where, in pursuance of the
contract of bailment, the bailee has rendered
services involving the exercise of labour and 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 services he
has rendered(sec.170)
For example: A delivers a rough diamond to B, who is 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 he has rendered.

13. Duties of Bailee

To take reasonable care of goods delivered
to him
Not to make unauthorized use of goods
entrusted to him
Not to mix goods bailed with his own goods
To return the goods
To deliver any accretion to the goods

14. Rights of the Bailor

 The bailor is entitled to the return of the goods bailed
as soon as the purpose of bailment is served. If the
bailee defaults in so returning or tendering to return
them at the proper time and place, the bailor is
entitled to appropriate compensation for the loss of
the goods or any damage.
 The bailor may rescind the contract of bailment if the
bailee does any act with regard to goods bailed
which is inconsistent with the conditions of bailment.
Suppose, a gives his car to B for one month for the
latter’s use. B employs it for carrying passengers. A
can terminate the bailment.

15. Duties of Bailor

 The bailor is bound to disclose to the bailee faults in
the goods bailed of which he is aware and which
materially interfere with the use of them or expose
the bailee to extraordinary risks;(Sec.150)
 Where the conditions of the bailment are such that
the goods are to be kept or to be carried or where
work has to be done upon them by the bailee for the
bailor, the bailee will not receive such remuneration
such services, the bailor must repay to bailee all the
legitimate expenses which he has to incur in
connection with the bailment (Sec. 158).

16. Duties of Bailor(Cont...)

The bailor is responsible to the bailee for any
loss which the bailee may sustain by reason of
the fact that the bailor was not entitled to make
the bailment. For example: A gives a car to C for
sale. Which is belongs to B. But C believing that
the car really belongs to A, sells it to a third
person. B sues C for damages for the
unauthorized sale. A must compensate C for any
damages that the court may award against C

17. Termination of Bailment

A contract of bailment is terminated in the
following ways:
1. When the time for which the goods were bailed
has expired. E.g., A lends his plough to B for 3
months. The bailment will be discharged at the
end of the stipulated period.
2. When the purpose for which the goods were
bailed has been accomplished. A lend B his
typewriter for typing a certain document. The
bailment will terminate as soon as B has
finished typing the document.

18. Termination of Bailment(Cont...)

3. A gratuitous bailment is terminated by the
death of either the bailee or bailor.
4. When the bailee does an act inconsistent
with the contract of bailment, the bailor can
terminate the bailment at his option.