Description about Bialment,pledge,pawner and pawnee pledge by Non-Owners.All the informaion aboou ahe bailment and pledge ,pawner and pawnee with including their rights and duties of bailor and Bailee ,pawner and pawnee,and also expalained about difference betweenBailment and Pledge.

1. CONTRACT LAW-II
PART -2
By,
Mahendar Sunkepaka
M.Pharm, LLB

2. Index
 Contract of Bailment.
 Bailor and Bailee.
 Essentials of Bailment.
 Kinds of Bailment.
 Rights and Duties of Bailor & Bailee.
 Termination of bailment.
 Pledge .
 Pawnor & Pawnee.
 Rights and Duties of Pawnor & Pawnee.
 Pledge by Non –Owner.

3. Bailment వస్తు నిక్షేపం
 Chapter IX Section 148 Of the Indian Contract Act.1872 lays down the
provisions to the Contract of Bailment.
 The Term Bailment is derived from the “French” word “Bailor”,
Which means “to Deliver”.
It means change of possession voluntarily from person to person.
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.
Explanation.—A delivers a Cloths to B,aTailor for making a shirt.The Contract
between A& B is Bailment. Similarly Radio, T.V repairers, Mechanics etc.,

4. Bailor and Bailee
 The person delivering the goods is called the “Bailor”.
 The person to whom they are delivered is called, the “Bailee.
 From the above example, A delivers a cloths to B,a Tailor for making a
shirt ,here A is a Bailor and B is a Bailee.
Ingredientsof Sec148.
1. A bailment is the delivery of goods by one person (Bailor) to another (Bailee)
for some purpose.
2. Upon a contract stipulating that when the purpose is accomplished the goods-
i. Will be returned or
ii. Disposed of according to the directions of bailor.
3. A person already in a possession of the goods can also contract to hold them
as Bailee.

5. Essentials of the Contract of Bailment
Following are the important essential of bailment :
 Contract:-It is the basic essential for the bailment. For the delivery of
goods contract between the two parties is necessary. Contract may be oral or
written, implied or expressed.
 Moveable Property :-It is the main feature of bailment that it is only for
the moveable property and not for the immoveable property.
 Delivery of Goods :-It is also necessary that goods should be delivered
by one person to another.
 Change of Possession :-Bailment contract also brings change in the
possessions of the goods. Only b without possession is not sufficient for this
contract.

6.  Purpose of Bailment :-The object of bailment may be for the safety of
goods or for hire or for the use.
 Temporary Delivery :-The delivery of the goods may not be for the
permanent purpose. it is essential that delivery must be made for the temporary
purpose.
 Ownership :-Right of ownership remains with bailor and it does not change
by the delivery of goods to other person.
 Change In Shape :-If bailed goods shape changes in the mean time even
then it remains a contract of bailment.
 Parties of the Contract :-In the contract of bailment there are two parties,
the bailor and the bailee.
 Returnable :- It is very important feature of the bailment. The bailee should
return the goods to the bailor or disposed according the directions of the bailor.

7. Kinds of Bailment
Bailment may be classified as follows:-
1. Bailment for the benefit of the Bailor.
2. Bailment for the benefit of the Bailee.
3. Bailment for benefit of both bailor and bailee.
4. Gratuitous (అసందర్భ) Bailment.
5. Non- gratiutous (కృతజ్ఞత లేనిది) Bialment.

8. Rights & Duties of Bailor & Bailee
 Duties of BAILOR:
1. Disclosing of defects of goods bailed (Sec 150):- It is duty of bailor to
disclose any defects, which are present in goods, which are being bailed.
2. Repayment of expenses(Sec 158):-It is liability of bailor to repay all those
expenses, which bailee spends for purpose of bailment.
3. Bailor’s Responsibility to Bailee (Sec 164):Bailor is liable to bailee for any
loss, which the bailee bears in the following situations
i. No right to make bailment: Bailor is responsible to bailee for any loss,
which bailee bears because bailor was not entitled to make bailment.
ii. No Right to get back bailed goods: Bailor is responsible to bailee for
any loss, which bailee bears because bailor was not entitled to get back
bailed goods.
iii. No right to give Directions:Bailor is responsible to bailee for any loss,
which bailee bears because bailor was not entitled to give directions.
4. Liability of Premature breach of Bailment (Sec 159):

9. Following are duties and liabilities of Bailee;
1. Care (Sec 151 & 152): In all cases of bailment, bailee is bound to take
care of bailed goods in the same manner in which a man of ordinary prudence
takes care of his own goods of the same quality and value.
2. Unauthorized use of Bailed Goods (Sec 154): If bailee makes any use of
goods bailed and such use in not according to conditions of bailment, he is
liable to make compensation to bailor for any damage, which is caused to the
goods during such use.
3. Mixing of Bailed goods with Bailee’s goods (Sec 155.156,157): If bailee
mixes bailed goods with his own goods without consent of bailor, his liability
arises in the following two cases;
a. When goods can be Separated?
Out of mixed goods, if bailed goods can be separated or divided, bailee
will be under obligation to bear all expense of separation or division, and any
damage, which is caused from such mixture.
b. When goods cannot be Separated?
Out of mixed goods, if bailed goods cannot be separated or divided,
bailee will be under obligation to compensate the bailor for such loss of bailed
goods.

10. 4. Return of Bailed good( Sec 160& 161): It is duty of bailee to
return bailed goods to bailor without any demand an according to
directions of bailor on expiration of time or accomplishment of purpose.
5. Non-return of Bailed Goods: If bailee fails to return bailed
goods at proper time, it is his liability to compensate bailor for any
destruction or loss from this time.
6. Increase or Profit from bailed goods (Sec 163): In
absence of any contrary contract or according to directions of bailor,
bailee is also under obligation to deliver to bailor any increase or profit,
which may have accrued from bailed goods.

11. Rights of Bailor & Bailee
 Following are the important RIGHTS OF BAILOR
1. Right of Return:- As the purpose of bailment completes bailor has a
right to take back the goods bailed. If bailee fails to return then bailor has a
right to claim for compensation.
2. Return Before Time :- With the consent of the bailee the bailor may
return his goods before the specified period.
3. Right of Termination :- The contract of the bailment can be
terminated by the bailor if the goods bailed are misused or against the
conditions of the contract.
4. Right of Profit :- The bailor has right to get profit from the goods bailed
according the conditions of the contract.
5. Gratuitous Good Right Of Return :- In case of gratuitous bailment the
bailor has a right to terminate the contract at any time. If bailee cause a loss
it may be compensated to the bailor.

12.  Following are the important RIGHTS OF BAILEE
1. Bailee has right to claim compensation for injuries arising out of faults
present in goods.
2. Bailee has right to claim contribution for expenses.
3. In case where bailer has given goods with defective title and bailee, therefore,
comes across suffering, then such bailee has right to get compensated by
defective titled bailer.
4. Bailee has right of indemnity, for making involvement in bailment Contract,
bailer can make bailee answerable.
5. Bailee has right of lien. It is only particular lien. That means he can exercise
right of lien against those goods only on which amount is due.SEC 171.
6. Bailee can return the goods to any one of the joint owners.
7. In times of need Bailee has right to approach Court of law.

13. Termination of Bailment
A contract of bailment shall terminate in the following circumstances:
1. On expiry of stipulated period (SEC 153): If the goods were given for a
stipulated period, the contract of bailment shall terminate after the expiry of
such period.
2. On fulfillment of the purpose (SEC 160): If the goods were delivered for a
specific purpopse, a bailment shall terminate on the fulfillment of that
purpose.
3. By Notice:
i. Where the bailee acts in a manner which is inconsistent with the terms of the
bailment, the bailor can always terminate the contract of bailment by giving a
notice to the bailee.
ii. A gratuitous bailment can be terminated by the bailor at any time by giving a
notice to the bailee. (SEC 159)
1. By death (SEC 162): A gratuitous bailment terminates upon the death of
either the bailor or the bailee.

14. PLEDGE
• A pledge is only a special kind of bailment, and chief basis of distinction
is the object of the contract. Where the object of the delivery of goods is to
provide a security for a loan or for the fulfilment of an obligation, that kind of
bailment is pledge.
• Under Indian Contract Act, 1872 the ‘Pledge’ has been defined in
Section 172 as follows
 The bailor is in this case called the “Pawnor”.
 The Bailee is called the “Pawnee”.
The bailment of goods as security for payment of a debt or performance of a promise
is called “pledge”.

15. Essential elements of Pledge or PAWN:
1. Delivery of goods
2. Security for payment of Debt
3. The subject matter must be Movable property.
FOLLOWING ARETHEDUTIESOFPAWNEE:
A. Return of Goods :On the receipt of his dues he should return the goods.
B. Reasonable Care:-He must do the reasonable care of the pledges goods.
C. Comply Terms :- He should abide by the terms.
D. No Misuse :- He should not make unauthorized use the pledged goods.
E. No Mixation :- He should not mix the pledged goods with his own goods
beard by the pawnee.

16. Rights and Duties of the PAWNEE
1. Right to receive payment of the debt or to obtain the performance of promise
with interest and expense(Sec. 173):-Pawnee has a right to retain possession
on the goods pledged till he obtains payment of his debt interest on that debt
and all other necessary expenses which he might have incurred for the
preservation of the goods pledged or in respect, of his possession.
2. Right of Particular lien (Sec. 174): Pawnee has no right to retain his
possession over the goods pledged for any debt or promise other than the debt
or promise for which they were pledged unless otherwise provided for, by a
contract.
3. Right to receive extraordinary expenses (Sec. 175):- Pawnee is also entitled
to receive from the pawnor any extraordinary expenses which he might have
incurred for the preservation of the goods pledged

17. 4. Pawnee’s right in case of default of the pawnor (Sec. 176):- In the case of
default by the pawnor in the payment of debt or the performance of promise
at the stipulated time or on demand or within reasonable time, the pawnee can
exercise the following two rights:
i. He has a right to bring a suit on the debt or promise and can retain the goods
pledged as a collateral security.
ii. He has also a right to sell the goods pledged after giving reasonable notice of
sale to the pawnor.
He has a right to claim any deficit arising from the sale of the goods pledged from
the pawnor. He will have to return to the pawnor any excess obtained by the sale
of goods pledged beyond the amount necessary to pay the debt and other expenses
due.
5. Pawnee must not use the goods pledged. He must not use goods pledge
unless they are such as will not deteriorate by wear.
Besides the above rights and duties, all other rights and duties of the bailor
and bailee apply equally to pawnor and the pawnee.

18. RIGHTS OF PAWNOR :-Following are the rights of pawnor
1. Right of Redemption:- A pawnor has a right of redemption
after depositing the dues.
2. Right of Suit:- If pawnee makes unauthorized sale
the pawnor has the right to file a suit against the pawnee.
3. Right of Proper Care :- The pawnor can enforce the pawnee
to do proper care and maintain the pledged goods.
DUTIES OF THE PAWNOR:- Following are duties of Pawnor
1. Meet the Obligations :- Pawnor must meet the obligations
regarding the contract with in specified time.
2. Pay Extra Expenditure :- He should also pay the extra ordinary
charges

19. PLEDGEBY NON-OWNER
Ordinarily only a person who is the real owner of the goods can make a valid
pledge, but in the following cases pledge made by non-owners will also be valid.
1. Pledge by a mercantile agent (Sec. 178). Where a mercantile agent is, with
the consent of the owner, a possession of goods or the documents of title to
goods, any pledge made by him.
2. when acting in the ordinary course of business of a mercantile agent,
3. Shall be as valid as if he were expressly authorised by the owner of the goods
to make the same,
4. Provided that the pawnee act in good faith and has not
5. At the time of the pledge notice that the pawnor has no authority to pledge.
6. Pledge by person in possession under voidable contract (Sec. 178 A). When
the pawnor has obtained possession of the goods pledged by him under a
contract voidable under Section 19 or Section 19A, but the contract has not
been rescinded at the time of the pledge, the pawnee acquired a good title to
the goods, provided he acts in good faith and without notice of the pawnor’s
defect of title.

20.  Pledge where pawnor has only a limited interest (SEC. 179). Where a
person pledges goods in which he had only a limited interest, the pledge is
valid to the extent of that interest.
 Example: A finds a watch on the road and spends Rs. 25 on its repairs. He
pledges it with B for Rs. 50/-. The real owner can get the watch by paying
Rs. 25 to the pledge.
 Pledge by a co-owner in possession. If there are several joint owners of
goods and goods are in the sole possession of one of the co-owners with the
consent of other co-owners, such a co- owner can make a valid pledge of
goods.
 Pledge by seller or buyer in possession after sale: A seller who has got
possession of goods even after sale, can make a valid-pledge, provided the
pawnees act in good faith.
• Example: X buys goods from Y, pays for them, but leaves them in the
possession of Y, and Y
• then pledges the goods with Z who does not know of sale to X, the pledge is
valid.

21. BASIS FOR
COMPARISON
BAILMENT PLEDGE
Defined in Section 148 of the Indian Contract
Act, 1872.
Section 172 of the Indian Contract
Act, 1872.
When the goods are temporarily
handed over from one person to
another person for a specific
purpose, it is known as bailment.
When the goods are delivered to act
as security against the debt owed by
one person to another person, it is
known as the pledge.
Meaning When the goods are temporarily
handed over from one person to
another person for a specific
purpose, it is known as bailment.
When the goods are delivered to act
as security against the debt owed by
one person to another person, it is
known as the pledge.
Purpose Safe keeping or repairs, etc. As security against payment of
debt.
Consideration May or may not be present. Always present.
Use of Goods The party whom goods are being
delivered can use the goods only,
for the specified purpose.
The party whom goods are being
delivered has no right to use the
goods.