Bailment ( Indian Contract Act, 1872)

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BAILMENT
'The Indian Contract Act'
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INTRODUCTION
• The word “Bailment” is derived from the French word “Bailor” which means “ To
deliver”.
• But as per law, it refers to the contract which results in delivery of good.
• In Contract of Bailment, only possession is passed on, not the ownership.
• There cannot be Bailment of immovable property/goods.

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DEFINATION
According to the Section 148 of the Indian Contract Act, 1872 – 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.
There are 2 parties in the Contract of Bailment –
1. A person delivering the goods is called as “Bailor”.
2. A person to whom the goods are delivered is called as “Bailee”

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EXAMPLES OF BAILMENT
• X delivers a piece of cloth to Y, a Tailor, to be stitched it into a suit. It is contract of
Bailment.
• X delivers a watch to Y, a watch repairer for repair.
• Gold given to goldsmith to make ornament.
• Book left with a friend inadvertently.
• When a person find lost goods – implied contract of Bailment.

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ESSENTIALS OF BAILMENT
• Movable Property [Except – Money]
• Delivery of Possession
• For the Specific Purpose
• Condition to return Back
• Contractual Liability

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CHARACTERISTICS OF BAILMENT
• 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, the contract may be 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.

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TYPES OF BAILMENT
Types of Bailment are following:
• Deposit – Delivering for security of Goods. E.g. – Bank Locker used for safekeeping of
Jewelry.
• Commodatum – Gratuitous delivery of goods. E.g. – Giving Book to a friend for
reading.
• Hire – Delivering the goods for rent.

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• Pawn – Keeping goods by creditors in consideration of security for debts.
• Carrier – Sending movable property/goods from one place to another.
• Mandatum Deposit- Delivering the goods for repairing/construction. E.g. –
Vehicle, Cloth, Jewelry etc.

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• Right to receive back the goods in time [Section 160 of Indian Contract Act, 1872].
• Right to take compensation, in case of –
~~ Loss.
~~ Not getting back the goods in proper time..
• Right to rescind the Contract of Bailment [Section 153 of Indian Contract Act, 1872].
RIGHTS OF BAILOR

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• Right to terminate the Bailment [Section 159 of Indian Contract Act, 1872].
• Right to receiver the increase incurred when the goods/property is with the Bailee
[Section 163 of Indian Contract Act, 1872].
• Right to getting the goods separate when mixed by Bailee without consent [Section 156
& 157 of Indian Contract Act, 1872].
RIGHTS OF BAILOR

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• Duty to disclose the fault/defect in the goods [Section 150 of Indian Contract Act, 1872].
• To repay necessary expenses in case of gratuitous bailment – Where the Bailee is required to keep goods
for the benefit of the Bailor without any remuneration , it is duty of Bailor to repay all necessary expenses
[Section 158 of Indian Contract Act, 1872]. E.g. - X leaves a horse in the custody of Y to be taken care of.
All the expenses incidental thereto i.e. feeding horse, medical expenses should be paid to Y by X.
• Bailor to be liable for the damages incurred to the Bailee due to lack of authority to make the Bailment
[Section 164 of Indian Contract Act, 1872].
• Duty to compensate Bailee for taking the goods back before time [Section 159 of Indian Contract Act,
1872]
DUTIES OF BAILOR

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• Right to recover necessary expenses incurred on Bailor’s Goods [Section 158 of Indian
Contract Act, 1872].
• Right to recover compensation from Bailor [Section 164 of Indian Contract Act, 1872].
• Right to have lien on the goods bailed [Section 170 & 171 of Indian Contract Act, 1872].
(# The right of lien extends only to the possession of goods & not to a right of sale.)
• Right to file suit against Wrongdoer [Section 180 of Indian Contract Act, 1872].
• Right to deliver goods to any one of the several joint owners of the bailed Goods.
• Right to receive compensation for loss incurred for Bailor’s defective title.

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• Duty to take reasonable care of the goods bailed [Section 151 & 152 of Indian Contract Act, 1872]. E.g. - X
bailed the goods to Y. Inspite of Y’s taking reasonable care, goods were stolen & Y did not inform the own.
• Duty not to make a unauthorized use of the goods bailed [Section 153 & 154 of Indian Contract Act, 1872].
Duty not to mix the bailed goods with own goods [Section 155, 156, and 157 of Indian Contract Act, 1872].
• Duty to return the bailed goods on the fulfillment of the purpose [Section 160, 161, 165, 166, and 167 of
Indian Contract Act, 1872].
• Duty to deliver the increase or profit gained from the bailed goods to the Bailor [Section 163 of Indian
Contract Act, 1872].
DUTIES OF BAILEE

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• Lien is a right of a person to retain the property or goods of another until he pays his due
payment/charges.
• Generally, Lien is of 2 Types:
~~ Particular Lien - Particular lien gives right to retain only such goods in respect of which charges
due remain unpaid.
~~ General Lien - General lien gives right to retain any goods belonging to another person for any
amount due from him
CONCEPT AND TYPES OF LEIN

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• The Bailee has the right to retain the goods delivered to him until the charges due to
him are paid by the Bailor.
• The Right of Lien is lost when possession is lost.
• The Right of Lien extends only to the possession of goods & not to a right of sale.
BAILEE’S RIGHT OF LEIN

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DISTINCTION BETWEEN BAILEE’S PARTICULAR LIEN AND
GENERAL LIEN
Basis of Distinction Bailee’s Particular Lien Bailee’s General Lien
NATURE OF RIGHT
CONDITION FOR EXERCISING
LIEN
RIGHT TO WHOM?
Particular Lien gives right to retain only such goods in
respect of which charges due remain unpaid.
Particular Lien can be exercised only when some labour
or skill has been expended on the goods, resulting in
an increase in value of goods
Every Bailee is entitled to Particular Lien
General Lien gives right to retain any goods belonging
to another person for any amount due from him.
General Lien may be exercised even though no labour
or skill has been expended on the goods.
General lien can be exercised by only such persons as
are specified under Section 171 of the Indian Contract
act, 1872. E.g. - Bankers, Policy brokers etc

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TERMINATION OF BAILMENT
?
• Expiry of Specified Period of the Bailment - When bailment is for specific period, it terminates on the
expiry of the specified period.
E.g. - Z lends a moped to Y for a period of 3 months, April – June. The Bailment terminates by the end of
June.
• Accomplishment of specified purpose - Where bailment is for a specified purpose, it terminates when
such purpose is accomplished. E.g. - G hires tables and chairs, utensils, etc. from H for organizing his son’s
engagement. G shall return them once the engagement functions are over

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?
• Bailee’s act inconsistent with conditions of the Bailment (Section 153) - When bailee does some act
which is inconsistent with the terms and conditions of bailment, the Bailor may terminate the bailment. E.g. -
J gives his car to K keeping it in K’s garage. K gives it to his son for racing. J can terminate the bailment.
• Destruction of subject matter - When goods bailed are destroyed, Bailment comes to an end. E.g. - K
hires a cycle from L. When the cycle is damaged beyond repair in an accident, bailment ends.

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?
• Gratuitous Bailment (Section 159) - Gratuitous Bailment can be terminated at any time.
Also, a Gratuitous Bailment ends by the death of either Bailor or Bailee (as per Section 162 of
the Indian Contract Act, 1872).
Note: Where premature termination of bailment by the Bailor causes loss to the Bailee
exceeding the benefits derived by him, the Bailor shall indemnify the Bailee.
• Bailment will be terminated on the death of any party.
• Contract of Bailment can be terminated by any party by giving the notice of
termination to the another party

Bailment ( Indian Contract Act, 1872)

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