CONTRACT OF BAILMENT ( Ss.148 – 181)

 

Bailment means to give or to deliver

Sec 148 defines – Bailment , Bailor & Bailee

Bailor – Person Delivering the goods

Bailee – Person to whom the goods are delivered


Bailment Essential – 

a.Delivery of the goods by bailor

b. Delivery Should be upon contract

c. Such delivery should have a specific purpose temporarily


Object of the bailment is temperory custody of the property in the bailee’s hand.

Until last payment of last installment, the hire-purchaser is a bailee


2 kinds of bailment – 

Sec 148 – 171 – Bailments in General

Sec 172 – 179 – Bailments in Pledges

 

Bailment means a delivery of goods from one person to another for a special purpose. Whereas Pledge means delivery of goods as security for the payment of debt or performance of a promise

 

Essentials of Bailment

·       There shall be a contract between the parties for the delivery of goods,

·       The goods shall be delivered for a special purpose only,

·       Bailment can only be done for movable goods and not for immovable goods or money,

·       There shall be a transfer of possession of goods,

·       Ownership is not transferred to Bailee, therefore Bailor remains the owner,

·       Bailee is duty bound to deliver the same goods back and not any other goods.

 

Duties of a Bailor - Section 150 


·       Gratuitous Bailment: It is the duty of the bailor to disclose all the defects in the goods that he is aware of to the Bailee that can interfere with the use of goods or can expose him to extraordinary risks. And failure to do the same will make bailor liable for damages.

·       Non Gratuitous Bailment (Bailment for Reward):This duty particularly deals with the goods given on hire. As per this provision, when the goods are bailed for hire, then in such a situation even if the bailor is aware of the defect in the goods or not will be held liable for the injury that has been caused due to the existence of such defect.

Duties of Bailee

  1. Duty to take reasonable care - (Section 151-152)
  2. Duty not to make unauthorized use of the goods - (Section 153-154)
  3. Duty not to mix bailor’s goods with his own goods - (Section 155-157)
  4. Duty to return the goods on the fulfilment of purpose - (Section 160-161)
  5. Duty to deliver to the bailor increase or profit if any on the goods bailed - (Section 163)

 Rights of a Bailor

  1. Enforcement of Bailee’s Duty:
  2. Right to claim damages - (Section 151)
  3. Right to Termination the Contract - (Section 153)
  4. Right to claim compensation
  5. Right to demand the return of goods

 Rights of a Bailee

  1. Right to recover expenses - (Section 158)
  2. Right to remuneration
  3. Right to recover compensation - (Section 168)
  4. Right to Lien (A lien is the legal right of a creditor to sell the collateral property of a debtor who fails to meet the obligations of a loan contract.)
  5. Right to suit against a wrongdoer - (Section 180)

Pledge 

Pledge is a kind of bailment. Pledge is also known as Pawn.It is defined under section 172 of the Indian Contract Act, 1892. 

By pledge, we mean bailment of goods as a security for the repayment of debt or loan advanced or performance of an obligation or promise. 

The person who pledges the goods as security is known as Pledger or Pawnor 

The person in whose favour the goods are pledged is known as Pledgee or Pawnee.

Essentials of Pledge

·   here shall be a bailment for security against payment or performance of the     

     promise,

·   The subject matter of pledge is goods,

·   Goods pledged for shall be in existence,

·   There shall be the delivery of goods from pledger to pledgee,

·    There is no transfer of ownership in case of the pledge.

o   Exception: In exception circumstances pledgee has the right to sell the movable goods or property that are been pledged.

Rights of Pawnor

Section 177 - the Pawnor has the Right to Redeem. 

By this, we mean that on the repayment of the debt or the performance of the promise, the Pawnor can redeem the goods or property pledged from the Pawnee before the Pawnee makes the actual sale. 

Rights of a Pawnee

Right to retain the goods - (Section 173-174)

Right to recover extraordinary expenses - (Section 175)

The right of suit to procure debt and sale of pledged goods - (Section 176)

 

 

Rights of Finder of Lost Goods

The right of Lien: According to section 168 of the Indian Contract Act, 1872 finder of the lost goods can exercise his right of particular lien if the actual owner refuses to make the payment of the expenses incurred to preserve those goods or to find the actual owner. But finder of the lost goods cannot sue him for the same.

The right of Claiming the Award, if announced by the owner: 

For instance, A finds B’s purse and gives it to him. B promises A to give him Rs. 100 for the same. This is a contract of bailment and B is bound to pay the reward.

Right to sell the goods found: According to section 169 of the Indian Contract Act, 1872 finder of the lost goods also have the right to sell the goods on certain circumstances i.e. either he could not find the actual owner after taking all due diligence or the goods or of such nature that their value might perish.

Lien Types :

By right of Lien, we mean that the Bailee has the right to retain the property or goods until the Bailor makes the payment of expenses or remuneration. 

Lien is of two types:

·       Particular Lien: Section 170 of the Indian Contract Act, 1872 in the absence of any contract to the contrary if the Bailee uses his skills and renders his service to the Bailor on the goods bailed, he has the right to the particular lien if he fails to pay the remuneration for the same. But the Bailee cannot sue him for the non-payment of remuneration, he can only retain the goods.

·       General Lien: Section 171 of the Indian Contract Act, 1872 in the absence of any contract to the contrary the Bailee can retain possession of goods or property for non-payment of expenses or remuneration against the general balance of the account. 


Example : X borrows Rs. 500 from the bank without security. Later he takes one more loan of Rs 2000 from the same bank against a security of gold. X pays backs Rs. 2000 but yet has not paid Rs 500. So the bank can retain gold (general balance of the account) for the previous loan. This is the general lien. The right of general lien has been conferred on the following kinds of Bailee:

Bankers, Factors, Wharfingers, Attorney of a High Court, Policy Brokers.

 

The Bailment can be terminated when the:

  1.        The time period of the bailment expires,
  2.        The purpose for which the bailment was done is achieved,
  3.        Bailor or Bailee dies,
  4.        Goods are used in an inconsistent manner,
  5.        Bailor himself terminates the same.