This
article will be discussing about the Contract of Bailment containing its concept,
parties to it, kinds of bailment, its essentials, bailor’s duty, duty and
rights of bailee.
1.
INTRODUCTION:
Bailment
consists in delivery of goods, i.e., movable property, by one person, who is generally
the owner thereof, to another person for the same purpose. Those goods are to
be returned to their owner after the purpose is accomplished, or they are to be
disposed of according to the direction of the person delivering them.
Section
148 of the Indian Contract Act, 1872, defines bailment as under: 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. The person delivering the goods is called the ‘bailor’ and the person to
whom they are delivered is called the ‘bailee’.
Bailment
is a legalese used specifically in common law. Despite the fact that its
etymology could refer to any sort of handling over, it involves a change in
possession. One who has custody without possession, like a servant guest using
his host’s goods, is not bailee. On the whole, a bailment might be described as
a delivery on condition to which the law usually attaches an obligation to
re-deliver the goods or otherwise deal with them as directed, when the
condition is satisfied; (A. T. Trust Ltd. vs. Tripunthura Devaswon, 1954).
2.
PARTIES TO A BAILMENT:
a.
Bailor:
In
a contract of bailment, the person who delivers the goods is called bailor.
b.
Bailee:
The
person to whom the goods are delivered is called the bailee.
3.
TYPES OF BAILMENTS:
There are two types of bailments.
- Gratuitous Bailment: Gratuitous bailment refers the bailment without any consideration.
- Non-Gratuitous Bailment: Non-gratuitous bailment
refers bailment with consideration.
4.
ESSENTIALS OF BAILMENT:
The
essential elements of a bailment are summed as below;
a.
Delivery of goods for some purpose.
b.
Return of the goods after the purpose is achieved, or their disposal according
to the bailor’s direction.
Let’s
have a detailed discussion –
a.
Delivery of the goods for some purpose:
“Delivery”
means transfer of possession of the goods from one person to another. Delivery
need not always be actual. It may sometimes be a constructive or symbolic
delivery. Section 149 of the Indian Contract Act recognizes other than actual
delivery also. It provides:
“The
delivery to the bailee may be made by doing anything which has the effect of
putting the goods in the possession of the intended bailee or of any person
authorized to hold them on his behalf”.
Transferring
of the key of the godown may be deemed to be delivery of the goods. Explanation
section 148 of the Act, gives an illustration of constructive theory. According
to this provision, if a person already in possession of the goods of other
contracts to hold then as a bailee, he thereby becomes the bailee, and the owner
becomes the bailor of such goods, although they may not have been delivered by
the of bailment.
For
example, A sells his watch to B. instead of delivering the watch to B, A is
asked to continuing to keeping the watch with him for one month on B’s behalf.
After this arrangement, A is the bailee of the watch. The watch was already in
the possession of A. earlies he was having it as himself the owner, but now he
holds the same as a bailee for B. A finder of goods is also deemed to be the
bailee of those goods.
b.
Return of the goods after the purpose is achieved:
The
delivery of goods, in a bailment, is only for some purpose, e.g., for safe
custody, for carriage, or for repair, etc. when the purpose is accomplished,
the goods are to be returned or otherwise disposed of according to the
directions of the person delivering them.
As
stated by Section 148, the goods “shall, when the purpose is accomplished, be
returned or otherwise disposed of according to the direction of the person
delivering them”. This element distinguishes bailments from the other
transactions like sale of goods, or gift where the property in the goods is
transferred and they are not to be return in any case. In every bailment, the
same thing is to be returned either in the same form or in an altered form.
5.
BAILOR’S DUTY:
Section
150 of the Indian Act, 1872 mentions the following duty of a bailor in respect
of the goods by him.
a. The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expense the bailee to extraordinary risks; and if he does not make disclosure, he is responsible for the damage arising to the bailee directly from such faults.
b.
If the goods are bailed for hire, the bailor is responsible for such damages,
whether he was or was not aware of the existence of such fault in the goods
bailed.
6.
DUTIES OF BAILEE:
A bailor has observed the following duties:
a.
Duty to take reasonable care of the goods bailed (Section 151-152).
b.
Duty not to make unauthorised use of the goods bailed (Section 153-154).
c.
Duty not to mix bailor’s goods with his own goods (Section 155-157)
d.
Duty to return the goods on fulfilment of the purpose (Section 159-161,
165-167)
e.
Duty to deliver to the bailor increase or profit on the goods bailed (Section
163).
a.
Duty to take reasonable care of the goods bailed (Section 151-152):
As
per the provision of section 151 of the Indian Contract Act the standard of
care required is that of a reasonable man. The amount of care to be taken
should be such as a man of ordinary prudence would, under similar
circumstances, take of his own goods of the same bulk, quantity and value as
the goods bailed. This section lays down a uniform duty of care for every kind
of bailment, whether the same is for reward or is merely gratuitous.
Further,
section 152 mentioned bailee not liable when he takes due care. Section 151
describes the amount of care which a bailee is supposed to take. If he has
taken due care, he will not be liable for any loss which may caused to the
bailed to him.
b.
Duty not to make unauthorised use of the goods bailed (Section 153-154):
when
the goods have been bailed for a particular purpose, the bailee is supposed to
use them only for that purpose and none else. If he makes unauthorised use of
the goods bailed, there is two remedies available to the bailor:
i. The bailor may terminate the bailment as per the provision of the section 153 of the Act. And The bailor may recover compensation for the loss caused due to unauthorized use of goods which is contrary to the condition of bailment as contained under section 154 of the Act.
c.
Duty not to mix bailor’s goods with his own goods (Section 155-157):
When
handling the bailor's property, the bailee must exercise reasonable care. He has
a responsibility to keep the goods of the bailor separate from his own or any
portion of his own goods. According to Section 155, the bailor will have an
interest in the goods in proportion to the goods he has bailed if the bailee
mixed the goods with his goods while doing so with the bailor's prior consent. However,
this paragraph makes it clear that the bailee had the bailor's permission.
Sections
156 and 157 discuss circumstances in which the goods were mixed without the
bailor's consent. When the goods can be separated, the bailee is legally responsible
for any loss or damage the bailor may incur as a result of the mixing. The
bailor is however allowed to request compensation for the lost goods if it is
not possible to separate the goods.
d.
Duty to return the goods on fulfilment of the purpose (Section 159-161,
165-167):
since
the bailment of the goods is either for a certain purpose or a certain period,
the bailee is bound to return the goods to the bailor as soon as the time for
which they were bailed has expired, or the purpose of bailment has been
accomplished.
If
the bailor is not in a position to deliver back the goods, for instance, when
they are lost due to the fault of his servants, the responsibility for each
loss is that of the bailee.
e.
Duty to deliver to the bailor increase or profit on the goods bailed (Section
163):
According
to section 163, in the absence of any contract to the contrary, the bailee is
bound to deliver to the bailor, or according to his directions, any increase or
profit which may have accrued from the goods bailed.
For
instance, X leaves a cow in the custody of B to be taken care of. The cow has a
calf. B is bound to deliver the calf as well as the cow to X.
According
to section 163, accretions in respect of the goods bailed are part of the
bailed goods and hence such accretions do not belong to the bailee, and therefore
they have to be handed over to the bailor when the goods bailed are returned.
7.
RIGHTS OF BAILEE:
The
bailee of the goods has the following rights under the Indian Contract Act:
- a)
Right to recover necessary expenses
incurred on bailment (Section 158).
- b)
Right to recover compensation from the
bailor (Section 164).
- c)
Rights to have a lien on the goods
bailed (Section 170-171).
- d)
Right to suit against a wrongdoer
(Section 180).
Let’s
have a detail look over these rights.
a)
Right to recover necessary expenses incurred on bailment (Section 158):
when
under a contract of bailment, some remuneration is to be paid to the bailee for
services he renders in respect of them, he has a right to recover the same, or
to exercise the rights of lien in respect of such goods until he receives the
necessary payment.
Even
when the bailment is gratuitous, i.e., the bailee is to receive no remuneration
for the service render by him, he is nonetheless entitled to recover from the
bailor necessary expenses incurred by him for the purpose of the bailment.
For
instance, A leaves his horse with his neighbour, B for safe custody for one
week. B is entitled to recover the expenses incurred by him in the feeding the
horse.
b)
Right to recover compensation from the bailor (Section 164):
sometimes
the bailor may not be entitled to make the bailment, or to receive back the
goods. This may result in some loss to the bailee. The bailee is entitle to
recover from the bailor such loss as may be caused due to the above stated reason.
c)
Rights to have a lien on the goods bailed (Section 170-171):
lien
is the right of the bailee under which the bailee can retain the goods of the
bailor, and refuse to deliver them to the bailor, until his due remuneration
for services in respect of the goods bailed, or the amount due is paid.
The
Act recognizes two kinds of lien:
-
i.
Particular lien, and
-
ii.
General lien.
The
right of ‘particular lien’ entitles the bailee to retain those very goods for
the services regarding which the remuneration is due. The ‘general lien’ entitles
the bailee to retain the goods of the bailor for a general balance of account.
d)
Right to suit against a wrongdoer (Section 180):
when
the goods have been bailed, if a third person wrongfully deprived the bailee of
their use or possession, or causes an injury to the goods, the bailee can sue
such third person for wrong to the goods. It may be noted that not only the
bailee but the bailor also can bring an action against such third party.
8.
CONCLUSION:
Both
the bailor and the bailee have been confronted with certain rights and duties that
are necessary for them to follow whenever seem appropriate in a contract of
bailment, which involves the transfer of possession of the good from the bailor
to the bailee for the specific purpose. Additionally, all requirements must be met
for the bailment contract to be deemed valid. Additionally, a bailment of goods
is distinct from a sale of goods because a bailment involves the transfer of
possession only, whereas a sale involves the transfer of ownership.
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