BAILMENT

THE LAW OF AGENCY, BAILMENT AND PARTNERSHIPCourse Conductor: Sadia SharminEmail: sadia.sharmin3@gmail.com

BAILMENT

‘Bailment’ is derived from a French word ‘bailer’ which means ‘to deliver’.

But in law it refers to the contract which results from delivery of goods.

In contract of bailment only possession is passed on not the ownership.

There cannot be bailment of immovable property.

SECTION 148 OF CONTRACT ACT

“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 to whom they are delivered is called the bailee”

Examples: X delivers a piece of cloth to Y, a tailor, to be

stitched 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. Something left with a friend inadvertently. When a person find lost goods – implied

contract of bailment.

ESSENTIALS OF BAILMENT

Contract Delivery of goods - Delivery of possession of

goods from one person to another. Mere custody of goods does not amount to change in possession. Goods must be handed over to the bailee for some purpose.

The delivery of possession of goods is of the following kinds:

1. Actual delivery - when goods are physically handed over to the bailee by the bailor.

2. Constructive delivery or Symbolic Delivery – Handling over the keys of a warehouse, Document of title of goods. ( immovable property)3. Delivery of goods must be for some purpose- The delivery of goods must be for some purpose. Eg goldsmith4. Delivery upon a contract – There is no bailment where the delivery of goods is without contract. ( A minor )5. Return of goods.

KINDS OF BAILMENT

On the basis of benefit – 1. Exclusive for the benefit of bailor.2. Exclusive for the benefit of bailee. On the basis of Reward – 1. Gratuitous Bailment – Goods are delivered

by the bailor to the bailee without any reward. Lending a book to a friend for reading. ( Exclusive benefit of either of the party)

2. Non – Gratuitous bailment – Where bailor

& bailee is entitled to reward for bailment.

Example:

A car let out for hire,

Gold given to goldsmith for making jewellery for charges.

DUTIES OF BAILEE

1. To take reasonable care:As a prudent man would take of his own goods. If any loss or damage incurs to the goods bailed in spite of the due care, he will not be liable for any such loss or damage. The burden of proof is on the bailee to show that he was not negligent.

The bailee is not answerable for any loss to goods bailed, caused by an act of God, Lightning, flood.

Examples: X bailed the goods to Y. In spite of Y’s taking

reasonable care, goods were stolen & Y did not inform the owner or police. Y was held liable.

X, had hired a wooden shop & it was burst by mobs during a communal riot. Held X was not liable.

2. Not to make any unauthorized use of goods:A lends a horse to B for his own riding only. B allows C, member of the family, to ride the horse. The horse accidentally falls & is injured. B is liable to make compensation

3. Not to mix the goods with his own goods:(a) Mixing with bailor’s consent.(b) Mixing without bailor’s consent Where goods can be separated – Bailee is

liable to bear all the expenses of separation.Example: A bails 100 bales of cotton marked with

a particular mark to B. B, without A’s consent mixes the 100 bales with other bales of his own bearing a different mark. A is entitled to have his 100 bales returned & B is bound to bear all the expenses for separation of bales.

Where the goods mixed cannot be separated – The bailor is entitled to be compensated by the bailee for the loss of goods.

4. Not to set up adverse title:

Bailee must hold the goods on behalf of & for the bailor. ( Even he comes to know about the true owner of the goods )

5. To return increase or profit:

It happens in case of animals. A 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 cow to A.

6. To return the goods:

If he fails to do so, he becomes liable for any loss. Responsible also for act of god.

Case Ref:

Shaw & co. vs. Symmons & sons – X delivered books to Y to be bound. Y promised to return the books within a reasonable time. X pressed for the return of the book. But Y, failed to deliver them back even after the expiry of reasonable time. Subsequently the books were burnt in an accidental fire at the premises of Y. Y was held liable for the loss.

Where there are several joint owners of goods bailed – the bailee may return the goods to any of the bailor.

Where there is a gratuitous bailment, the bailee is bound to return the goods to the bailor on demand even before the expiry of the fixed period or accomplishment of purpose. The bailor is liable to pay if there is any loss incurred due to termination of bailment. (books for reading)

DUTIES OF BAILOR

1.To disclose fault in the goods bailed.2.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. E.g. X leaves a horse in the custody of Y to be taken care of & y is to receive no remuneration. All the expenses incidental thereto i.e. feeding horse, medical expenses should be paid to Y.

3. To repay the extra ordinary expenses:in case of non–gratuitous bailment:

Y hires X’s horse for his carriage. The horse becomes ill & Y spends Rs. 50 on medical expenses over & above Rs. 20 on feeding the horse. X is liable to pay to Y Rs. 50 the extra- ordinary expenses only.

4. To indemnify the bailee:The bailor has to indemnify the loss if incurred on defective title of the goods.

5.To received back the goods:If the bailor refuses to receive back the goods, he is liable to compensate the bailee for the necessary expenses of custody.

RIGHT OF BAILOR

Right to claim for loss caused to the goods by the bailee for not taking reasonable care.

Right to claim damages for mixing goods without consent.

Right to claim increase in goods. Right to demand back the goods.

RIGHTS OF BAILEE

Right to recover extra ordinary expenses incurred on goods.

Right to claim damages incurred because of non disclosure of faults in goods bailed.

Right to deliver goods to any one of the several joint owners.

Right to receive compensation for loss incurred for bailor’s defective title.

BAILEE’S LIEN

Lien is a right of a person to retain the property or goods of another until he pays

(Bailor) the lawful charges or debt due thereupon.

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.

TYPES OF BAILEE’S LIEN

Particular lien:

A retention of particular goods in respect of which some charge is due.

Example:

A delivers a rough diamond to B, a jeweler, to be cut & polished, which is accordingly done. B is entitled to retain the stone till he is paid for the service he has rendered.

CONDITIONS TO BE SATISFIED

The bailee must have rendered some services & must be entitled to some remuneration for it.

The services must have been performed in full. (no lien if part performance is done)

The bailee cannot exercise the right of lien where he has agreed to render the services on credit until the expiry of period of credit.

The goods must be in possession of the bailee: IF POSSESSION IS LOST LIEN IS LOST.

General Lien:

It entitles the person to hold goods of another for any amount due to him whether in respect of those goods or any other.

TERMINATION OF LIEN:

1. Agreement between parties .

2. Payment of debt.

3. Loss of possession

4. Refusal of tender (by Bailee)

TERMINATION OF BAILMENT

On the expiry of period – Bailment is for specific period.

Accomplishment of purpose. Gratuitous bailment – in between Death of bailor or bailee.

THANK YOU

Copyright: Komma Naveen Kumar (Guntur, Student at Tata Docomo)