Define Contract of Bailment.
Discuss in detail the rights and duties of the bailor and bailee
Introduction:
1. The word “Bailment” has been derived from the French word “ballier” which means “to
deliver”. Bailment etymologically means ‘handing over’ or ‘change of possession’.
2. As per Section 148 of the Act, bailment is the delivery of goods by one person to another for
some purpose, upon a contract, that the goods shall, when the purpose is accomplished, be
returned or otherwise disposed of according to the directions of the person delivering them.
3. The person delivering the goods is called the “bailor”. The person to whom they are delivered is
called the “bailee”.
4. Example: Where ‘X’ delivers his car for repair to ‘Y’, ‘X’ is the bailor and ‘Y’ is the bailee.
According to Sec.148, There are three essentials elements of a valid bailment:
(i) delivery of goods by the bailor
(ii) Delivery of possession upon a contract.
(iii)Bailee bound to return goods or to dispose of according to the directions of bailor.
Kinds of Bailment
On the basis of reward
Gratuitous bailment: The bailment of products without any charges or reward is Gratuitous
bailment. In this type, there is no requirement to pay any charges by the bailee for the bailment.
Non gratuitous bailment: The bailment for some reward or charges is non gratuitous bailment. It
is required to pay some charges to the bailor by the bailee.
On the basis of benefit
Bailment contract made for the exclusive benefits of the bailor.
Bailment made for the exclusive benefits of the bailee.
Bailment made for mutual benefits of both bailor and bailee.
Duties of a Bailor
1. Duty to Disclose Faults (Section 150)
The bailor must disclose all known defects or faults in the goods being bailed that could
interfere with their proper use or harm the bailee. In a gratuitous bailment, the bailor is liable
for known defects. In a non-gratuitous bailment, the bailor is responsible for both known
defects and those that could have been discovered through reasonable diligence. If the bailor
fails to disclose such faults, they are responsible for any loss or damage suffered by the bailee.
2. Duty to Pay Necessary Expenses (Section 158)
The bailor is responsible for reimbursing the bailee for necessary expenses incurred during the
bailment. In a gratuitous bailment, the bailor must bear all necessary expenses for maintaining
or preserving the goods. This ensures that the bailee does not suffer financial losses while
carrying out the bailment.
3. Duty to Accept the Goods Back (Section 164)
The bailor must accept the goods after the purpose of the bailment is completed or the agreed
time period has ended. If the bailor refuses to take the goods back without a valid reason, they
are liable for any losses or expenses the bailee incurs due to the refusal.
4. Duty to Indemnify the Bailee (Section 164)
The bailor must indemnify (compensate) the bailee if the bailee suffers a loss due to a defective
title of the goods. If the bailor does not own the goods or has no legal authority to bail them,
and a third party claims ownership, the bailor must compensate the bailee for the resulting loss
or legal issues.
Duties of a Bailee:
1. Take proper care of goods
According to section 151, it is the duty of a bailee to take care of goods bailed to him. Bailee should
take care of these goods as an ordinary man will take care of his goods of the same value, quality,
and quantity.
Thus, if the bailee takes due care of goods then he will not be liable for any loss, deterioration of
such goods. Also, the bailee needs to take the same degree of care of goods whether the bailment
is for reward or gratuitous.
However, the bailee is not liable for any loss due to the happening of any act by God or public
enemies though he agrees to take special care of the goods.
2. Not to make unauthorized use
As per section 153, the Bailee shall not make any unauthorized use of goods bailed. In case he
makes any unauthorized use, then bailor can terminate the bailment.
Bailor can also claim for damages caused to goods bailed due to unauthorized use as per Section
154.
3. Duty not to mix the bailers goods in his own goods [S.155, 156, 157 ]:- It is the duty of bailee
not mix the bailor's goods in his own goods. If he mixes the bailers goods in own goods the
effect of such mixture will be as follows:-
With Bailor’s Consent (Section 155): Both parties share an interest in the mixed goods in
proportion to their respective shares.
Without Consent, Separation Possible (Section 156): The goods remain the property of each
party, but the bailee must bear the expenses of separation and any resulting damage.
Without Consent, Separation Impossible (Section 157): The bailor is entitled to
compensation for the loss of goods.
4. Not Set Adverse Title
a bailee must not set an adverse title to the goods bailed.
5. Return Goods
As per Section 160, the duty of the bailee is to return the goods without demand on the
accomplishment of the purpose or the expiration of the time period. In case of his failure to do
so, he shall be liable for the loss, destruction, deterioration, damages, or destruction of goods
even without negligence.
6. Return Increase or Profits
As per Section 163, a bailee shall return the goods along with any increase or profit accruing to
the goods to the bailor, in the absence of any contract to the contrary.
For example, A leaves a hen in the custody of B. The hen gets a chick. B shall deliver the hen along
with the chick to A.
Rights of Bailor: Broadly rights of bailor are also the duty of the bailee (under Sec. 151,154,155
and 157) In addition to that, the bailor has the following other rights also.
1. To terminate the contract
As per Section 153 of the Act, “A contract of bailment is voidable at the option of the bailor, if the
bailee does any act with regard to the goods bailed, inconsistent with the conditions of the
bailment.”
2. Right to demand the goods back – Sec 159
3. Right to demand the return of goods on completion of bailment – Sec 160
4. Right to claim any increase or profit – Sec 163
5. Right to file a suit against the wrong doer – Sec 180
Rights of Bailee:
1. Right to claim damages: If the bailor has bailed the goods, without disclosing the defects in
goods, and the bailee has suffered some loss, the bailee has a right to sue the bailor for
damages.
A hired a carriage of B. The carriage is unsafe, though B is not aware of it, and A is injured. B is
responsible to A for the injury (Section 150).
2. Right to claim reimbursement: In case of non-gratuitous bailment the bailee has a right to
recover from the bailor, all necessary expenses, which the bailee had incurred for achieving the
purpose of bailment. In case of a gratuitous bailment, bailee has a right to recover from the
bailor, all extraordinary expenses, borne by the bailee or the purposes of bailment (Section
158).
3. Right to recover compensation: At times a situation arises wherein bailor did not have the
capacity to contract for bailment. Such a contract causing loss to the Bailee; therefore the
Bailee has the right to recover such compensation from the bailor. (Section 168)
4. Right to Lien: The bailee has the right of lien, which means that the bailee can retain possession
of the goods until the bailor pays the charges or remunerations due to the bailee for the
services rendered in respect of the goods. However, the right of lien can only be exercised if the
bailee has possession of the goods lawfully, and not if the goods were obtained through theft,
fraud, or any other illegal means.
5. Delivery of goods to one of several joint bailors of goods - If several joint owners of goods bail
them, the bailee may deliver them back to, or according to the directions of, one joint owner
without the consent of all, in the absence of any agreement to the contrary (Sec.165).
6. Delivery of goods to bailor without title - If the bailor has no title to the goods, and the bailee,
in good faith, delivers them back to or according to the directions of, the bailor, the bailee is not
responsible to the owner in respect of such delivery (Section.166)
7. Right to apply to Court to stop delivery - If a person, other than the bailor, claims goods bailed,
the bailee may apply to the Court to stop the delivery of goods to the bailor, and to decide the
title to the goods. [Sec.167]
8. Right of action against trespassers - If a third person wrongfully deprives the bailee of the use
or possession of the goods bailed to him, he has the right to bring an action against that party.
The bailor can also bring a suit in respect of the goods bailed. [Sec. 180]
