BAILMENT

MEANING OF BAILMENT
• The term bailment is derived from a French
word ‘baillier’ which means ‘to deliver’. In legal
sense, bailment is a contract where the owner
of goods makes delivery of his goods to another
for some purpose or for some limited period.
• When the purpose is accomplished the goods
shall be returned him otherwise disposed off
according to the direction of the person
delivering them.
 MEANING OF BAILMENT
• If a person gives some property to another
upon a contract that it shall be returned him
or otherwise disposed of or sold out according
to the order of the person delivering it, the
contract is said to be the contract of bailment.
 MEANING OF BAILMENT
• The person delivering the goods is called the
bailor. The person to whom they are delivered is
called the bailee.
• Examples
(i) P lends his book to Q.
(ii) P delivers his car to Q for repair.
(iii) P gives Q his watch as security for a loan.
• In all these cases P is the bailor and Q is the
bailee.
 MEANING OF BAILMENT
• Bailment does not cause any change of
ownership. It is concerned with only movable
goods. Money is not included in the category
of movable goods. A deposit of money is not
bailment. A person already in possession of
the goods may become a bailee by a
subsequent agreement. Bailment may be
classified into gratuitous bailment and
bailment for reward.
 FEATURES OF BAILMENT
• Bailor delivers goods to bailee for some purpose or for a period
of time.
• Bailee has to return goods to bailor or follow directions of bailor
after the purpose is accomplished or the period for which the
goods are delivered is expired.
• It does not change in ownership.
• It is concerned only with movable goods.
• Money is not included in the category of movable goods.
• A person already in possession of goods may become a bailee by
a subsequent agreement.
• Bailment may be classified into gratuitous bailment and bailment
for reward.
 RIGHTS OF BAILOR
1. enforcement of the bailee’s duties. The bailor can enforce by suit
all the duties of the bailee as his rights
a. Right to claim damages for loss caused to the goods bailed by
bailee’s negligence.
b. Right to claim compensation for any damage arising from or
during unauthorized use of the goods bailed.
c. Right to claim compensation for any loss caused by the
unauthorized mixing of goods bailed with his own goods.
d. Right to demand return of goods as soon as the time for which
they were bailed has expired, or the purpose for which they were
bailed has been accomplished.
e. Right to claim any natural accretion to the goods bailed.
 RIGHTS OF BAILOR
• 2. Right to terminate bailment if the bailee
used the goods wrongfully. The bailor has a
right to terminate the bailment, if the bailee
does, with regard to the goods bailed, any act
which is inconsistent with the terms of the
bailment, although the terms of bailment has
not expired or the purpose of bailment has
not been accomplished.
 RIGHTS OF BAILOR
3. Right to demand return of goods at any time in case of
gratuitous bailment. When the goods are lent without
reward (i.e., gratuitously), the bailor can demand their
return whenever he pleases even though he lent them
for a specified purpose or time and if the bailee is not
guilty of wrongful use.
• But if the premature return of goods causes the bailee
loss in excess of benefit actually derived by him from
the use of such goods, the bailor must indemnify the
bailee for the amount in which the loss occasioned
exceeds the benefit derived.
 DUTIES OF BAILOR
1. Duty to disclose faults in goods bailed. 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 expose the
bailee to extraordinary risk. If he does not make such
disclosure, he is responsible for damage arising to the
bailee directly from such faults.
• If the goods are bailed for reward, the bailor is
responsible for such damage, whether he was or was
not aware of the existence of such faults in the goods
bailed.
 DUTIES OF BAILOR
2. Payment of necessary expenses in gratuitous
bailment. If the bailee is to receive no remuneration,
the bailor shall repay to the bailee all the necessary
expenses incurred by him for the purpose of bailment.
(usual and extraordinary, e.g., feeding and medical)
3. Duty to repay extraordinary expenses in case of
bailment for reward. If the bailee is to receive
remuneration for his services, it is the duty of the
bailor to bear extraordinary expenses, if any, incurred
by the bailee in relation to the thing bailed. (e.g.,
medical)
 DUTIES OF BAILOR
• 4. Duty to indemnify bailee. A bailor is also
bound to indemnify the bailee for any loss
suffered by the bailee, by reason of the fact
that the bailor was not entitled to bail the
goods because of the defective title.
 DUTIES OF BAILOR
5. Duty to receive back the goods. It is the duty
of the bailor to receive back the goods when
the bailee returns them after the time of
bailment has been expired or the purpose of
bailment has been accomplished.
If the bailor refuses to take delivery of goods
when it is offered at the proper time, the bailee
can claim compensation for all the necessary
expenses of, and incidental to, the safe custody.
 RIGHTS OF BAILEE
1. Enforcement of bailor’s duties. The bailee can, by suit,
enforce the duties of the bailor.
a. Right to claim damages for loss arising from the undisclosed
faults in the goods bailed.
b. Right to claim reimbursement for extraordinary expenses
incurred in relation to the thing bailed.
c. Right to indemnity for any loss suffered by him by reason of
defective title of the bailor to the goods bailed.
d. Right to claim compensation for expenses incurred for the
safe custody of the goods if the bailor has wrongfully refused
to take delivery of them after the term of bailment is over.
 RIGHTS OF BAILEE
2. Bailment by several joint owners. “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 off all, in the absence
of any agreement to the contrary.
3. Bailee not responsible on redelivery 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 directions of the bailor, the baiolee is not
responsible to the owner in respect of such delivery.
 RIGHTS OF BAILEE
4. Bailee’s particular lien. Lien means the right to
retain property until some debt or claim is paid. The
right of lien is given by law in certain cases. Lien
may be of two types: general lien and particular
lien.
General lien means the right to retain all the goods
of the other party until all claims of the holder are
paid.
Particular means the right to retain particular goods
until claims on account of these goods are paid.
 RIGHTS OF BAILEE
• 4. Bailee’s particular lien. A bailee has a
particular lien (the right to retain particular
goods until claims on account of those goods
are paid), when he has rendered any service
upon an article and is entitled to some
remuneration for it according to the terms of
the contract between him and the other party.
There are following limitations upon the
bailee’s particular lien:
 RIGHTS OF BAILEE
4. Bailee’s particular lien
Limitations
(i) The particular lien is available only if the service
rendered by the bailee is one involving the exercise of
labor or skill in respect of the goods bailed. There is no
lien for custody charges or other charges for work not
involving labor or skill.
(ii) the right of lien cannot be exercised until the services
have been performed in full. When a bailee has done
only a part of the work contracted for he cannot claim
lien for part payment
 RIGHTS OF BAILEE
4. Bailee’s particular lien
Limitations
(iii) The lien cannot be claimed if there is an
agreement to pay the money on a future date.
(iv) The lien can be exercised only so long as the
goods are in the possession of the bailee. If
possession is lost for any reason, the lien is
also lost.
 RIGHTS OF BAILEE
5. Bailee’s general lien (the right to retain all the goods until all the
claims are paid). Bailees coming within the following catagories
have a general lien: bankers, factors, wharfingers, attorneys of
high court, and policy brokers. Such bailees can retain all goods of
the bailor so long as anything is due to them.
The general lien in all these cases may not exist if there is a
contract to the contrary.
Bailees falling in catagories other than mentioned above may
have a general lien if there is an express agreement to that effect.
• Factors = selling agent
• Wharfinger = in charge of a warehouse of a sea port
 DUTIES OF BAILEE
1. Degree of care. The bailee is bound to take as
much care of the goods bailed to him as a man of
ordinary prudence would, under similar
circumstances, take of his own goods of the same
bulk, quality and value as the goods bailed.
2. Bailee’s liability for negligence of servants. A
bailee is liable for damages caused by negligence
of the servants about the use or custody of the
thing bailed, when acting in course of their
employment.
 DUTIES OF BAILEE
3. Unauthorized use of goods. If the bailee makes
unauthorized use of goods bailed, he is
responsible for all damages to the goods and must
pay compensation to the bailor.
4. Duty not to mix goods bailed with his own goods.
If the bailee, with consent of the bailor, mixes his
own goods with the goods of the bailor, the bailor
and the bailee shall have an interest, in proportion
to their respective shares, in the mixture thus
produced.
 DUTIES OF BAILEE
4. Duty not to mix goods bailed with his own
goods. If the bailee , without the consent of
the bailor, mixes the goods of the bailor with
his own goods, and the goods can be
separated, the property in the goods remains
in the parties respectively; but the bailee is
bound to bear the expense of separation, and
any damage arising from the mixture.
 DUTIES OF BAILEE
4.Duty not to mix goods bailed with his own
goods. If the bailee, without the consent of
the bailor, mixes the goods of the bailor with
his own goods, in such a manner that it is
impossible to separate the goods bailed from
the other goods and deliver them back, the
bailor is entitled to be compensated by the
bailee for the loss of the goods.
 DUTIES OF BAILEE
5. Duty of returning goods. It is the duty of the
bailee to return or deliver according to the
bailors directions, the goods bailed, without
demand, as soon as the time for which they
were bailed has expired, or the purpose for
which they were bailed has been
accomplished. Otherwise he is responsible for
any loss, destruction or deterioration of the
goods from that time.
 DUTIES OF BAILEE
6. Accretion to the goods bailed. 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 from the goods bailed.
 FINDER OF LOST GOODS
• A finder of lost goods is under no obligation to
take charge of the goods when he comes
across. But if he does take the charge of the
goods, he bocems responsiblefor the goods
like a balee in a gratuitous bailment.
DUTIES OF FINDER OF LOST GOODS
1. Duty to find the true owner. It is the duty of
the finder to make reasonable effort to find
the true owner of the goods.
2. Duty to take reasonable care of the goods as
a man of ordinary prudence would, under
similar circumstances, take of his own goods
of the same description.
 RIGHTS OF FINDER OF LOST GOODS
1. Right to retain possession of the goods until the true
owner is find. Finder never becomes the owner of the
goods. The ownership always remains with the true
owner, and the finder only enjoy the right to retain
possession against everybody except the true owner.
2. Right to lien over the goods for expenses. A finder
has a right to retain the goods against the true owner
until he receives reasonable compensation for
trouble and expenses incurred by him to preserve the
goods and to find out true owner but can’t sue.
 RIGHTS OF FINDER OF LOST GOODS

3. Right to sue for reward. The finder can file a

suit against the true owner to recover any
reward, which was offered by the true owner
for the return of the goods lost, provided he
came to know the offer before actually finding
out the goods. He may also retain the goods
until he receives the reward.
 RIGHTS OF FINDER OF LOST GOODS
4. Right to sell. If the true owner cannot be found with
reasonable diligence, or if he refuses, upon demand, to pay
the lawful charges of the finder, the finder may sell the
goods in the following cases:
a. When the thing is in danger of perishing or of losing the
greater part of its value, or
b. When the lawful charges of the finder, in respect of the
thing found, amount to two third of its value.
The true owner, however, is entitled to get the balance of
sale proceeds, if there is a surplus left after
meeting the lawful charges of the finder.