CONTRACTS-2

PROJECT
TOPIC: WHAT IS BAILMENT AND ESSENTIAL ELEMENTS OF BAILMENT

SUBIMITED TO
DR. RITHU GUPTA

SUBMITED BY
B. CHANDRADHAR REDDY
121833201001

AKNOWLEDGMENT
THE SUCCESS AND THE FINAL OUTCOME OF THIS PROJECT REQUIRED
GUIDELINES AND ASSISTANCE FROM MANY PEOPLE AND EXTREMELY
FOURTUNATE TO HAVE GOT THIS ALL ALONG THIS COMPLATION OF
THIS PROJECT WORK. WHATEVER I HAVE DONE IS ONLY DUE TO
SUCH GUIDEANCE AND ASSISTANCE AND I COULD NOT FORGET TO
THANK THEM. I RESPECT AND THANK RITHU GUPTA MAM FOR
GIVING ME AN OPPURTUNITY TO DO THIS PROJECT ON TIME

DECLARTION
I HERE BY DECLARE THAT THE PROJECT ENTITLETED CONTRACT OF
BAILMENT PARTIES, ESSENTIAL FEATURES AND JUDICAL
INTERUPTION
SNO. CONTENTS PNO.
1. ABSTRACT 2
2. DEFETION OF BAILMENT 2
3. KINDS OF BAILMENT 3
4. PARTIES AND ESSENTIAL 4
ELEMENTS OF BAILMENT
5. DUTIES OF BAILEE AND BAILOR 5
6. RIGHTS OF BAILEE AND BAILOR 6
7. CASES OF BAILEMENT 7

ABSTRACT
A bailment is a special contract defined under section 148 of the Indian Contract
Act, 1872. It is derived from a French word “bailer” which means “to deliver”.
The meaning of bailment is “handing over” or “change of possession of goods”.
By bailment, we mean delivery of goods from one person to another for a special
purpose on the contract that they shall reimburse the goods on the fulfilment of
the purpose or dispose of them as per the direction of the bailor. The person who
delivers the goods is known as bailor. And the person to whom the goods are
given is known as Bailee. And the property bailed is known as Bailed Property.

DEFENITION OF BAILMENT
Section 148 of the Indian Contract Act, 1872 defines bailment - 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. In bailment the person delivering the goods is called the
‘bailor’ and the person to whom they are delivered is called the bailee.
KINDS OF BAILEMENT;

There are five Kinds of Bailment are as under

1) Gratuitous Bailment

A Bailment made without any Consideration for the benefit of the

bailor or for the benefit of the bailee is called Gratuitous Bailment. In simple
words A bailment with no consideration is Gratuitous bailment.

2) Non-Gratuitous Bailment:

Non gratuitous is a bailment for reward. It is for the benefit of both the
bailor and bailee.

3) Bailment for the Benefit of the Bailor

In this case the bailor delivers his goods to a bailee for a safe custody
without any benefit/ reward. It is called " the bailment for the benefit of the
bailor".

4) Bailment for the exclusive Benefit of the Bailee

In this case Bailor delivers his goods to a bailee without any benefit
for his use , it is called "the bailment for the exclusive benefit of the bailee"

5) Bailment for the Benefit of the Bailor and Bailee

In this case goods are delivered for consideration, both the bailor and
bailee get benefit and hence it is called the bailment for the benefit of bailor
and bailee.
PARTIES AND ESSENTIALS OF BAILEMENT;
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 BAILOR;
Section 150 of the Indian Contract Act, 1872 bound the bailor with certain
duties to disclose the latent facts specifically pertaining to defect in goods.
Bailor’s duty of disclosure

 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 has been caused due to the existence of
such defect

DUTIE OF BAILEE;

Bailee should fulfil several obligations as per Indian Contract Act, 1872. That is:
  Duty to take reasonable care: It is the duty of the Bailee to take care
of goods as his own goods. He shall ensure all safety measures that are
necessary to protect the goods. The standard of care should be such as
taken care by a prudent man. The goods shall be taken care of equally
whether they are gratuitous or non-gratuitous. The Bailee shall be held
liable for payment of compensation if he fails to take due care. But if
the Bailee has taken due care and instead of that the goods are damaged
then in such a situation Bailee will not be liable to pay compensation.
The Bailee is not liable for the loss of goods due to destruction by fire
(Section 151-152)
 Duty not to make unauthorized use of the goods: Bailee is duty bound
to use the goods for a specific purpose only and not otherwise. If he uses
the goods for any other purpose than what is agreed for then the bailor
has the right to terminate such bailment or is entitled with compensation
for damage caused due to unauthorized use. (Section 153-154)
 Duty not to mix bailor’s goods with his own goods: It is the duty of
the Bailee not to mix bailor’s goods with his own. But if he wants to do
the same then he shall seek consent from the bailor for mixing of goods.
If the bailor agrees for the mixing of the goods then the interest in the
mixed goods shall be shared in proportion. In case, Bailee without the
consent of bailor mixes the goods with his own then two situations arise:
goods can be divided and goods can’t be separated. In the former case
the Bailee should bear the cost of separation and in the latter case since
there is the loss of the goods, therefore, bailor shall be entitled with
damages of such loss. (Section 155-157)
 Duty to return the goods on the fulfilment of purpose: Bailee is duty
bound to return the goods once the purpose is achieved or on the expiry
of the time period for which the goods were bailed. But if the Bailee
makes default in returning the goods on proper time then he will be
responsible with the loss, destruction or deterioration of the goods if
any. (Section 160-161)

RIGHTS OF BAILOR
As such Indian Contract Act, 1872 does not provide for Rights of a Bailor. But
Rights of a Bailor is same as Duties of the Bailee i.e. Rights of Bailor = Duties of
Bailee. The rights of bailor are:

 Enforcement of Bailee’s Duty: Since Right of the bailor is same as the

right of the Bailee, therefore on the fulfilment of all duties of Bailee the
bailor’s right is accomplished. For example, it is the duty of the Bailee
to give the accretions and it is the right of bailor to demand the same.
 Right to claim damages: If the Bailee fails to take care of the goods,
the bailor has the right to claim damages for such loss. (Section 151)
 Right to Termination the Contract: If the Bailee does not comply
with the terms of the contract and acts in a negligent manner in such
case the bailor has the right to rescind the contract. (Section 153)
 Right to claim compensation: If the Bailee uses the goods for an
unauthorized purpose or mixes the goods which cause loss of goods in
such case bailor has the right to claim compensation.
 Right to demand the return of goods: It is the duty of the Bailee to
return the goods and the bailor has the right to demand the same

RIGHTS OF BAILEE;

 Right to recover expenses: In the contract of Bailment, the Bailee

incurs expenses to ensure the safety of goods. The Bailee has the right
to recover such expenses from the bailor. (Section 158)
 Right to remuneration: When the goods are bailed to the bailee he is
entitled to receive certain remuneration for services that he has rendered.
But in case of gratuitous bailment, the Bailee is not awarded any
remuneration.
 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)
 Right to Lien: Bailee has the right over Lien. By this, we mean that if
the bailor fails to make payment of remuneration or does not pay the
amount due, the Bailee has the right to keep the goods bailed in his
possession till the time debtor dues are cleared. Lien is of two types:
Particular-lien and general-lien. (Section 170-171)

CASES OF BAILEMENT

 Surya Investment Co. v. S.T.C the court held that expenses

incurred by Bailee during preservation of goods under lien shall be
borne by bailor.

 In Hyman v Nye & Sons the plaintiff took a carriage on hire

from defendant but the carriage was not fit for the journey and
subsequently, the plaintiff suffered injuries. The court held that
even though the defendant was aware of such defect or not he shall
be liable.