BAILMENT
Sanjay Bang
POINTS TO BE COVERED
What is the contract of bailment?
The origin of bailment.
The parties involved in the bailment
agreement.
The definition of bailment covered in the
section 148 of the Act.
The nature of the bailment agreement.
The characteristics along with judicial
interpretation of the characteristics of the
bailment.
INTRODUCTION
Section 148 to 181 of the Indian Contract Act
deal with law relating to bailment and
pledge.
The Contract Act deals with the general
principles of bailment like pledges, finder of
lost goods etc.
There are separate Acts like Carriers act-
1865, Railways Act-1890 which deal with
special type of baiment.
ORIGIN OF BAILMENT
The word “ bailment” is derived from the
French word “baillier” which means to “ to
deliver”.
It denotes a contract resulting from delivery.
It involves change of possession of goods
from one person to another for some specific
purpose.
It doesn’t involve the transfer of ownership
but only the possession of goods.
CONTINUED
Thus, a bailment is the delivery of goods by a
person to another for definite purpose, on
the condition that after the purpose is
accomplished the goods have to be returned.
Bailment involves a set of relationship in
which the personal property of one person,
temporarily goes into the possession of
another person.
Custody of goods without possession does not
constitute bailment.
DEFINITION OF BAILMENT
Section 148 of the Indian 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 delivering the goods is called the
Bailor . The person to whom the goods are
delivered is called the Bailee. The
transaction is called Bailment.
COMMON EXAMPLES OF
BAILMENT
Hiring of goods like Zoom car now a days,
delivering the cloths to a tailor for making
suit, delivering a car or scooter for repairs,
depositing the luggage in clock room and
delivering the dresses to a dry cleaner etc.
“A” sells his motor bike to “B”, B paid the
price and asked A that he will take the bike
after week only as he is going out of city .
Who is bailor and bailee in the above case?
ESSENTIAL FEATURES OF
COTRACT OF BAILMENT
I) Delivery of the goods by the bailor.
II) Delivery should be upon the contract.
III) Such delivery should have a specific
purpose.
IV) Such delivery must be temporary.
Fazal vs Salmat Rai (1928) 120 IC 421
Mare was lost by the defendant, who seized
after the order of the court for non payment
by the defendant.
BRAIN FOOD FOR YOU
Test whether the following two
transactions are bailment or not
according to bailment provisions in
the Indian Contract Act-1872.
1) The seizure of the goods by the
Custom Authority.
2) “A” parked his vehicle at a
parking lot, looks it and keeps the
key with himself.
NATURE OF BILMENT
Bailment is a type of special contract and
thus, all basic requirements of contract are
equally applicable to contract of bailment.
A bailment is usually created by an agreement
between the bailor and the bailee.
Section 148 specially talks of bailment via a
contract. But a valid bailment can also arise in
absence of express contracts or from invalid or
voidable contracts.
It’s a temporary transfer and bailor can claim
the possession at any time
WHAT MAY BE BAILED?
Only “Goods” can be bailed and thus, only
moveable goods can be the subject matter of
bailment.
In case of immoveable property, it would be
mortgage/Lease
Deposition of money in the bank is not
bailment as money is not the goods according
to Law.
Specifically money is not goods according to
the Sale of Goods Act-1930
ESSENTIAL CHARACHTESTICS OF
BAILMENT
Section 148 makes it very clear, that the
contract of bailment possess following
characteristics
1) Delivery upon contract.
2) Delivery upon goods.
3) Delivery for a purpose.
4) Delivery on return of goods.
1) Delivery upon contract:- The goods should
be returned when the purpose is fulfilled.
The condition is either in original form or in
altered form
CONTINUED
E.g Watch is given for repair.
Still there are certain rules which are
exceptions to the express contract rule
Implied contract:- A finder of goods is a
person who finds the goods belonging to
some other person and keeps them under his
protection till the actual owner of the goods
is found.
Since he is in the position of the goods just
like bailee, he is enjoying all the rights and
duties of the bailee
CONTINUD
Is always not necessary for the parties to get
into formal agreement, that’s why even
implied agreements are also covered under the
Contract of Bailment.
K. D. Patil v/s State of Mysore (1977) 4 S.C.C
358, where the gold ornaments were stolen
and then traced by the police and again then
disappeared from police station. Can we held
state liable?.
Insurance company put a car of Mr A for repair
to B, the garage owner. Who is bailor or bailee?
DELIVERY OF GOODS
In State of Gujrat v/s Memon Mohamed ( AIR
1967 SC1885) The Supreme Court has held that
it is not correct to say that there cannot be
bailment without an enforceable contract.
Bailment involves change of possession. The
ownership of the goods is retained by the bailor.
Mere custody without possession of the goods
doesn’t create the contract of Bailment.
Kaliaperumal v/s Visalakshi (1938)
The goldsmith case, where he was holding the
goods, is it possession or mere custody?
DELIVERY OF GOODS
Delivery of goods may be of two types.
The first one is actual delivery. A delivery is
said to be actual where the goods are
physically handed over by a person to
another.
E.g A bike for repair to a garage owner.
The second one is constructive delivery. A
delivery is said to be constructive when it is
made by doing anything which has the effect
of putting the goods in the possession of the
intended bailee or any authorized person.
CONDITION UNDER ENGLISH
LAW
Under English contract, there can be a bailment
without a contract. If a person deposits the
goods under stressful circumstances like
earthquake, flood, fire etc or the person who is
depositing the goods is incapable of appreacting
the value of the action, it is still regarded as
bailment despite the absence of contract
Delivery of goods to another under a mistake of
identity of the person is also treated as bailment
without a contract as long as the bailer took
reasonable care to ascertain he identity. Hankel
v/s Pape
THE DUTY OF BAILEE
It is the responsibility of the bailee to take
utmost good care of the goods bailed.
If he fails to do so, may be his fault or the
fault of someone else, he will be held
responsible and it is enough for the plaintiff
to show that Defendant (Bailee) was
responsible for the same.
Appleton v/s Ritchie Taxi (1942) 3 DLR 546
The defendant had a parking lot in which the
plaintiff parked the car and handed over the
keys to the attendant.
CONTINUED
The burden of the proof will be on the
defendant to show that their carelessness
was not the reason for the stolen of the car.
Wong Aviation Ltd v/s National Trust
company (1969) SCR 481
The deceased was a student in a flying school
who took out a plane owned by the plaintiff.
He was not an experienced pilot and took out
a plane in whether that was beyond his flying
ability. After the deceased took the plane
up, he was never seen again nor the plane
CONTINUED
The Supreme Court of Canada held “ loss
could have been equally caused by
negligence or no negligence. When this
happens, the burden of proof shifts back to
the plaintiff.”
Bailment is different than sale or exchange.
But hire purchase contract is a type of
bailment, though it involves an element of
sale.
KINDS OF BAILMENT
Bailment
O n the basi s of reward O n t he basis of benefi t
Gratuitous Bailment Non gratuitous bailment
Bailment
On the basis of benefit
For the benfit of
For the exclusive For the exclusive
both bailor and the
benefit o bailee benefit of Bailor
Bailee
KINDS OF BAILMENT
The bailment can be classified on the basis of
rewards and benefit associated with it.
1) On the basis of reward:- Reward here
means involving the payment which
establishes contractual relationship
between the parties.
For any breach of the condition, or bailers
goods are not returned or damaged, the
bailee will be liable for breach of bailment.
CONTINUED
I) Gratuitous bailment ( sec 162):- In this
kind of bailment , neither bailor nor bailee
are entitled for any payment.
Lending a book to a friend for reading for no
charge, bike etc
There is no charge or reward associated with
this kind of bailment.
Bailee can be sued for breach of duty of care
because no contract has been formed.
Marteen v/s Town and country
(1964) 42 D. L.R (2d) 449
CONTINUED
Plaintiff went for dinner and found difficult
for parking, attendant who was not in
uniform helped him to park, when he came
car was missing.
2) Non-gratuitous Bailment:- In this kind of
bailment either the bailor or bailee are
entitled for reward. This type of bailment
attaches some charge or reward with it.
A hire a taxi from B for 2000 rs per day.
CONTINUED
1) Benefit of the bailor:- A bailment where
the goods are delivered by the bailor to the
bailee only for the benefit of the bailor. A
bailor solely receives the benefit under the
contract.
“A” while going to outstation kept his bike
with this neighbour “B” for safety.
2) Benefit of the bailee:- A bailment I
created exclusively for the benefit of the
bailee only as he is only at receiving end.
CONTINUED
A lent his Bike to B, his friend, for temporary
use without any charges, just to bring B s
children from school.
3) For the exclusive benefit of the bailor and
the bailee:- In this type of bailment , both
the parties, that is bailor and the bailee
derived the benefits under the contract. A
bailment for the mutual benefit of the
parties is created when there is an exchange
of performances between the parties.
Bailment for the repair of watch
CONTINUED
“A” gives his car to “B” to his friend free of
cost to bring his children along with the
children of “B” from the school. Here both
the parties are getting benefit under the
contract to of bailment.
RIGHTS OF BAILOR
1) Right to take back the goods bailed.
2) Right to claim damages if bailee makes
wrongful use. (sec 154)
3) Right to claim, return of goods or their
loss . (sec 159, 160 and 161).
Fazal v/s Salmat Rai (1928) 1120 IC 421
The plaintiff failed to pay his debt, the horse
of plaintiff was taken into possession.
4) right to receive increase or profit from
goods bailed. (sec 163)
CONTINUED
Motilal heerabai v/s Bai Mani (1925) PC
Pledged shares, bonus shares were issued,
5) Right to claim proportionate share in
mixed goods. ( sec 155)
If bailor consents to mix with the goods of
bailee, then the bailor can claim the
proportionate of the share of his goods.
6) Right to claim damages due to mixing up
of goods. (sec 156 and 157)
7) Right to sue the wrong doer for
compensation (sec 180)
CONTINUED
8) The bailor can avoid the contract, if
bailee breaks the condition of the bailment.
