Definition

According to Section 148 of the 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”. Some of the examples of bailment
are Cloth given to a tailor for stitching, a watch given to a shop for repairing, a
friend lending his bicycle to another friend for riding it and jewelry taken on rent
for wearing it to party.The person delivering the goods is called the ‘Bailor’ and
the person to whom the goods are delivered is called the ‘Bailee’.
Illustration
A sends his car to the garage for repair. In this case A is the bailor and the garage
owner is the bailee. The garage owner (bailee) has to repair the car and then hand
it over to A (bailor).
The following are the essential features of Bailment:
· Movable Goods: Goods in bailment are goods as defined in section 2 (7) of
theSale of Goods Act, 1930, which means every kind of movable property other
than money and actionable claims. Immovable property like land and buildings
are not
considered as goods.
Illustration
A agreed to lend his car to B for a week for rupees 3500. This is a case of bailment
where A is a bailor and B is a bailee. B is liable to pay A rupees 3500 and also
return the car after a week.
· Delivery of Goods: Section 149 of the Indian Contract Act, 1872 explains the
mode of delivery of goods. It states that there may be two modes of delivery:
Actual delivery and Constructive Delivery. In actual delivery the bailor hands over
physical possession of goods to the bailee and in constructive delivery the bailor
does not hand over physical possession of goods but does something which has
the same effect of putting the goods in possession of the bailee.
Illustration
A gives a piece of cloth to her tailor for stitching a dress. This is a case of actual
delivery where the bailor has physically delivered the cloth to the bailee for the
purpose of stitching and once the purpose has been fulfilled the bailee returns the
stitched cloth to the bailor.
1. Some Purpose: The delivery of goods from bailor to bailee is done to
accomplish some purpose. If goods are delivered by mistake without any purpose
then there is no bailment.
Illustration
A went to her friend B house. While leaving the house she forgot to pick up her
purse. After coming home she realized that she had left her purse on the sofa in B
house. This is not bailment because the purse was left behind in B house by
mistake.
Return of Goods: After the purpose for which the goods were bailed to the bailee
has been fulfilled the goods have to be returned to the bailor.
Kinds of Bailment
Bailment may be classified according to the benefit derived by the parties. These
are
as follows:
1. For the benefit of the bailor: When the delivery of goods by the bailor to the
bailee is done for the exclusive benefit of the bailor and the bailee gets nothing in
return, that is consideration does not pass between the bailor and the bailee.
Illustration
A gave a piece of cloth to her friend B, who was a fashion designer,to stitch a
shirt.B after stitching the shirt gave it back to A. In this case A is the bailor and B is
the bailee and B stitches the shirt without taking anything from A.
2. For the benefit of the bailee: When the delivery of goods by the bailor to the
bailee is done for the exclusive benefit of the bailee and the bailor gets nothing in
return. Hence consideration does not pass between bailor and the bailee.
Illustration
A lent her saree to her friend B for a wedding party. In this case A is the bailor and
B is the bailee and B has to return the saree to A after the function is over.
3. For the mutual benefit of both the bailor and the bailee: When the delivery of
goods by the bailor to the bailee is done for the mutual benefit of both the
parties. In this case consideration passes between the bailor and the bailee.
Illustration
A gave a piece of cloth to a tailor for stitching a shirt for rupees two hundred. In
this case A is the bailor and the tailor is the bailee and consideration of rupees
two hundred passes between the bailor and the bailee.
Bailment may also be classified as Gratuitous and Non-Gratuitous Bailment.
1 Gratuitous Bailment: In this case no consideration passes between the bailor
and the bailee. The bailment for the benefit of the bailor and the bailment for the
benefit of the bailee mentioned above are gratuitous bailment.
Illustration
A was going out of station for two days. She had a dog Romeo whom she gave to
Satish her neighbour for safekeeping. This is a case of gratuitous bailment.
2 Non-Gratuitous Bailment: In this case consideration passes between the bailor
and the bailee. The bailment for the mutual benefit of the bailor and the bailee is
a nongratuitous bailment.
Illustration
A took a necklace on a rent of rupees two hundred from a jeweler for wearing it to
a party. This is a case of non-gratuitous bailment.
Rights and Duties of Bailor and Bailee
Duties of a Bailor
(1) To disclose known facts: The bailor should disclose the known faults about the
goods, which he/she has bailed to the bailee. If the bailor does not disclose the
defects then he/she is liable for any damage caused to the bailee due to such
defects in the goods.
Illustration
A went for a horse riding. He took a horse from the stable that was mad. The
horse owner was aware of the horse’s madness but he did not inform A about it. A
sat on the horse and the horse threw him off as a result A hurt himself.In this case
it was the duty of the horse owner to inform A about the madness and therefore
the owner is liable to compensate A for the injury sustained by him.
(2) To bear extraordinary expenses of bailment: The bailee is responsible to bear
ordinary and reasonable expenses of the bailment but for any extraordinary
expenses it is the bailor who is responsible.
Illustration
A use to leave her daughter in a crèche for rupees 100 a day. One day her
daughter became sick and was taken to the hospital by the crèche owner and the
owner paid the medical bills. As this is an extraordinary expense therefore it is the
duty of A to reimburse the crèche owner all the medical expenses.
(3) To indemnify bailee for loss in case of premature termination of gratuitous
bailment: If a gratuitous bailment is terminated by the bailor before the specified
time then any loss the bailee incurs due to such termination shall not be born by
the bailor.
However if the loss suffered by the bailee exceeds the benefit he/she has derived
from bailment then in such a case the bailor shall indemnify the bailee.
Illustration
A's relatives had come to Pershawar on vacation. He had no vehicle so he
borrowed his friend’s car for two days. He filled up the petrol tank for rupees two
thousand. The very next day his friend came to take the car back. Hence the friend
was liable to pay the petrol cost to A as he later incurred a loss of rupees two
thousand due to the premature termination of the contract of bailment.
(4) To receive back the goods: Once the purpose for which the goods were bailed
out has been fulfilled, it becomes the duty of the bailor to receive back his/her
goods from the bailee. He cannot refuse to take back the goods. However if the
bailor refuses to take back the goods then the bailee is entitled to receive
compensation for the expenses he/she incurs in keeping the goods in his/her
custody.
Illustration
A had left her cat at her neighbour’s place for two days as she was going out of
town. Once she came back it was her duty to fetch her cat back from her
neighbour’s place.
(5) To indemnify the bailee: If the title of the good is defective and due to that the
bailee suffers a loss then the bailor is responsible to the bailee for the loss
suffered by him/her.
Illustration
A found a watch on the road and picked it up. He sold it to B for a hundred rupees.
The watch was not in working condition so B got it repaired for rupees fifty. Later
the real owner of the watch came and claimed back his watch from B. B was
entilteld to be reimbursed for the loss suffered by her in purchasing and using the
watch from A (the bailor).
Duties of a Bailee
(1) To take reasonable care of the goods: It is the duty of the bailee to take
reasonable care of the goods bailed to him/her by the bailor. According to section
151 of the Indian Contract Act 1872 “the bailee is to take care of the goods as a
man of ordinary prudence would, under similar circumstances, take care of his
own goods of the same bulk, quality and value as the goods bailed”. Section 152
states that if, in spite of taking all reasonable care, the goods are damaged or
destroyed in any way, then the bailee is not liable for the loss, destruction or the
deterioration of the goods bailed.
Illustration
A gave her mobile phone for repair to B at his repair shop. B forgot to keep the
phone in the drawer and the phone kept lying on the table. Someone came to the
shop and stole the mobile. Later B found that the mobile had been stolen. In this
case B is liable to compensate A, for the loss as the loss was due to his negligence.
Cae Law 1
Coldman vs. Hill
(1919) 1 K.B. 443
In this case some cattle belonging to A were given to B for feeding them grass
againspayment. Without any negligence on the part of B the cattle were stolen. B
did not inform the owner or the police or make any effort to recover the cattle,
because hethought it would be useless to do so. It was held by the Court that B
was liable for the loss to A.
(2) Not to make any unauthorized use of goods: The bailee is not to use the
goodsin a manner, which is inconsistent with the terms of the contract. If he/she
uses the goods in an inconsistent manner then he/she is liable for loss of or any
damage to the goods bailed.
Illustration
A gave a piece of cloth to her tailor for stitching a kurti. After two days A went to a
friends wedding and there she saw her tailor wearing her stitched kurti. This is not
within the terms of the contract of bailment therefore the tailor has to
compensate A for using the kurti for her own personal purpose.
(3) Not to mix goods bailed with his/her own goods: The bailee is to keep the
goods bailed to him/her separately from his/her own goods.If the bailee mixes the
goods with his/her goods-
(a) With the Bailor’s consent- in such a case both the bailor and the bailee shall
have a proportionate interest in the mixture produced due to the mixing of the
goods.
Illustration
A bought a hundred kilograms of rice but due to scarcity of space he requested B
to keep the rice in his storehouse.B’s storehouse was already filled with rice.
When A’s rice was kept in the storehouse it got mixed with B’s rice. Whenever A
wants the rice back he will get his share of twenty kilos from the whole bulk.
(b) Without the bailor’s consent the goods can be separated: In this case the
bailee is liable to bear the expenses of separation as well as the damage caused to
the bailed goods due to such a mixture.
Illustration
A bought a hundred kilograms of wheat but due to scarcity of space he requested
B to keep the wheat in his storehouse. B’s storehouse was already filled with rice.
When A’s wheat was kept in the storehouse the wheat got mixed with B’s rice.
Whenever A wants to get his wheat back, B has to separate the wheat from the
rice and the expense incurred for separating the two will be born by B.
(c) Without the bailor’s consent and the goods cannot be separated: In this case
the mixture cannot be separated therefore the bailee is liable to compensate the
bailor for the loss of goods.
Illustration
A bought a hundred kilograms of basmati rice but due to scarcity of space he
requested B to keep the rice in his storehouse. B’s storehouse was already filled
with rice of another variety. When A’s rice was kept in the storehouse the rice got
mixed withB’s rice. It was not possible to separate A’s rice from B’s rice. Therefore
B would be liable to compensate A for the loss of his basmati rice.
(4) To return the goods: The bailee is bound to return the bailed goods to the
bailor once the purpose for which the goods were bailed has been fulfilled.
Illustration
A had given her car to her friend B to go to Islamabad from Peshawar. B took the
car to Islamabad and came back to Peshawar the next day. Hence B is bound to
return the car to A.
Case Law 2
Shaw & Co. vs. Symmons & Sons
(1917) 1 K.B. 799
A delivered some books to B for binding. He pressed for their return, but B
neglected to return them although more than a reasonable time had elapsed. A
fire accidentally broke out on B’s premises, and the books were destroyed. Held, B
was liable for the loss, although he was not negligent, because of his failure to
deliver the books within a reasonable time.
(5) To return any accretion to the goods: If during the period of bailment any
profit or addition in value has accrued from the goods bailed then it is the duty of
the bailee to return such profit or increase in value to the bailor.
Illustration
Mr A's family was going for a vacation to Goa so they left their dog at their
neighbor Mr B’s house. During that time dog gave birth to six puppies. It was Mr
B’s duty to return Dog and its puppies to Mr A once his family came back from
vacation.