Chapter 14
BAILMENT AND PLEDGE
DEFINITION AND FEATURES
Definition of Bailment
by onc person to another for some purpose, upon a
"A bailment is the delivery of goods accomplished be returned or otherwise disposed of
is
contract that they shall, when the purposedelivering them"-Sec. 14.
according to the directions of the persons they are delivered i
person delivering the goods is called the Bailor. The person to whom
The
called the Bailee. The transaction is called Bailment.
Examples :
(i) Plends his book to .
(ii) P delivers a pen to Q for repair.
(iü) P gives Qhis watch as security for a loan.
In all these cases P is the bailor and is the bailee.
Characteristic Features or the Requisites of Bailment
Bailment has the following characteristic features :
1. Delivery : It is delivery of goods by one person to another.
2. Purpose : The g00ds are delivered for some purpose.
3. Return :It is agreed, that when the purpose is
otherwise disposed of according to the direction of theaccomplished
bailor.
the goods are to be returned or
4. Contract : Bailment arises from
express or implied contract. In case of finder of
bailment arises by implication of law. goods
5. Ownership : In bailment the
bailment does not cause any change ofbailor continues to be the owner of the goods. Theretore
ownership.
6. Movable goods :
Bailment is concerned with only
of money is notmovable
the category in movable goods. A goods. Money is not included m
Deposit of money in a bank
deposit bailment.
and the bank is that of borrower anddoesthenot constitute bailment. The relationship betwecn depositor
7. Possession : A person
lender.
subsequent agreement, express oralready
in
implied. possession of the goods may become a bailee by a
Example :
Xis a seller of motor cars,
the car in the possession ofhaving
X. Afterseveral cars in
the sale is his
originally he was the owner. possession. Ybuys a car and leaves
complete, becomes a bailee, although
X
Delivery to bailee how made
The delivery of goods to the
putting he goods in the possession bailee
of may be made by
on his behalf-Sec. 149. the doing
intended bailee or of anyanything which has the effect of
person authorised to hold them
BAILMENT AND PLEDGE
17
pifferent kinds of Bailment
Bailmentsmay be classified into; (1) Gratuitous
A gratuitous baiiment is one in which neither the Bailments and (2) Bailment for Reward.
cemuneration, eg., loan of an article gratis; safe bailor, nor the bailee is entitled to any
A bailment for reward is one custody without charge, etc.
o amotor car let out for hire: where either thc bailor or the bailee is entitled to a
goods given to a cárrier for carriage at a price; remuneration.
for
person being repaired for a articles given to a
remuneration; pawn, etc.
DUTIES OF THE BAILEE
1. Duty of reasonablecare
The bailee is bound to take as much care of the
goods
prudence would, under similar circumstances, take of his own bailed to him as aman of ordinary
goods of the same bulk, quality
value as the goods bailed. Sec. 151. and
The degree of care to be taken by a bailee is that of a man of
that amount of care, he will not be held responsitble for loss, ordinary prudence. If he takes
goods bailed. (Sec. 152). The degree of care required from the destruction or deterioration of the
bailee is the same whether the
bailment is for reward or is gratuitous.
There nay be a special contract between the bailor and the bailee by which the bailee is
required to take a higher degree of care or under which he is responsible for compensating in full
for loss, destruction or deterioration of the goods. Such special terms are usually
contracts of carriage.
incorporated in
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 things bailed, when acting in course of their employment. But the bailee is not liable for
damages caused by the acts or default of third person which cannot be revented by ordinary
diligence. The bailee is also not liable for unauthorised acts of his servants outside the scope of
their employment. Sanderson v. Collins.!
3. Unauthoriscd use of goods
Ifthe bailee makes unauthorised use of goods bailed, i.e., uses them in a way not authorised
by the terms of the bailment, he is responsible for all damages to the goods and must pay
compensation to the bailor. This liability arises even if the bailee is not guilty of any negligence,
and even if the damage is the result of accident.--Sec. I54.
Examples :
(i) Alends a horse to B for his ownriding only. Ballows C, amember of his family, toride
the horse. Crides with care, but the horse accidentally fails and is injured. Bis liable to
make compensation to Afor the injury done to the horse.
(i) Ahires a horse in Calcutta from B expressly to march to Benares, A rides with due care
but marches to Cuttack instead. The horse accidentally falls and is injured. Ais liable to
make compensation to B or the injury to the horse.
1. (1904) | K. B. 628
Law (WP
I18 LAW OF CONTRACT
4. Mixture of Bailor's goods with the Bailee's
If the bailce mixes up his own goods with those of the bailor, the following rules
(a) If the bailee, with consent of the bailor, mixes the goods of the bailor with his apply :
the bailor and the bailee shall have an interest, in proportion to their respective own goods,
mixture thus produced."Sec. 155.
shares, in the
(b) "If the bailee, without the consent of the bailor mixes the goods of the bailor with his
goods, and the goods can be scparated or divided, the property in the goods remains in the pari
respectively: but the bailee is bound to bear the expense of separation or division, and any
arising from the mixture." Sec. 156. damage
Example:
Dbails 100 bales of cotton marked with aparticular mark to B. B without D's consen:
mixes the 100 bales with other bales of his own, bearing a different mark. D is entitled
to have his 100 bales returned, and B is bound to bear all the expenses incurredin the
scparation of the bales, and any other incidental damage.
(c) "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 toseparate the goods bailed from the other goods and
deliver them back, th¹ bailor is entitled to be compensated by the bailee for the loss of the
goods."-Sec. 157.
Example:
D bails superior flour worth Rs. 45 to B. B, without D's consent mixes the flour with
inferior flour of his own, worth only Rs. 25. B must compensate D for the loss of his
flour.
5. Duty of returning goods
*"It is the duty of the bailee to return or deliver according to the bailor's directions, the goods
bailed, without demand, as soon as the time or which they were bailed has expired, or the purpose
for which they were bailed has been accomplished,"Sec. 160.
"If, by the default of the bailee, the goods are not returned, delivered or tendered at the proper
time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that
time."Sec. I61.
Example:
G agreed to carry certain goods of B expeditiously. The driver of the van which was
carrying the goods, left the van unattended for one hour for lunch, During that time the
goods were stolen. Bfled a suit for damages against G. Held, the carrier has a duty vic.
to deliver the goods or return them. The carrier could not do so. The van driver's
departure constitutes a fundamental breach of the contract to carry the goods forthwith to
thedestination. Damages were awarded. Bontex Knitting Works Ld. y. St. John Garage.*
goods bailed
6. Accretion to the of any contract to the contrary, the of
In the absence bailee is bound to deliver to the bailor,
bailed."
any increase or profit which may have accrued from the goods
according to his directions,
-Sec. 163.
690
All E. R.
2. (1944)2
BAILMENTAND PLEDGE
119
Example:
Cleaves a cow in the custody of Bto be taken care of. The cow has a
deliver the calf as well as the cow to C. calf. Bis bOund to
7. Liabilities of Innkceper and Hotelkeepers
In England Innkeepers were governed by the Common Law. They were regarded as
ie loss of or damages to customer's goods had to be fully made up, except certain insurers,
special cases.
This rule was applied in Bombay High Court in an old case (1886), Tt is now held that the liabilities
of innkeepers and hotelkeepers are as bailees and are governed by Sections 15I and 152 of the
Contract Act. (Seep. 117 Rampal Sing v. Murray & Co.3; Jan & Son v. Cameron.4
8. Liabilities of Carriers See Book V, Ch 1.
DUTIES OF THE BAILOR
1. Bailor's 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, and, 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 hire, the bailor is responsible for such damage, whether he was or
was not aware of the existence of such faults in the goods bailed"Sec. 150.
Examples:
(i) A lends a horse which he knows to be vicious to B. H does not disclose the fact that the
horse is vicious. The horse runs away, B is thrown and injured. A is responsible to B for
damage sustained.
(ii) A hires 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.
2. Payment of expenses in Gratuitous Bailments
"Whereby the conditions of the bailment, the bailee is to receive no remuneration, the bailor
shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment."
Sec. 158.
3. Responsibility for breach of warranty of title
The bailor is responsible to the bailee for any loss which the bailee may sustain by reason that
the bailor was not entitled to make the bailment, or to receive back the goods or to give direction
respecting them.Sec. 164.
Example :
Agives B's car to C for use without B's knowledge of permission. B sues C and receives
compensation. C is entitled to recover his losses from A.
3. (1899) 22 All 164 4. (1922) 44 All 735
LAW OF CONTRACT
120
BAILEE'S RIGHTS
1. Enforcement of rights the bailor.
suit, enforce the duties of
The bailee can, by
2. Bailment by several joint owners the bailee may deliver them back to, or according
bailthem.,
If several joint owners of goodswithout the consent of all, in the
absence of any agreement to
to the directions of, one joint owner
the contrary."- Sec. 165.
not responsible on re-delivery tobailor without title faith, delivers them back to, or
J. Bailee and the bailee, in good
the goods,
"If the bailor has no title to
bailor, the bailee is not responsible to the owner in respect of such
according to directions of the
delivery."Sec. 166.
4. Bailee's Particular Lien
means the rights to retain property until some debt or claim is paid. The right of lien is
Lien : General Lien and Particular Lien. General
given by law in certain cases. Lien may be of two types all the claims of the holder are
lien means the right to retain all the goods of the other party until on account of those
paid. Particular lien means the right to retain particular goods until claims
goods are paid.
A bailee has a particular lien, 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.
The following limitations upon the bailee's particular lien are to be noted.-Sec. 170.
(a) The particular lien is available only if the service rendered by the bailee is one involving
the exercise of labour or skillin respect of the goods bailed. There is no lien for custody charges or
other charges for work not involving labour or skill.
(b) The right of lien cannot be exercised until the services have been performed in ful.
When a bailee has done only a part of the work contracted for he cannot claim lien for part
payment.
(c) The lien cannot be claimed if there is an agreement to pay the
(d) The lien can be exercised only so long as the goods are in the money on a future dale.
possession of the bailee.
possession is tost for any reason, the lien is also lost.
Examples :
() Adelivers a rough diamond B, a
to
done. B is entitled to retain the stonejeweller,
till he
to be cut and polished, which is
is accordingy
/: Agives cloth to B, a paid for the services he has rendered.
tailor, to
as it is finished, and to give a make into a coat, B promises A to deliver the coat as so
three months' credit for the price, B is
the coat until he is paid. not entitled to rea
5. Bailee's General Lien
Section 171 provides that bailees coming within the
bankers, factors, wharfingers, attorneys of High Court, andfollowing categories have a general lien
so
all goods of the bailor long as anything is due to policy brokers. Such bailees can retain
not exist if there is a contract to the them. The general lien in all these cases may
mentioned above may have a general contrary. Bailees
lien if there is an failing in categories other than those
express agreement to that effect.
BAILMENTAND PLEDGE 121
BAILOR'S RIGHTS
1. Enforcement of rights
The bailor can enforce by suit all the liabilities or duties of the bailee.
terms
2. Act inconsistent with the if the bailec does any act with
"A contract of bailment is voidable, at the option of the bailor, 153.
eoard to the goods bailed inconsistent with the conditions of the bailment."-Sec.
Example : horse in carriage. This is, at the
Alets to B, for hire, a horse his own riding, B drives the
option of A, a termination of the bailment.
3. Restoration of goods lent gratuitously bailor can demand their return whenever he pleases,
When goods are lent gratuitously, the had acted in
or purpose. But if the bailee in such cases
even though he lent it for a specified time
that the return of the goods before the stipulated time would cause loss greater than
such a manner indemnify him for the loss if he compels an
the benefit which he has received, the bailor must
immediate return.Sec 159.
TERMINATION OF BAILMENT
following circumstances :
Acontract of bailment terminates under the as
of time :If the bailment is for a stipulated period, the bailment terminates as soon
1. Eflux
the stipulated period expires. specific purpose, the bailment terminates as
purpose :If the bailment is for a
2. Fulfilment of
sOon as the purpose is fulfiled. the bailee does any act, 'with regard to the goods bailed,
3. Act inconsistent with the terms : If terminates.Sec. 153.
inconsistent with the terms of the bailment, the bailment
which is
bailment can be terminated any time but 159. if premature
4. Goods lent gratuitously :A gratuitous bailee.Sec.
bailor must indemnify the
termination causes any loss to the bailee, the
terminates upon the death of either the bailor or the bailee.
5. Death: Agratuitous bailment
Sec. 162.
GOODS
RIGHTS AND DUTIES OF FINDER OF
Rights
position of a goods. (See p. 95) The
bailee if he takes charge of theand
A finder of goods is in the follows.--Sections 168 169 :
goods can be summarised as
rnghts of the finder of owne.
the goods against everybody except the trueexpense
1. Possession : He can retain possession of and
2. Compensation and Lien : He is
entitled to be compensated for the trouble the goods for
to preserve the goods and to find out the owner. He has a lien upon
incurred by him paid.
payment of these sums i.e., he can refuse to return the goods until they are
the expense he has incurred but can sue for any reward
3. Reward : He cannot file a suit for the
return of the goods lost.
the
which the owner might have offered for subject-matter of sale and if the owner cannot
4. Sale:If the goods found are commonly the to pay the lawful charges of the finder the
he refuses
with reasonable diligence be found or if further
following conditions are fulfilled
goods can be sold provided the
LAW OF CONTRACT
124
RIGHTS OF PLEDGOR
1. Defaulting Pawnor's Right to Redeem which
"If atime is stipulated for the payment of the decbt, or performance of the promise, for the
the pledge is made. and the pawnor makes default in payment of the debt or performance of
promise at the stipulated time, he may redeem the goods pledged at any subsequent time before the
actual sale of them; but he must, in that case, pay, in addition, any expenses which have arisen from
his default." Sec. 177.
2. Preservationand Maintenance
The pledgor can enforce the preservation and proper maintenance of thegoods pledged.
3. Protection of Debtors
The pledgor as a debtor has various rights given to him by statutes enacted for the protection
of debtors e.g., the Moncy lenders Acts.
