Meaning of bailment-

The word ‘Bailment’ is derived from French word ‘baillier’ which means to deliver. According to sec
148, a “Bailment’ is the delivery of goods by one person to another for some purpose, with a
condition to return the goods when the purpose is over or otherwise disposed off according to the
direction of the person delivering them. Parties in bailment contract

Bailor- The person delivering the goods is called the bailor.

Bailee- The person to whom the goods are delivered is called the bailee.

Example: - 1. Mr. X who is going out of station delivers a dog to Mr. Y for proper care. 2. Mr. A hires a
horse for riding.

3. Mr. A deliver watch for repair.

4. Mr. A gives a cloth to his tailor for stitching.

Essential features of goods

Agreement : There must be an agreement between the bailor and bailee. This agreement may be
express or implied. However, a bailment may be implied by law as it happens in the case of finder of
lost goods.

Delivery of Goods: In bailment, it is necessary that the goods should be delivered to the bailee. It is
the essence of the contract of bailment. It is further necessary that the possession of the goods
should be voluntarily transferred and is in the accordance with the contract.

Delivery may be of two types: 1-Actual delivery, 2- constructive delivery.

Example- 1. Delivery of a car for repair to a workshop dealer is an actual delivery.

2. Delivery of the key of a car to a workshop dealer for the repair of car is a constructive delivery. In
a bailment the ownership remains with the bailor and is not transferred to the bailee or anyone as
because if the ownership is transferred then it is not a bailment contract. It becomes a contract of
sale. Bailment is only for movable goods and not for immovable goods. 

Purpose: The goods must be delivered to the bailee for some purpose. The purpose could be the
safe custody, use of the goods, transportation of the goods, repair of the goods etc. 

If the goods which are bailed are changed like a cloth is converted into a shirt than still the contract
remains a bailment.  The goods shall be returned to the bailor or disposed off according to his
direction .

Example – The amount deposited by a person in various accounts like saving, current account etc. is
note treated as bailment because the bank is not bound to return the same identical coins or
currency notes which are deposited. This has been stated in the various decisions given by the
judges in different cases from time to time. But if a person keeps of his valuable items like jewellery
or money etc. in the bank locker for safe custody, it is treated as a case of bailment contract.
KINDS OF BAILMENT

On the basis of reward –

Gratuitous bailment- it is the bailment of goods without any charges or reward. The bailee is not
required to pay any charges for the bailment.

Non gratuitous bailment- it is a bailment for some charges or reward. The bailee is required to pay
some charges to the bailor

On the basis of benefit

Bailment for the exclusive benefit of the bailor

Bailment for the exclusive benefit of the bailee

Bailment for mutual benefit of both bailor and bailee

DUTIES OF BAILOR—

1. To Disclose the known defects: It is the duty of the bailor to in the goods. If the bailor fails
to disclose such disclose the known defects defects and as a result, if the bailee suffers from
any loss. The bailor should compensate the bailee for such loss. In case of gratuitous
Bailment If the bailor fails to disclose such defect then the bailor is liable to indemnify bailee
for such loss. In case of non gratuitous bailment. If the bailee suffers any loss Due to any
defect in the goods, the bailor is liable to indemnify Bailee for such loss whether he knows
those defect or not.
2. Torepay to the bailee all the necessary expenses: The bailor must repay to the bailee all
the necessary expenses which the bailee has already incurred for the purpose of bailment in
the case of gratuitous bailment. But in case of non gratuitous bailment, the bailor is liable to
repay the extra-ordinary expenses incurred by the bailee.
EXAMPLE Mr. X delivers a dog to Mr. Y. Y incurred Rs 100 as feeding expenses and Rs 200 as
medical expenses when the dog become sick. State the legal position (a) if nothing was
charged by either party. (b) If Mr. X charged Rs 500 from Y. Solution: (a) It is a case of
gratuitous bailment where x (the bailor) must repay Rs Mr. X delivered a Dog to Mr. Y
incurred Rs 100 as feeding expenses 300 to Mr. Y (the bailee) because the bailor isbound to
bear all expenses incurred by the bailee for the purpose of bailment. (b) It is the case of non
gratuitous bailment where Mr. X (the bailor) must repay Rs 200 to Y (the bailee) because the
bailor is Bound to bear all extraordinary expenses (and not ordinary expenses) incurred by
the bailee for the purpose of bailment.
If the loss caused to the bailee due to premature termination is more than the benefit
obtained by the bailee, it is the duty of the bailor to compensate the bailee for such an
excess loss.
If the bailor does not have any title to deliver the goods to the bailee, he would be liable to
indemnify to the bailee for any loss which the bailee has paid to the original owner.

EXAMPLE- A asks his friend B to give him cycle for one hour. B instead of his own cycle gives
C's cycle to A. While A was riding, the main owner of the cycle catches A and surrenders him to
 police custody. A is entitled to recover from B all costs, which A had to pay in getting out of this
situation

If the bailor wrongfully refuse to receive back the goods, he shall be liable to pay necessary
expenses incurred by the bailee for keeping this goods safely.

Example: - Mr. X lent a dog to Mr. Y for ten days. On the expiry of ten days, Mr. X refused to
receive back the dog but after five days, he received back the dog. During these five days, Mr. Y
incurred Rs 500 as feeding expenses. Mr. X must repay Rs 500 to Mr. Y.

It is the duty of bailor to bear the risk of loss, deterioration and destruction, of the things bailed,
provided that bailee has taken reasonable care to protect the goods from loss

EXAMPLE: Mr. X lent a dog to Mr. Y for five days. On third day, the dog become sick and was
hospitalized but died. Mr. Y is not liable to Mr. X for this loss.

Rights of a bailor-

1- If the bailee has not taken reasonable care(in the absence of any special contract or special care)
the bailor has a right to claim damages for the loss, destruction, or deterioration of the goods bailed.

2- If the bailee uses the goods in an unauthorized manner, the bailor can terminate the contract of
bailment before the completion of the bailment. A contract of bailment is regarded as a voidable
contract in such an event the bailee cannot sue the bailor for a breach of contract.

3- If the bailee does not use the goods bailed according to the terms and conditions of the bailment
contract, the bailor has a right to claim compensation from bailee for any damages arising to the
goods from or during such use of them.

4- If the bailee, without the consent of the bailor mixes bailors goods with his own goods and the
goods can be separated, the bailor has a right to claim his goods after separation.

5- If the bailee without the consent of the bailor mixes bailors goods with his own goods and the
goods cannot be separated, the bailor has a right to claim compensation from bailee for the loss of
the goods.

6- The bailor has a right to demand return of goods after the completion of the purpose or after the
expiry of period of bailment.

7- If the bailee does not return or deliver the goods according to the bailor’s directions, after the
accomplishment of purpose or after the expiry of period of bailment, the bailor has a right to claim
compensation for any loss, destruction and deterioration of goods from that time.

8- In the absence of contract to the contrary, the bailor has a right to demand any increase or profit
which may have occurred from the goods bailed.

Example:- Mr. A leaves a cow in the custody of Mr. B to be taken care of. The cow has a calf then Mr.
B is bound to deliver the calf as well as the cow to Mr. A. Duties of bailee

1-
 Duties of the bailee
1The bailee should take reasonable care of the goods which are in his possession. The
degree of care required by the bailee is similar to that of a man of ordinary prudence would
take of his own goods under the similar circumstances. If he has taken such care, he is not
liable, even if the goods are lost or damaged. He is also not liable for the destruction or the
loss of goods due to an act of god.
2The bailee should not use the goods for an unauthorized purpose . He can use the goods
as per the terms and condition of the bailment. If the bailee makes any unauthorized use of
goods he shall be liable for any loss on any unauthorized use of goods. The bailor may
terminate the contract of bailment. In other words the contract of bailment becomes
voidable.
3(a) If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own
goods, the bailor and the bailee shall have an interest, in proportion to their respective
shares, in the mixture thus produced
(b) If the bailee, without the consent of the bailor, mixes the goods of the bailor with his
own goods, and the goods can be a separated or divided, the property in the goods remains
in the parties respectively; but the bailee is bound to bear the expense of separation or
division, and any damages arising from the mixture .
(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 to separate the goods bailed from the
other goods and deliver them back. It was held that the bailor was entitled to refuse to take
delivery and claim compensation for loss or damage.

4- The Bailee must return the goods without waiting for demand from bailor:

 the time specified in the contract has expired or the purpose specified in the contract is
accomplished,

 if the goods are not returned, then:  the goods shall be at risk of the bailee,  the bailee shall be
liable for any loss or damage, even if such loss is caused without any fault or negligence of the bailee
or due to an act of god or other unavoidable reasons.

5- In the absence of any contract to contrary, the bailee is bound to return any extra profit occurred
from goods bailed.

6- The bailee must not do any act which is inconsistent with the title of the bailor. He must not set
up his own title or a third parties title on the goods bailed to him.

Finder of goods- The person who finds the goods belonging to some other person and takes
them in his possession is known as the finder of goods. The finder of goods is in a position of the
bailee and therefore, all the duties of the bailee are equally applicable to the finder of goods. Duties
of the finder of goods-

1. The finder of goods must take the reasonable care of goods.

2. The finder of goods must return the goods to the owner.

4. The goods must not mix with own goods.

5. The goods must return any increase in goods along with the goods. 6. The finder of goods must
make a reasonable effort to find the owner.

Right of finder of goods-

2. Where the owner has offered a specific reward for the return of goods lost, the finder has a right
to sue the owner for such reward and to retain the goods until he receive it.

3. A finder of goods has a right to sell the goods found under the following circumstances-

 If the owner cannot with reasonable diligence be found; or

 If the owner when found refuses to pay the lawful charge of the finder; or

 If the goods are in danger of perishing or of losing the greater part of their value; or

 If the lawful charges of the finder in respect of goods found amount to two third of its value.

Termination of bailment
1. On the expiry of fixed period

2. On fulfilment of the purpose

3. Inconsistent use of goods

4. Destruction of the subject matter of bailment

5. Death of any party

6. Termination by a bailor