Bailment

• A delivers a piece of cloth to the

tailor to be stitched into a suit.
• A lends a book to B to be
returned after examination.
• A sells certain goods to B who leaves them in A ‘s
possession.
Bailment • An insurance company places a damaged insured
car of A in possession of R, a repairer.
• E’s ornaments having been stolen and recovered
lying in Police custody.
Bailment

What is Bailment?
• Section 148 defines Bailment as:
• “The delivery of goods by one to another person 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’,
and the person to whom goods are
• delivered is called the ‘Bailee’.
Bailment

Bailor • Section 148 of indian

contract act 1872
• Delivery of goods by 1
person to another for
some purpose
• Contract to return after
use or to dispose as
asked by the person who
delivered the goods
• Bailor: who gives
• Bailee : who takes
Bailee • Bailment: transaction
 Examples

HIRING A BICYCLE GIVING CLOTH TO DELIVERING

A TAILOR WATCH FOR REPAIR
 1. Goods:
Bailment can be affected only with respect
to goods.
2. Delivery:
Delivery of goods by one person to another is
essential.
‘Delivery’ includes:
1. Physical delivery : Books
2. Constructive delivery : If you pick up a
package on your friend’s behalf and
decide to hold on to it for him
Essentials of 3. Symbolic delivery : Car keys

Bailment 3. To be returned
4. Without demand unless agreed
otherwise.
4. In specie
5. i.e., the same goods are to be returned
and not the equivalent.
6. including any accretion, e.g. calf born to
a cow.
5. Contract between the parties
(Exception: Finder of goods is also treated
as a bailee even though there is no contract
between them)
 Kinds / Basis of bailment

Kinds of bailment
• Based on benefit:
• Bailment for the exclusive benefit of
1 bailor: leaving goods in safe custody
without paying
2 bailee :a loan of some article like a pen
3 mutual benefit: contracts for hiring,
repair
 Kinds of bailment:
• Based on reward/consideration:
1 Gratuitous bailment: neither bailor nor
bailee is entitled for remuneration, example:
lending a book to a friend
2 Non-gratuitous bailment: bailment of
reward: either bailee or bailor is entitled to a
remuneration , example: hire, tailor, etc
 Duties of Bailor

1. TO DISCLOSE FAULTS IN THE GOODS BAILED

As per Sec. 150 of the Act, the bailor is bound to disclose to the bailee the
known defects in the goods bailed. If he fails to do so, he is liable for
damages arising to the bailee from such defects.
Example: A lent his horse to his friend B. A knew that the horse was
mischievous. But did not disclose this fault to B. When B was riding on the
horse, it suddenly ran away and B was thrown and injured. Here A is liable
to B for the damages sustained by B.
2. TO BEAR EXTRA-ORDINARY EXPENSES
The ordinary and reasonable expenses are to be borne by the bailee.
However, it is the duty of the bailor to bear the extraordinary expenses
made by the bailee for the purpose of bailment.
Example: A lends his scooter to B, a friend for one week. The usual and
ordinary expenses like the expenses for petrol and minor repairs etc., are
to be borne by B himself. However, if any major defect occurs like defect
in the engine etc. A will have to repay B the repair charges incurred by B.
 Duties of Bailor

3. TO INDEMNIFY (COMPENSATE) BAILEE

If the title of the bailor to the goods is defective and as a consequence the
bailee suffers, it is the bailor’s duty to indemnify i.e., compensate the
bailee for the loss suffered by him.
Example: A found a diamond ring and delivered it to B for safe custody.
Subsequently C, the true owner, came to know that his ring is in B’s
custody. C filed a suit against B and recovered the ring and compensation
from him. Here A is bound to make good the loss suffered by B, the bailee.
4. TO RECEIVE BACK THE GOODS
It is the duty of the bailor to receive the goods back when they are
returned by the bailee on the expiry of the term of bailment or on the
fulfillment of the purpose of the bailment. If the bailor refuses to receive
the goods back, then he becomes responsible to pay the compensation for
the necessary expenses of custody to the bailee.
Example: A delivered a car to B a mechanic for repair to be over by one
week. But A didn’t take back the car for one month. Here B can claim the
necessary expenses incurred by him for safe custody of the car.
 Duties of Bailee
1. TO TAKE REASONABLE CARE OF THE GOODS BAILED
It is the duty of the bailee to take reasonable care of the goods bailed to
him. He must take as much care as an ordinary sensible man would take,
under the similar circumstances, in respect of his own goods of the same
type. If he has taken the required degree of care, then he is not liable for
any loss or destruction of the goods bailed. However, if the bailee is
negligent in taking care of the goods bailed, then he is liable to pay
damages for loss or destruction of the goods.
Thus, if the bailee takes due care of goods then he will not be liable for any loss, deterioration of
such goods. Also, the bailee needs to take the same degree of care of goods whether the
bailment is for reward or gratuitous.
However, the bailee is not liable for any loss due to the happening of any act by God or public
enemies though he agrees to take special care of the goods.

2. NOT TO MAKE ANY UNAUTHORIZED USE OF GOODS

The bailee should use the goods bailed to him strictly in accordance with
the conditions of the contract of bailment. If he unauthorizedly uses the
goods bailed to him, the contract of bailment becomes voidable at the option
of the bailor. Further, the bailee is also liable to the bailor for any loss or
damage caused to the goods on account of such unauthorized use of the
goods, even though he is not guilty of negligence, and even if the damage is
the result of an accident.
3. NOT TO MIX THE GOODS BAILED WITH HIS OWN GOODS
 Duties of Bailee
4. NOT TO SET UP AN ADVERSE TITLE
The bailee holds the goods on behalf of and for the bailor. So he has to
return them to him. He cannot deny the right of the bailor as to the
ownership of the goods. However, if it is proved that the goods belonged
to a person other than the bailor by a competent authority, he may return
the goods to such a person.
5. TO RETURN THE GOODS
The bailee should return the goods bailed to the bailor on the expiry of
the period or/on the fulfillment of the object for which the goods were
bailed. The goods must be returned or disposed of according to the
directions of the bailor. If he fails to do so, he is responsible to the bailor
for the loss, even if it arises without his negligence.
6. TO RETURN ANY ACCRETION TO THE GOODS
In the absence of any contract to the contrary, the bailee is bound to the
bailor, or according to his direction, any increase or profit, which may
have accrued from the goods, bailed.
Example: A leaves a cow in the custody of B to be taken care of. The cow
has a calf. B is bound to deliver the calf as well as the cow to A.
Rights of bailee

Right to compensation
Right to receive Right against premature
for loss on account of
necessary termination of
fault in goods
expenses[S.158] bailment[S.159]
bailed[S.150]

Right to compensation Delivery of goods to one

Right against third
in case of defective of the joint
parties
title[S.164] owners[S.165]

Right of Lien (right to

retain the possession of
goods till the bailee is
paid for his charges for
services. )
Rights of bailor

Right of indemnity
Termination of
(compensation) for Compensation for
bailment on
losses due to unauthorised use by
inconsistent use by the
negligence by the bailee[S.154]
bailee[S.153]
bailee[S.152]

Compensation when
the bailee mixes the Right of return of Right to profit from
goods bailed with own goods back[S.160] goods bailed[S.163]
goods [S.155]
Lien
• It means the right to retain the possession of goods till the bailee is paid for his charges
for services or any other amount.

• Lien are of two types:

• General Lien – A certain bailee entitled to retain any goods for any amount due. Eg:
The bank can withdraw fine from Savings account if the salary account does not
have enough minimum balance

• Particular Lien – The Bailee has the right to retain the goods only for which he has
spent an amount in offering the services that he promised. Eg: Amit gave the
watchmaker 2 watches for repairing. The watchmaker repaired only one watch. So,
in case, Amit does not pay, the watchmaker has the right only to retain with
himself the watch that was repaired.
Finder of Goods
The person who finds the goods (also is referred as
bailee) belonging to some other person (bailor) and
takes them in his possession is known as finder of
goods.
Duties of Finder of Goods:
1) Take reasonable care of goods
2) Return goods to owner
3) Must not use goods for his own purpose
4) Must not mix goods with his goods
5) Must return any increase in goods
6) Make a reasonable effort to find the owner.
• A person, who finds goods of another and takes them into his custody, is subject to the
same responsibilities as a bailee. He is bound to take as much care of the goods as a man of
ordinary prudence would, under similar circumstances would take care of his own goods of
the same bulk, quality and value. If he does not, he will be guilty of wrongful conversion of
the property.
• Till the owner is found out, the property in goods will vest in the finder and he can retain
the goods as his own against the whole world.
• The finder can also claim compensation from the owner for the charges incurred from him
for taking care of the goods.
• F picks up a diamond on the floor on k's shop. He hands it over to K to keep it till true
owner is found out. No one appears to claim it for quite some weeks in spite of the wide
advertisement in the newspapers. F claims the diamond from K who refuses to return.
What can F do?
• K is bound to return the diamond to F who is entitled to retain the diamond against the
whole world except the true owner.
 Termination of bailment
• Doing an act inconsistent with terms of
bailment[S.153]
• At desire of the bailor in case of gratuitous
bailment[S.159]
• On expiry of period[S.160]mjn
• On accomplishment of object[S.160]
• Death of the bailor or bailee [S.162]