Bailment and the duties of the bailor and bailee

Introduction

There are many instances of bailment in our daily lives – when we give our clothes for laundry, when we use valet parking for our cars. We deliver our goods to another person or leave them in the power of another person for a purpose and expect to receive our goods back when the purpose has been achieved.

For example 

A man visits a repair shop for getting his television set fixed. The television set is left at the shop where the repair man examines it and fixes the problem. Once fixed, the television set has to be returned to its owner. There is a contract of bailment between the man and the repair-man.

• Bailment is a process where the owner of certain goods places them in the temporary possession of another person. In simple terms, bailment means that a person delivers his goods to another person or put them in another’s possession for a specific purpose and there is an express or implied understanding between the two people that once the purpose has been achieved, the goods will be returned to the owner – the person who bailed them.

• Chapter IX (Section 148 – 181) of the Indian Contract Act, 1872 deals with the general rules relating to bailment. The Chapter is not exhaustive on the topic of bailment – there are various other Acts which deal with other types of bailment like the Carriers Act, 1865, the Railways Act, 1890, the Carriage of Goods by Sea Act, 1925.

Definition of Bailment

• The word ‘bailment’ is derived from the French word ‘bailler’ which means ‘to deliver’. Etymologically, it means any kind of ‘handing over’. In legal sense, it involves change of possession of goods from one person to another for some specific purpose.

• Section 148 of Indian Contract Act 1872 defines ‘Bailment’ as 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 direction of the person delivering them.

The person who owns and delivers the goods is called the ‘bailor’. The person to whom the goods are delivered is called the ‘bailee’.

Illustration

A man drops off his clothes for dry cleaning. He is the bailor and the purpose of bailment is to have the particular set of clothes cleaned. The dry cleaner is the bailee – he is the temporary custodian of the clothes and is responsible for keeping them safe and to return them to the bailor once they have been cleaned. 

Nature of Bailment

• Bailment is a type of special contract and thus, all basic requirements of contract like consent of parties, competency, etc are applicable to any contract of Bailment. A bailment is usually created by an agreement between the bailor and bailee. Section 148 specifically talks of bailment via a contract. But a valid bailment can also arise in absence of express contracts or from invalid or voidable contracts.

• In bailment, neither the property nor the ownership of the goods involved is transferred at any point. Only the temporary possession of the bailed goods is transferred and the ownership of such goods remains with the bailor. The bailor can demand to have the property returned to him at any time.

What may be bailed?

• Only ‘goods’ can be bailed and thus, only movable goods can be the subject matter of bailment. Current money or legal tender cannot be bailed. Deposition of money in a bank is not bailment as money is not ‘goods’ and the same money is not returned to the client. But the coins and notes that are no longer legal tender and are more or less just objects of curiosity, then they can be bailed. 

Essential features of the bailment

Section 148 of the Indian Contract Act, 1872 makes it very clear that there are three essential features of Bailment, namely:

1) Delivery of Possession

2) Delivery upon Contract

3) Delivery for a purpose and Return of Goods

Case law:

In Atul Mehra vs. Bank of Maharashtra [AIR 2003 P&H 11], it was held that mere hiring of a bank’s locker and storing things in it would not constitute a bailment. But the position changes completely if the locker in the safe deposit vault of the bank can be operated even without the key of the customer.

Duties of bailor and bailee

As per the section 148 of the Indian Contract Act, 1872, a livery may be a contract wherever one person delivers merchandise to a different person for a few purpose. The person delivering the products is that the deliverer and also the person receiving the products is that the agent. when the accomplishment of the aim, the agent must come these merchandise to the deliverer or eliminate them in step with the directions of the deliverer. allow us to currently discuss the duties of agent and deliverer.

Duties of bailor and bailee

Bailment refers to the voluntary delivery of products. Also, such delivery is for a short lived purpose and when the fulfilment of that the agent shall either come the products within the same or altered kind or eliminate them.

In the contract of livery, the ownership of the products remains with the deliverer and solely the possession transfers to the agent. Such delivery of products could also be actual or constructive.

For example, once A hands over the keys of a warehouse to B, it amounts to the delivery of products within the warehouse. Also, A is that the deliverer and B is that the agent.

Duties of a bailor

Duties of a bailor in respect of merchandise square measure as follows:

1. Take correct care of products

According to section 151, it's the duty of a agent to require care of products bailed to him. agent ought to lookout of those merchandise as a normal man can lookout of his merchandise of constant price, quality, and quantity.

Thus, if the agent takes charge of products then he won't be to blame for any loss, deterioration of such merchandise. Also, the agent must take constant degree of care of products whether or not the livery is for reward or gratuitous.

However, the agent isn't to blame for any loss because of the happening of any act by God or public enemies although he agrees to require special care of the products.

2. to not create unauthorized use

As per section 153, the agent shall not create any unauthorized use of products bailed. just in case he makes any unauthorized use, then deliverer will terminate the livery. Bailor may also claim for damages caused to merchandise bailed because of unauthorized use as per Section 154.

3. Keep merchandise separate

The agent must keep {the merchandise |the products} severally from his own goods. He mustn't combine {the Merchandise |the products} beneath livery together with his own goods. just in case agent mixes {the merchandise| the products} together with his own goods while not the consent of the deliverer, then:

i. deliverer conjointly has AN interest in the mixture.

ii. If the products may be separated or divided, the property within the merchandise remains with each the parties. But, the agent bears the expenses of separation or any damages arising from the mixture.

iii. If it's unacceptable to separate the products, the agent shall compensate the deliverer for the loss of products.

4. Not set adverse title

A agent should not set AN adverse title to the products bailed.

5. come merchandise

The duty of the agent is to come the products while not demand on the accomplishment of the aim or the expiration of the period. just in case of his failure to try and do thus, he shall be to blame for the loss, destruction, deterioration, damages or destruction of products even without negligence.

6. come increase or profits

A agent shall come the products in conjunction with any increase or profit accruing to the products to the deliverer, within the absence of any contract to the contrary.

For example, A leaves a hen within the custody of B. The hen gets a chick. B shall deliver the hen in conjunction with the chick to A.

Duties of a bailee

Duties of a bailee square measure as follows:

1. it's the duty of a deliverer to disclose all faults. If deliverer fails to disclose such faults then he are going to be liable for the harm caused to merchandise or loss suffered by the agent.

2. Also, the deliverer is beneath the duty to pay the extraordinary expenses incurred by the agent for such livery.

3. it's the duty of the deliverer to just accept {the merchandise the products} when the aim that such goods were bailed is accomplished.

4. it's the duty of the deliverer to indemnify the agent for the price incurred because of the defective title of products bailed to the agent.

Example on Duties of bailee and bailee

Explain Bailee’s, explicit Lien?

Ans. As per section one hundred seventy of the Indian Contract Act, 1872, the agent encompasses a lien on the products that he receives beneath the contract of livery. once the deliverer bails {the merchandise the products} to the agent for a specific purpose and also the agent expands talent and labour on these goods, he encompasses a right to retain the products till the deliverer pays him his charges in respect of talent and labour. However, the proper of lien arises only if the agent uses talent and labour on the products to confer a further price on the products.

For example,

X provides a chunk of material to Y for handicraft a shirt. Y guarantees to deliver the shirt in a very week’s time. when per week Y has the shirt prepared. But, he encompasses a right to retain it till X pays him his charges. Section 171 states the provisions for a lien. it's a right to detain any property happiness to a different person that is within the possession of the person elbow grease the lien in respect of any payment lawfully because of him. 

Works Cited/References

Bangia, R.K. “Chapter2: Bailment and Pledge.” Contract-II. Allahabad Law Agency, 2017.

The Indian Contract Act, 1872. Bare Act. Universal LexisNexis, 2019.