Contract of bailment

Contract of bailment

Author – Smruthi A Y , Student of  Ramaiah College of Law 

Abstract: 

This research paper deals with the contract of bailment, essentials required for bailment, who are called as bailor and bailee and the rights and duties of bailor and bailee. 

Justice Blackstone defines contract of bailment as delivery of goods in trust upon a contract which is expressed or implied that trust shall be faithfully executed on the part of the bailee.

Introduction: 

Bailment comes under the specific contract under the Indian contract act 1872. 

Section 148 of the Indian contract act defines the terms bailment, bailor and bailee which states as follows: 

A bailment is delivery of goods by one person to another person for some purpose and when that purpose is accomplished the goods must be returned or disposed according to instructions. 

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

Essential features of contract of bailment: 

1. Delivery of possession: 

This is considered as the important feature of bailment the person who has the custody without possession such as a servant or a guest who is using his host’s goods are not considered as bailee. The goods must be handed over to the bailee itself. Once this is done a bailment arises, irrespective of the manner it is done.

2.  Delivery should be upon a contract: 

Delivery of the goods should be made for some purpose and upon a contract and when the purpose is accomplished the goods shall be returned to the bailor. When the person’s goods go into possession of another without contract then there is no bailment.

3. Delivery should be upon some purpose:

Bailment of goods is made for some purpose and it is subject to the condition that when the purpose is accomplished the goods must be returned to bailor or disposed according to the mandate. 

Classification of bailment: 

Bailment can be divided into two categories: 

1. On the basis of benefit of the parties:  

1. Exclusive benefit of bailor:                                                                                                              In this case bailor delivers the goods to bailee for a safe custody without any benefit. In this case a contract of bailment is executed for the benefit of the bailor and bailee does not derive any benefit. 
2. Exclusive benefit of bailee:                                                                                                             In this case bailor delivers his goods to bailee without any benefit to his use. In this case a contract of bailment is executed only for the benefit of bailee and bailor does not derive any benefit.
3. Mutual benefit: In this case goods are delivered for consideration of both the bailor and the bailee gets the benefit. Here both bailor and bailee derive some kind of benefit from this contract. 
4. On the basis of renumeration: 

1. Gratuitous Bailment:                                                                                                            Bailment made without any consideration and for the benefit of the bailor or for the benefit of bailee. For example, if A borrows book from his friend B, then the contract between these two is called gratuitous bailment. 
2. Non-Gratuitous Bailment:                                                                                                                   It is a bailment for reward. It is for the benefit of both bailor and bailee. A contract of bailment in which involves considerations passing between the parties. For example, if a student borrows a book from the college library, then the contract between these two is called non gratuitous bailment. 

Duties of Bailor:

1. Duty to disclose defects:                                                                                                              According to section 150 of the Indian contract act bounds the bailor to disclose the facts specifically pertaining to the defect in the goods. He should also disclose information which materially interferes with use of goods or to expose the bailee to extraordinary risk. 
2. Duty to bear expenses:                                                                                                            Section 158 of the act says that by the condition of the bailment the goods are to be kept or carried or have work done upon them by bailee for bailor and bailee to receive no remuneration and the bailor shall repay the expenses incurred for the bailment. 
3. Duty to indemnify the bailee:                                                                                                 Section 159 of the act states that bailor has duty to indemnify the loss suffered by the bailee. The lender of thing for use me at any time require its return and if the loan was gratuitous even though he lent for specified time but if on the faith of such loan made for a specified time the borrower is acted in such a manner that the return of the thing before time agreed upon would cause him losses exceeding the benefit actually derived by him from loan the lender must if he compels the return indemnify the borrower for the amount in which the loss occasioned exceeds benefits so derived. 
4. Duty to bear risks:                                                                                                                            It is the duty of Bailor to bear the risk of loss and destruction of things bailed provided that bailee has taken reasonable care to protect the goods from the loss. 
5. Duty to receive back the goods:                                                                                                       It is the duty of the bailor that when the bailee in accordance with the terms of bailment returns the goods to him that bailor should receive them if the bailor without any reasonable reasons refuses to take the goods back when they are offered at proper time and at proper place the bailee can claim compensation from the bailor for all necessary and incidental expenses the bailee under takes to keep and protect the goods. 
6. To pay damages for defect in bailor’s title:                                                                                       Section 164 of the act says that bailor is responsible to the bailee for any loss which the bailee may sustain the reason that the bailor was not entitled to make the bailment or receive back the goods or give directions respecting them. 
7. To put bailee into possession:                                                                                                 Section 149 of the act says that delivery to be bailee may be made by doing anything which has the effect of putting the goods in possession of the intended bailee or of any person authorized to hold them on his behalf. 

Duties of bailee: 

1. Duty to take reasonable care of goods bailed:                                                                        According to section 151 of the act lays down the degree of care of which a bailee should take in respect of goods bailed to him. The bailee has to take care of the goods bailed to him and will be held liable if the goods suffer loss due to his negligence. 
2. Not to make any unauthorized use of goods:                                                                                The bailee is under duty to use the bailed goods in accordance with the terms of bailment. If the bailee does any act to the goods which is not in accordance with the terms of bailment the contract is voidable at the option of the bailor. The bailee is liable to compensate the Bailor for the damage caused.
3. Duty not to mix bailor’s goods with his  own goods:                                                                   The bailee has to keep the goods of the Bailor separate from his own according to sections 155 to 157 it lays down the duty in the following ways: The bailee with the consent of the bailor can mix the goods of the bailor with his own goods and should have interest in proportion to their respective shares. The bailee can mix the goods of bailor with his own goods without the consent of the bailor if the goods can be separated respectively.
4. Duty not to set up adverse title:                                                                                                       The bailee is duty bound not to do any act  which is inconsistent with title of the bailor. He should not set up his own title on the goods bailed to him.
5. Duty to return the goods:                                                                                                                  It is the duty of the Bailee to return the goods according to the directions of Bailor without demand on the expiry of the time fixed or when the purpose is accomplished. If he does not return the goods, he becomes liable to the bailor for any loss.
6. Duty to return accretions to the goods:                                                                                               In the absence of any contract the Bailee must deliver to the bailor any profit which has accrued  from the goods bailed. 

Rights of bailor: 

1. Right to claim damages:                                                                                                                                  According to section 151 it is the right of bailor to claim damages for the loss that has been caused to goods bailed due to bailee’s negligence.  
2. Right to avoid the contract:                                                                                                              If bailee does any act with respect to the goods bailed which is inconsistent with terms of the bailment the bailor has right to avoid the contract. 
3. Right to claim compensation:                                                                                                           If any damages is caused to goods bailed due to unauthorized use of goods. The bailor can claim compensation from bailee. 
4. Right to get back goods:                                                                                                                Bailor has right to get back the goods bailed by him as soon as the purpose is accomplished. If he fails to do, he is entitled to get reasonable compensation. 
5. Right  to denial return of goods:                                                                                                  Bailor has the right to compel bailee to return goods bailed when the time has expired or when the purpose has been accomplished.
6. Right to share profit:                                                                                                                       Bailor has the right to share bailee any profit earned from goods bailed if it is provided by the contract. 
7. Expenses of separation:                                                                                                                          If bailee has mixed goods of bailor with someone he has the right to get expenses from the bailee for the separation of his goods. 

Rights of bailee: 

1. Right to compensation:                                                                                                           According to section 164 bailor is responsible for the loss which bailee may sustain by reason the bailor was not entitled to make bailment. Bailor has no right to bail goods respecting them and consequently bailee is exposed to loss and the bailor is responsible for the same. 
2. Right to remuneration:                                                                                                              According to section 158 bailee is entitled to recover his charges the section says that where the bailee is required by the terms of bailment to keep the goods or to do some work upon them for the benefit of bailor and the contract provides for no reward the bailee has right to ask the Bailor for payment of necessary expenses incurred by him for the purpose. 
3. Right to lien:                                                                                                                                                        If bailee’s lawful charges are not paid he can retain the goods he also has the right to retain any property until the charges with respect to the property are paid. 
4. Right to sue:                                                                                                                                     If a third person wrongfully deprives the bailee  of the use of the goods bailed does any injury the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment had been made and either the bailor or the bailee may bring a suit against the third person for such injury. 

Cases: 

1. Ultzen v/s Nicolls (1894 1 QB 92):                                                                                                  A customer went to a restaurant to dine and when he entered the restaurant a waiter  without being asked took his coat and hung it on a hook behind the customer and when the customer rose to leave the court was no longer there in this case the court held that the restaurant keeper was held liable for the loss the coat. 
2. Kaliaporumal Pillai v/s Visalakshmi (AIR 1938 Mad 32):                                                               A lady had given her jewelry to goldsmith to melt and use in making new jewelry for her and every evening she received the semi-finished jewelry from the goldsmith and put it in a box in the goldsmith’s room then she would lock the box herself and leave the goldsmith’s place with the key in her possession one night the box locked was stolen from the room and the jewelry was lost in this case the court held that the goldsmith was not liable as bailment in this case came to an end when the lady received the semi-finished jewelry from the goldsmith every evening. 
3. Ram Gulam v/s Govt of  UP (AIR 1950):                                                                                        In this case the plaintiff’s ornaments having been stolen were recovered by the police and while in police custody was stolen again the plaintiff’s action against the state was dismissed. 
4. Hyman & wife v/s Nye & sons (1881 LR 6 QBD 685):                                                                                  The plaintiff hired from the defendant a carriage and a pair of horses and a driver. During the journey a bolt in the under part of the carriage broke and the carriage was upset and plaintiff was  injured. In this case the court held defendant liable.
5. Reed v/s Dean (1949 1 KB 188):                                                                                                         The plaintiff hired a motor launch from defendant for a holiday  on the river James the launch caught fire and the plaintiff were unable to extinguish it  as the firefighting equipment was out of order and was injured and suffered loss. In this case court held the defendant liable.