The term ‘bailment’ is derived from a French word ‘bailer’ which means ‘to give or to deliver’. In Common law, it means any kind of handing over of certain property, particularly goods, for a certain period.
As per Section 148 of Contract Act, 1872, “A bailment is 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 directions of the person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’.
Explanation:- If a person is already in possession of the goods of other contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment”.
IILUSTRATION-
P employs A, to beat T and agrees to indemnify him against all consequences of the act. A, therefore, beats and has to pay damages to T for so doing. P is not liable to indemnify A because the object of the agreement is illegal.
ESSENTIAL REQUISITES OF BAILMENT
There must be a delivery of goods by the bailor.
Delivery of goods must be for some purpose.
Contract
Delivery is temporary.
To be returned.
Delivery of goods is the consideration for the contract.
| RIGHTS AGAINST BAILEE | RIGHT AGAINST THIRD PARTY |
| 1. Right to take back the goods bailed (sec. 148) | 1. Section 180- suit by bailor or bailee against wrong-doer |
| 2. Right to terminate the bailment (sec154) | 2. Section 181- apportionment of relief or compensation obtained |
| 3. Right to demand return of goods (sec 159) | |
| 4. Right to claim the increase or profit from goods bailed (sec 163) | |
| 5. Right to claim damages due to mixing up of goods (sec 156) | |
| 6. Right to claim proportionate share in mixed goods (sec 155) | |
| 7. Right for enforcement of bailee’s duties |
| DUTIES OF BAILOR |
| To disclose faults in the goods bailed (sec 150) (Lyell v. Ganga Dai 1875) |
| 2. Bailor is liable to pay necessary expenses (sec 158) |
| 3. Responsibility to compensate (sec 164) |
| 4. To receive back the goods |
| RIGHTS OF BAILEE | RIGHTS OF BAILEE |
| TOWARDS BAILOR | TOWARDS THIRD PERSON |
| 1. Enforcement of bailor’s duties (sec 180) | 1. Right to interplead |
| 2. Right to compensate (sec 164) | 2. Action to trespass |
| 3. Right to remuneration (sec 158) | |
| 4. Right to lien (sec 170 & 171) | |
| 5. Right to claim necessary expenses (sec 158) | |
| DUTIES OF BAILEE |
| 1. To take reasonable care of goods bailed (sec 151 & 152) |
| 2. Not to deviate from the terms of the contract (sec 153) |
| 3. Not to use the goods bailed unauthorisedly (sec 154) |
| 4. Not to mix the goods bailed with his own goods a. Mixing goods with bailor’s consent (sec 155) b. Mixing goods without bailor’s consent (sec 156) c. Mixing of inseparable goods without bailor’s consent (sec 157) |
| 5. To return the increase in goods (sec 163) |
| 6. To return the goods bailed (sec 160) |
| 7. When goods are not duly returned (sec 161) |
| 8. Not to setup any adverse title against the bailor (sec 117 of Evidence Act) |
TERMINATION OF BAILMENT
1)By bailee’s act inconsistent with conditions (sec 153)
2)Return of goods bailed, on expiration of time or accomplishment of purpose (sec 160)
3)Termination of gratuitous bailment by death (sec 162)
4)Termination in case of deterioration
5)Mistake or coercion (sec 72)
6)Illegal goods bailed.
FINDER OF LOST GOODS
‘Finder of goods’ is a person who finds goods belonging to another and takes them into his custody.
Section 71 lays down that “A person who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a bailee”.
OBLIGATIONS OF THE FINDER OF GOODS
1)He must take reasonable care of the goods
2)Not to mix the goods with his own
3)To find the true owner
4)Not to use goods for his own purpose
5)To return any increase in goods or profit attained from it
RIGHTS OF FINDER OF GOODS
Right of lien (sec 168)
Right to sue for reward (sec 168)
Right against the world
Right to sell (sec 169)
LIEN
A lien is a right by which a person in possession of the property holds and retains it against the other in satisfaction of a demand due to the party retaining it.
A lien is a security given by law to secure the payment of money. Thus a lien is a legal claim to hold property as security.
Lien is the right of a person to retain the goods belonging to another until the claim of the person in possession is satisfied or some debt due to him is repaid.
The common law principle is that “if a man has an article delivered to him, on the improvement of which he has to bestow trouble and expense, he has a right to detain until his demand is paid.”
ESSENTIALS OF LIEN
The person who claims the lien must have the possession of the goods
Such possession must be lawfully obtained.
Possession must not be obtained by misrepresentation, fraud or force.
Lien is not lost merely because the bailee parts with the goods for a limited and specific purpose.
There must be continuous possession by bailee.
TYPES OF LIEN
| GENERAL LIEN | PARTICULAR LIEN |
| 1. Available to all bailees | Only to 5 categories- bankers, factors, wharfingers, attorneys and policy brokers. |
| 2. Right to retain a particular property in respect of which charges are due to the bailee. | Right to retain all property of bailor for amounts due to the bailee for work done in regard to anyone or more of them. |
| 3. Available only in respect of remuneration due for work done on a particular thing. | Exercised for any sum due on a general balance of accounts. |
TERMINATION OF BAILEE’S LIEN
A lien is terminated by surrender of goods.
If a tender of amount due on the lien is refused, the lien is terminated.
A lien may be lost by agreement between the parties.
When the debt is satisfied or paid.
Where the limitation period of debt is extinguished.
Where there is abandonment of the possession of thing bailed, the lien is extinguished.
Where the identity of goods is lost due to inter-mixture
Selling the goods are of perishable nature.
PLEDGE
A pledge is defined to be bailment of personal property as security for some debt or engagement, redeemable on certain terms, and with an implied power of sale on default.
According to section 172, “The bailment of goods as security for payment of a debt or performance of a promise is called ‘pledge’. The bailor is in this case called ‘pawner’. The bailee is called the ‘pawnee’.
ESSENTIALS OF PLEDGE
Delivery of goods
Delivery as security
Security for payment of debt
Movable property
Ownership of pawnor in goods
Transfer of possession
There must be contract between pawnor and pawnee.
| RIGHTS OF PAWNOR |
| 1. Right to redeem the goods in case of default (sec 177) |
| 2. Preservation and maintenance |
| 3. Right to claim back the goods. |
| 4. Right to get the increase or benefit of the goods |
| 5. Pledge where pawnor has only limited interest (sec 179) |
DUTIES OF PAWNOR
The pawnor has to bear all extraordinary expenses incurred by the pawnee for the preservation of the goods pledged.
He has to meet his obligations on stipulated date and comply with the terms of contract.
He is responsible for any loss to the pawnee because of his defective title, if any.
RIGHTS OF PAWNEE
Right of retainer (sec 173)
Right to recover extraordinary expenses (sec 175)
Right on default of pawnor (sec 176)
Pawnee’s right when the contract is voidable. (sec 178A)
DUTIES OF PAWNEE
Take reasonable care
No unauthorized use of goods
Not mix the goods
Return the goods on payment
Return any accretion
Not do anything inconsistent with terms of contract.
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