BAILMENT

Definition

Bailment refers to the voluntary delivery of goods. Also, such delivery is for a temporary purpose
and after the fulfillment of which the Bailee shall either return the goods in the same or altered
form or dispose of them.

A bailment is a contract where one person delivers goods to another person for some purpose.
The person delivering the goods is the Bailer and the person receiving the goods is the Bailee. After
the accomplishment of the purpose, the Bailee needs to return these goods to the Bailer or
dispose of them according to the directions of the Bailer.

In the contract of bailment, the ownership of the goods remains with the Bailer and only the
possession transfers to the Bailee. Such delivery of goods may be actual or constructive.
For example, when A hands over the keys of a godown to B, it amounts to the delivery of goods in
the godown. Also, A is the bailer and B is the Bailee.

Bailment is an act, contract (with or without signed paper) between Bailee and bailer. Bailee is
the person who is given product/item/property or anything which is actually the property of
bailer. It is for a specific time period. After that, bailer has the right to take and Bailee has a
responsibility to return back. These must be carefully used under instructive manner.

The Main Types of Bailment

i. Gratuitous (Un necessary/ Un Called for) Bailment

Where the Bailee does not charge nay thing for the bailment it is called gratuitous bailment.

ii. Bailment for Reward

When the bailor charges any thing for his services it is called bailment for rewards.

iii. Bailment for Use

When the bailer delivers an article to the Bailee for use by the later in any general or specific
way, this is called a bailment for use.

Illustration
X delivers his watch to Y for the latter to use it for one month. Here bailment is bailment for
used.
 iv. Bailment of Safe Custody

If valuable goods or even coins or notes in box are deposited for protection, it is called bailment
for safe custody.

Illustration

X gives his watch to Y for the latter to keep it in safe custody for two months.
Bailment for Mutual Benefit
When the bailor delivers his articles to another for repair or gives his goods to carrier for
carriage, it is known as bailment for mutual benefit.
v. Bailment for Pledge

It is a contract whereby an article is deposited with a lender as security for the payment of a
loan or performance of a promise.

A pledge or a pawn is a contract whereby an article is deposited with a lender or promise as

security for payment of a debt or performance of a promise. The bailer, in this case, is called
the pawner or pledgor and the Bailee is called Pawnee or pledgee.

Since pledge is a branch of bailment, the Pawnee is bound to take reasonable care of the goods
pledged with him. He is not permitted to use the goods pledged, and if he does so, be would be
responsible for damages.

Delivery of the goods to the Pawnee is important essential for the completion of the contract of
pledge. Any kind of goods, securities or documents may be pledged.

vi. Deposits
Goods are delivered for the purpose of keeping.

vii. Commadatum.

Goods are lent to a friend with out consideration

viii. Pawn (Place as collateral/ Pledge).

Goods are delivered to creditor as security for the ban (forbid, prohibit) owed (payable, due),
this called pledge.

Distinction between Pledge and Bailment

A bailment is a delivery of goods by one person to another for some purpose upon a contract, a
pledge is a bailment of goods as security for a debt or for the performance of a contract. Both
the contracts are the result of an agreement between the parties concerned.
On a bailment of goods, what passes to the Bailee is right of possession of the goods bailed, on
a pledge; the pledge obtains a “special property” in the goods pledged.

A Bailee has a right of lien on the goods bailed, but not right of sale. A pledge has such a right,
under certain circumstances.

Bailment may be for any purpose. But a pledge is made for a specific purpose.

Bailment for Finding of lost Goods

If a person already in possession of the lost goods of another, he thereby becomes the Bailee
and the owner becomes the bailer.

Essentials of Bailment:

i. Delivery of possession of goods:

Delivery of possession of goods is must for the contract of Bailment.

ii. Moveable Property

There can be bailment of moveable property only. It involves change of possession. Mere
custody without possession is not bailment.

iii. Delivery of possession of goods for some purpose.

Delivery of possession of goods for some purpose by the bailer to the Bailee.

iv. Return of goods deposited.

Goods deposited shall be returned to the bailer by the Bailee after completion of purpose..

Bailor: The person delivering the goods is the Bailer.

Rights of Bailor:

i. Compensation
Bailor has the right to be compensated in the case of damage.

ii. Return of goods

Goods bailed must be returned to him on completion of the object.
iii. Claiming charges
The bailor can claim charges incurred on recovery of goods bailed.

iv. Claiming Increase:

The bailor can claim in cost of increase in the value or income accruing from the goods bailed.

v. Cancellation of bailment

The bailor can cancel the contract of bailment.

vi. Right to use against Bailee

The bailer has the right to sue (To take legal action) against the Bailee in case of breach (break /
violate) of contract.

Duties of a bailer   

Duties of a bailer are as follows:

i. Disclose the Faults

It is the duty of a bailer to disclose all faults. If bailer fails to disclose such faults then he will be
responsible for the damage caused to goods or loss suffered by the Bailee.

ii. Payment of Extraordinary Payment

The bailer is under the duty to pay the extraordinary expenses incurred by the Bailee for such
bailment.

iii. To accept the goods

It is the duty of the bailer to accept the goods after the purpose for which such goods were
bailed is accomplished.
iv. To indemnity the Bailee

It is the duty of the bailer to indemnify the Bailee for the cost incurred due to the defective title
of goods bailed to the Bailee.
v. Warning to the Bailee

When the things are in danger i.e. explosive goods, the bailor must give extraordinary warning
to the Bailee.
Bailee: the person receiving the goods is the Bailee

Right of the Bailee

i. Right to Claim damages

Bailee can claim damages in case of breach of contract against bailor.

ii. Right to claim expenses

Bailee has right to claim expenses for his services

iii. Right to deliver the goods

Goods must be delivered to him by the bailor.

iv. Right to sue

Bailee can sue the bailor in court in case of violation of the terms of the contract.
v. Right to lien

The bailee can retain the goods in case of default of the bailor.

Duties of Bailee

i. Take proper care for goods

Bailee must be careful towards the goods put in his possession by the bailor.

It is the duty of a Bailee to take care of goods bailed to him. Bailee should take care of these goods
as an ordinary man will take care of his goods of the same value, quality, and quantity.

Thus, if the Bailee takes due care of goods then he will not be liable for any loss, deterioration
(decline, weakening 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.

ii. No unauthorized use of goods

He will not use the goods with out permission of the bailor or beyond terms and conditions of the
contract of bailment. The Bailee shall not make any unauthorized use of goods bailed. In case he
makes any unauthorized use, then bailer can terminate the bailment.
Bailer can also claim for damages caused to goods bailed due to unauthorized use.

iii. Not to mix the goods with other goods.

He will not mix the goods bailed to him with the goods belonging to himself or some one else.
The Bailee needs to keep the goods separately from his own goods. He should not mix the goods
under bailment with his own goods. In case Bailee mixes the goods with his own goods without
the consent of the bailer, then:
Bailer also has an interest in the mixture. If the goods can be separated or divided, the property
in the goods remains with both the parties. But, the Bailee bears the expenses of separation or
any damages arising from the mixture. If it is not possible to separate the goods, the Bailee shall
compensate the bailer for the loss of goods.

iv. Duty to return the goods.

The bailee must return the goods to bailor on expiry of period or according to the terms and
conditions mentioned in the contract of bailment.
The duty of the Bailee is to return the goods without demand on the accomplishment of the
purpose or the expiration of the time period. In case of his failure to do so, he shall be liable for the
loss, destruction, deterioration, damages or destruction of goods even without negligence.

v. Duty not to setup adverse title

He will never set up his own title to the goods bailed to him by the bailor under the contract.

vi. Duty to return increase

He must return the increase if any accrued to the goods bailed to him by the bailor.
A Bailee shall return the goods along with any increase or profit accruing to the goods to the bailer,
in the absence of any contract to the contrary.
For example, A leaves a hen in the custody of B. The hen gets a chick. B shall deliver the hen along
with the chick to A.

Solved Example on Duties of Bailee and Bailer

Explain Bailer’s, Particular Lien?

Ans.

The Bailee has a lien on the goods that he receives under the contract of bailment. When the
bailer bails the goods to the Bailee for a particular purpose and the Bailee expands skill and labor
on these goods, he has a right to retain the goods until the bailer pays him his charges in respect of
skill and labor. However, the right of lien arises only when the Bailee uses skill and labor on the
goods to confer an additional value on the goods.

For example, X gives a piece of cloth to Y for stitching a shirt. Y promises to deliver the shirt in a
week’s time. After a week Y has the shirt ready. But, he has a right to retain it until X pays him his
charges.
It is a right to detain any property belonging to another person which is in the possession of the
person exercising the lien in respect of any payment lawfully due to him.