BAILMENT IN INDIAN CONTRACT ACT

Under the ICA, the word ‘bailment’ implies a relationship in which the personal property of one person is temporarily handed over into the possession of another.

Eg – Delivering a watch for repair, depositing luggage in a cloakroom, delivering garments to a dry-cleaner, delivering gold to a goldsmith to male ornaments, etc.

S.148: 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’.

If a person is already in possession of the goods of another and then 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.

Bailment of goods is always made for some purpose and is subject to the condition that when the purpose is accomplished, the goods will be returned to the bailor. If the person to whom the goods are delivered is not bound to restore them to the person delivering them or to deal with them according to his directions, their relationship will not be that of bailor and bailee.

There is no bailment unless there is an obligation to return the identical subject matter in either its original or altered form.

Giving gold to a jeweler to make ornaments is bailment.

Deposit of money with a bank is not bailment as the Bank is not bound to return the same notes and coins.

The concept of bailment applies to movable goods only.

Involuntary Bailment – where the creation of bailment does not require the consent of the Bailor.

In a Hire-purchase agreement or lease, until the sale, there is a contract of bailment between the lessee and the lessor.

Depositing cash, jewelry, etc. in a bank locker is not a bailment. This is because the locker space is a rental. Therefore, depositing items in the locker is essentially delivering to one’s self.

S.149: The ‘delivery’ to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorized to hold them on his behalf.

Delivery maybe –

  • Actual – When the bailor hands over the bailee, physical possession of the goods
  • Constructive – When there is no change of physical possession, but something is done which has the effect of putting the goods in the possession of the bailee.

Eg – giving the key to a warehouse wherein the goods are kept.

To secure constructive possession, the test is whether the dominion and control over the goods are relinquished to the bailee.  

Duties of the Bailee

S.151: Care to be taken by bailee – In all cases of bailment, the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quantity and value of the goods bailed.

This section prescribes a uniform duty of care. It is applicable to all cases of bailment. The kind of bailment does not matter- gratuitous, non-gratuitous

The onus is on the bailee to prove that he had taken the necessary precautions and care required by him under the law.

S.152: The bailee, in the absence of any special contract, is not responsible for the loss, destruction, or deterioration of the thing bailed if he has taken the amount of care of it described in S.151.

The bailee can give up his right under S.151 by way of contract. So, if the bailee has agreed to be liable absolutely, then in spite of taking due care, he will be liable, nonetheless.

S.153: A contract of bailment is voidable at the option of the bailor if the bailee does any act with regard to the goods bailed, inconsistent with the conditions of bailment.

S.154: If the bailee makes any use of the goods bailed, which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.

In a situation where the use of goods is in contravention to the terms of bailment, then the liability of the bailee is absolute. The amount of care taken does not matter.

S.155: If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, the bailor and the bailee shall have an interest, in proportion to their respective shares, in the mixture thus produced.

S.156: If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, and the goods can be separated or divided, the property in the goods remains in the parties respectively; but the bailee is bound to bear the expense of separation or division and any damage arising from the mixture.

S.157:If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, in such a manner that it is impossible to separate the goods, bailed from the other goods and deliver them back, then the bailor is entitled to be compensated by the bailee for the loss of the goods.

S.160: It is the duty of the bailee to return, or deliver according to the bailor’s directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished.

S.161: If by default of the bailee, the goods are not returned, delivered, or tendered at the proper time, he is responsible to the bailor for any loss, destruction, or deterioration of the goods from that time.

A bailee who retains goods after the period for which it has been bailed has elapsed does so at his own risk and is absolutely liable for any destruction or deterioration from that point of time onwards.

The due care argument expires with the expiration of ‘proper time’.

S.163: In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed

Bailor’s Duty

S.150: The bailor is bound to disclose to the bailee all faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults.

If the goods are bailed for hire (the bailment is for consideration; it is non-gratuitous), the bailor is responsible for such damage, whether or not he was aware of the existence of such faults in the goods bailed.

If the bailor is not aware of the fault, whereas the bailee is aware of such fault, then in that care the bailor will not be liable to the bailee for damages.

S.158: Where, by the conditions of bailment, the goods are to be kept or to be carried or have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of bailment.

This section applies only to gratuitous bailment.

S.164: The bailor is responsible to the bailee for any loss which the bailee may sustain by reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions, respecting them.

S.166: If the bailor has no title to the goods, and the bailee, in good faith, delivers them back to, or according to the directions of, the bailor, the bailee is not responsible to the owner in respect of such delivery.

Once the bailee in good faith delivers the goods to the bailor, and it transpires that the bailor had no title to the goods, the bailee is not responsible to the actual owner in respect of the delivery. However, if the bailee had noticed that the bailed goods rightfully in fact belong to another person, then this section will not come to the rescue of the bailee.

S.167: If a person other than the bailor claims the goods bailed, he may apply to the court to stop the delivery of the goods to the bailor, and to decide the title of the goods.

Bibliography: –

  1. The Indian Contract Act, 1872.

Aishwarya Says:

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