Bailment and Pledge

• Bailment and Pledge According to Sec 148 of the 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 and the transaction is called the bailment.
Essentials of Bailment
• It is a delivery of movable goods by one person to another (not being
his servant). According to Section 149 the delivery of goods may be
actual or constructive.
• The goods are delivered for some purpose. When they are delivered
without any purpose there is no bailment as defined under Sec 148
• The goods are delivered subject to the condition that when the
purpose is accomplished the goods are to be returned in specie or
disposed of according to the directions of the bailor, either in original
form or in altered form.
Duties of the Bailee
• (i) Duty to take reasonable care of goods delivered to him [Sec 151]
• (ii) Duty not to make unauthorized use of goods entrusted to him
[ sec 154]
• (iii) Duty not to mix goods bailed with his own goods [ Sec 155]
• (iv) Duty to return the goods [ Sec 165]
• (v) Duty to deliver any accretion to the goods [Sec 163]
• Duties of the Bailor(i) Duty to disclose fault in the goods bailed [Sec
150]
• (ii) Duty to repay necessary expenses in case of gratuitous Bailment
[Sec 158] eg bailment of horse and expenses incurred towards
feeding and medical care of the horse to keep it alive.
• (iii) Duty to repay any extraordinary expenses in case of non-
gratuitous expenses
• (iv) Duty to indemnify bailee [Sec 164]
Rights of Bailee
• (i) Enforcement of Bailor’s Duties
• (ii) Right to deliver goods to one of several joint owners
• (iii) Right to deliver goods, in good faith, to bailor without title,
without incurring any liability to the true owner
• (iv) Right of Lien
Rights of the Bailor
• (i) Enforcement of Bailee’s Duties
• (ii) Right to terminate bailment if the bailee uses the goods wrongfully
[ Sec 153]
• (iii) Right to demand return of the goods at any time in case of
gratuitous bailment [Sec 159]
Pledge or Pawn
• According to Sec 172, Contract Act, 1872, ‘ The bailment of goods for
repayment of a debt or performance of a promise is called ‘pledge’.
The bailor in this case is called the pawnor, the bailee is called the
pawnee.
Pledge Bailment
• Pledge is the bailment for
• Bailment is for a purpose a specific purpose ie to other than two
under provide security for a pledge ie for repairs, safe debt or for
fulfillment of custody etc. object.
• No right to sale.
• The pledgee has right to bailee may either retain sale on default after
the goods or the bailor giving notice thereof to for non-payment of
his the Pledger. dues Distinction between Bailment & Pledge
Essential Features of a valid pledge
• Delivery of possession
• Delivery should be upon a contract
• Delivery should be for the purpose of security
• Delivery should be upon condition to return
Duties of a Pawnor
• Duty to repay the loan
• Duty to pay expenses in case of default
Duties of a pawnee
• Duty not use of pledged goods
• Duty to return the goods
Right of Pawnor
• Right to redeem the goods pledged
• Right to receive the increase
Right of Pawnee
• Right to retain the pledged goods
• Right to extra ordinary expenses
• Right in case of default of the pawnor
• Right to sell the goods