Table of Contents

Introduction: ................................ ................................ ................................ ................................ ..... 3 Bailment: ................................ ................................ ................................ ................................ ........... 4 Essentials and Legal Rules as to Bailment ................................ ................................ ....................... 5 Contract:................................ ................................ ................................ ................................ .... 5 Delivery of Goods:................................ ................................ ................................ ...................... 5 No Transfer of Ownership: ................................ ................................ ................................ ......... 5 Delivery of Goods for Some Purpose: ................................ ................................ ......................... 5 Return of Specific Goods: ................................ ................................ ................................ ........... 5 Movable Goods:................................ ................................ ................................ ......................... 5 Deposit of Money Into Bank It is Bailment: ................................ ................................ .............. 5 Classification of Bailment ................................ ................................ ................................ ............... 5 Gratuitous: ................................ ................................ ................................ ................................ .... 6 Non-Gratuitous: ................................ ................................ ................................ ............................. 6 Right of Bailer: ................................ ................................ ................................ ............................... 6 a) b) c) Right of Termination:................................ ................................ ................................ .......... 6 Right to Demand Return of Goods:................................ ................................ ..................... 6 Enforcement of Rights: ................................ ................................ ................................ ....... 6

Duties of Bailer: ................................ ................................ ................................ ............................. 7 a) b) c) Duty to disclose known defects: ................................ ................................ ......................... 7 Duty to Bear Extraordinary expenses:................................ ................................ ................. 7 Bear Risk for Loss: ................................ ................................ ................................ .............. 7

Rights of Bailee: ................................ ................................ ................................ ............................. 7 a) b) c) d) e) Right to Interplead: ................................ ................................ ................................ ............ 7 Right against 3rd Party: ................................ ................................ ................................ ...... 7 Right of Particular Lien: ................................ ................................ ................................ ...... 7 Right of General Lien: ................................ ................................ ................................ ......... 7 Right to Claim Compensation in Case of faulty Goods................................ ......................... 8

Duties of Bailee:................................ ................................ ................................ ............................. 8 Particular Lien: ................................ ................................ ................................ ........................... 8 General Lien:................................ ................................ ................................ .............................. 8 Finder of Goods: ................................ ................................ ................................ ............................ 8

....... .. .............................. 13 Authority of agent.............................................. 8 Duties of Finder of Goods: .......................................................................... 11 Delivery of Goods:......... ................... .................................................... ... 12 Consideration not necessary ................... ........................................................................... 13 Remuneration to Agent............................................. ........ ... ......................................................................... 10 Essential of Pledge ................... ....... ............. ........... ............................................................ ...................................... .... ............................... ....................... ............................... ....................................................................................................... 13 Rights of Principal ...... ......... ..................... 11 Conclusion ................................................... ...................... ..... 13 Duties of Principal .......... ....... . ........ 13 Agent s duty to Principal ................................................................................... ....................... 12 Who may be an Agent............... ..................................... 8 Rights of Lien: ............ 11 Agent and Principal.......................................................... ....... ........................... ................. ................. 14 ..................... ............ .................................... 9 Pledge . ............ .......... 12 Who may employ agent ............................................... ............................................................................................................... .... ................................ ................. ...... ................................... ..................... ..................................................... .. .................................................... ................ 14 Termination of Agency....................................... . ....... ..... ...................................... 14 References............ ......................................... ..............Rights of Finder of Goods....... ... ...................................... .......................................... ........................................... ............................ 9 Pawnee s right of Retainer: ..................... ......................................................................................................................................... ........

naturally all basic requirements of contract are applicable. The court of law acts to enforce agreement. Basically. The person delivering the goods is called the ³bailor´. custom or trade will be valid as long as it is not inconsistent with provisions of Contract Act. when the purpose is accomplished. a person is free to contract on any terms he chooses. In bailment. he thereby be comes the bailee. execute a contract. A ³bailment´ is the delivery of goods by one person to another for some purpose. If a person already in possession of the goods of another. The goods are to be returned after the purpose is over. Section 1 of Contract Act provides that any usage or custom or trade or any incident of contract is not affected as long as it is not inconsistent with provisions of the Act. While purchasing milk or newspaper in the morning or going to watch movie in the evening. possession of goods is transferred. As per section 2(7) of Sale of Goods Act. and owner becomes the bailor. [section 148]. of such goods. we dealt with a contract. Bailment is another type of special contract. upon a contract that they shall.e. However. Bailment means act of delivering goods for a specified purpose on trust. It only provides a framework of rules and regulations which govern formation and performance of contract. In other words. The person to whom they are delivered is called the ³bailee´. provision of Contract Act will prevail over any usage or custom or trade. Indian Contract Act 1872 really codifies the way we enter into a contract. any usage. contracts to hold them as a bailee. but prop erty i. and implement provisions of a contract and effects of breach of a contract. µgoods¶ means every kind of movable pro perty other than money and actionable . Bailment can be only of µgoods¶. The rights and duties of parties and terms of agreement are decided by the contracting parties themselves. in case of nonperformance. Since it is a µco ntract¶. ownership is not transferred.Introduction: We enter into contracts so many times in a day that µcontract¶ has become an indispensable part of our life. although they may not have been delivered by way of bailment. be returned or otherwise disposed of according to the directions of the person delivering them.

what a person can do himself. The principles of contract of agency are: y Excepting matters of a personal nature. as house or farm is not a movable property. Bailment: According to section 148 of the Indian Contract Act. The person delivering the go ods is called bailer. The bailor is in this case called the ³pawnor´. Common example is keeping gold with bank/money lender to obtain loan. In addition. upon a contract that they shall. be returned or otherwise disposed of according to the directions of the person delivering them. no consideration is necessary to create an agency. Hence.claim. Thus. Agency is a special type of contract. Asking a person to look after your house or farm during your absence is not µbailment¶. 1872. The person to whom they are delivered is called the bailee. One important distinction is that as per section 185. Since agency is a contract. ³A bailment is the delivery of goods by one person to another for some purpose. all provisio ns applicable to bailment apply to pledge also. The bailment of goods as security for payment of a debt or performance of a promise is called ³pledge´. act of agent is act of Principal. .´ The word bailment is derived from a French word ³bailer´ who means to deliver. except to the extent excluded in the Act. Pledge is special kind of bailment. all usual requirements of a valid contract are applicable to agency contract also. a person cannot marry through an agent. where delivery of goods is for purpose of security for payment of a debt or performance of a promise. T he bailee is called the ³pawnee´. some specific provisions apply to pledge. he should have opportunity or facility to transact business through o thers like an agent. i. he can also do it through agent (e. keeping money in bank account is not µbailment¶.e.g. Pledge is bailment for security. when the purpose is accomplished. Since pledge is bailment. [section 172]. The concept of agency was developed as one man cannot possibly do every transaction himself. as it is a matter of personal nature) y A person acting through an agent is acting himself.

Essentials and Legal Rules as to Bailment Contract: A bailment is usually created by agreement b/w the bailer & bailee Delivery of Goods: In bailment. A bailment for the repair of an item is a bailment for mutual benefit when the bailee receives a fee in exchange for his or her work. the goods bailed must be movable. No Transfer of Ownership: In bailment. Deposit of Money Into Bank It is Bailment: Deposit of money into bank by a customer is not a contract of bailment because the money deposited is not returned in identical coins and n otes deposits. Return of Specific Goods: Goods are delivered to the bailee with the condition that the same goods will be returned to the bailer after the accomplishment of purpose. the possession of goods must be delivered by the bailer to the bailee. possession is transferred from one person to another but ownership of goods remains with the bailer. . Delivery of Goods for Some Purpose: The delivery of goods must be for some specific performance. Classification of Bailment On the basis of benefit y y y Bailor Bailee Both A bailment for the mutual benefit of the parties is created when there is an exchange of performances between the parties. Movable Goods: In bailment.

a bailee. By virtue of the terms of the bailment.A bailor receives the sole benefit from a bailment when a bailee acts gratuitously²for example. Gratuitous: It is the situation where neither the bailer nor the bailee gets any remuneration. the bailee agrees to act without any expectation of compensation. if the bailee does any inconsistent act with regards to goods. provides an attended coatroom free of charge to its customers. A bailment is created for the sole benefit of the bailee when both parties agree the property temporarily in the ba ilee's custody is to be used to his or her own advantage without giving anything to the bailor in return. b) Right to Demand Return of Goods: It could happen any time in case of gratuitous bailment. Right of Bailer: a) Right of Termination: Bailer has right to terminate the contrite of bailment. then. Non-Gratuitous: When either the bailer or bailee get remuneration. The bailer can demand back goods bailed at any time even if he ha d lend it for a specific goods for some period or for a specified purpose. On the basis of Rewards. it gratuitous. The loan of a book from a library is a bailment for the sole benefit of the bailee. c) Enforcement of Rights: The duties of bailee are the rights of bailer & bailer can enforce those rights by filing a suit against bailee. then it is known as non gratuitous bailment. if a restaurant. the bailors. .

policy broker will be entitled to retain as a security for a general balance of account any goods bailed to then. c) Bear Risk for Loss: Bailer is to bear risk of loss or destruction of the thing bailed if the bailee had taken prudent care of the goods. b) Right against 3rd Party: If a 3rd person wrongfully deprives bailee to use the goods or cause any injury. then bailee is entitled to such remedies which are available to real owner. c) Right of Particular Lien: When the bailee has rendered some services or skills on the good then he had right of particular lien unless he is paid. attorney of High Court. bailee may apply to court to stop the delivery. . factors. Rights of Bailee: a) Right to Interplead: If the person other than bailer claims the goods.Duties of Bailer: a) Duty to disclose known defects: A bailer is bound to disclose all the defects relating to goods of which he is known. the bailer shall pay bailee all the necessary expenses. d) Right of General Lien: Banker. b) Duty to Bear Extraordinary expenses: Where the bailment is gratuitous & the bailee is not to receive any remuneration.

has been offered by the owner of goods. General Lien: It entitles a person to retain the position of goods belonging to another for general balance of account. Finder of goods is in position of bailee & enjoys all the rights & duties of bailee. Rights of Finder of Goods Rights of Lien: a) Right of sue of reward: The finder of goods can sue to real owner for the reward. . Such person is called finder of goods. Finder of Goods: A person who comes by an article is not obliged to pick it up. if any. but if he does so or takes charge then it becomes a bailee.e) Right to Claim Compensation in Case of faulty Goods y y Right to claim necessary expenses Right to return the goods to any of the joint bailer Duties of Bailee: Duty of Reasonable care Duty not to make unauthorized use of goods Duty not to mix bailer¶s goods with his own Duty to return any profit out y y y y Particular Lien: It is available to the bailee against such goods in respect of which he has rendered some servicing involving the excise of labor or skills.

y They where the true owner refuses to pay the lawful charges to finder of goods. If there is no transfer of possession of goods. Under pledge one person transfers possession of some goods to another to secure the payment of debt or the performance of the promise. Must return the goods to the real owner if he is found. Must not use the goods of his personal purpose. y y y y y Pledge ³The bailment of goods as security for payment of a debt or performance of a promise is called pledge´ (SEC 172) A pledge is a special kind of bailment.b) Right to Sale: The finder of goods generally cannot sell the goods. y y When the goods are perishable in nature. . Where the lawful charges exceeds 2/3rd of the value of goods. The bailer is called pledger or pawner and the bailee is called Pawnee. Bailment of goods as a security for payment of debts or performance of promise is called pledge. To find the true owner. In the case of pledge the goods are deposited as security to get a loan. he found but in following cases he can do so: y When true owner of goods cannot be find after reasonable search. Duties of Finder of Goods: To take due care of the goods. there is no pledge. He should not mix the goods with his own goods.

A loan. however.The bailee tinder a contract of pledge does not become owner. The rules of delivery and the like which are generally applicable to bailments are applicable here. A Pawnee may redeliver the goods to the pawnor for a limited purpose without thereby losing his rights under the contract of pledge. Delivery is necessary to complete a pledge. but for the interest of the debt. above) that there can be no pledge of goods unless there is an actual delivery of the goods. as for the purpose of enabling the pledger to sell the goods on the pledgee's behalf. and all necessary expenses incurred by him in respe ct of the possession or for the preservation of the goods pledged. It is clear from the definition of "bailment" (S. and the pawnor can recover the goods. he is said to have a special property. Such a transaction does not require delivery of goods for its validity. but this must be done as required by statute by endorsement and delivery. The Pawnee makes himself a wrongdoer if he persists in holding the goods after tender of all that is due. 148. Pawnee s right of Retainer: According to section 173. or valuable things of a personal nature may be pledged. documents. . It has even been held that there is a valid pledge where the goods remain in the warehouse of the pledger. It is sufficient if the thing pledged is delivered under the contract within a reasonable time of the lender's advance being made. Any kind of goods. Government promissory notes may be pledged. not only for payment of the debt or the performance of the promise. as having possession and right to possess. as the pledgee has no convenient place to store them. It seems that a valid pledge of shares may be affected by delivery of the share certificate. In that event his "special property" is determined by his wrongful refusal of a ten der properly made. nor can it be said to be prohibited by the Contract Act merely because the Act contains provisions for bailments of pledges and none for hypothecation of goods. it may be actual or constructive. t he Pawnee may retain the goods pledged. may be secured by a hypothecation of goods. but.

An implied condition to return the goods. In bailment without reward the bailee is bound to return the goods on demand by the bailor. the pledge has a right of sale of the pledged goods on default after giving a notice to the pledgor. Goods must be movable.Essential of Pledge Delivery of Goods: y The delivery of goods to pledgee is necessary to constitute a pledge. lien cannot be exercised for the labour or skill spent. the bailee has no right of sail. Conclusion Bailment Purpose Pledge In bailment. lien can be exercised only In pledge. Lien In pledge. even if for the non-payment of interest. . In bailment. y y y y Delivery of goods should be by way of security. the goods are delivered as repairs and safe custody etc. the pledge has no such right nature of transaction so requires. Use of goods In bailment there is no restriction if the In pledge. security for loan or for the performance of the promise. He can retain the goods or sue for dues. the pledge is not bound to return the goods delivered unless the debt is repaid or promise performed. The security being for the payment of debt or the performance of a promise. In pledge. Return of goods of using the goods pledged. the goods are delivered for In pledge. Rights In bailment.

the arrangement would be strictly a rental or lease. A gratuitous loan and the delivery of property for repair or safekeeping are also typical situations in which a bailment is created . After enterin g into a contract. The person who acts on the behalf of another is called agent. The agent is authorized to create a contract between his principal and a third party. is given the keys to a motor vehicle by its owner. in addition to renting the space. The significance is that a Principal can . or who is so represented. A bailment involves only a transfer of possession or custody. and who is of sound mind. Who may employ agent Any person who is of the age of majority according to the law to which he is subject. Thus. A rental or lease of personal property might be a bailment. If the keys were not made available and the vehicle was locked. since there was no transfer of possession. Who may be an Agent As between the principal and third persons any person may become an agent. so as to be responsible to his principal according to the provisions in that behalf herein con tained. may employ an agent.Agent and Principal An ³agent´ is a person employed to do any act for another or to represent another in dealings with third persons. [section 184]. is called the ³principal´ [section 182]. depending upon the agreement of the parties. any person competent to contract can appoint an agent. A bailment is created when a parking garage attendan t. The owner. The contract which creates the relationship of principal and agent is called agency. The person for whom such act is done. the bailor. but no person who is not of the age of majority and of sound mind can become an agent. A bailment is not the same as a sale. has transferred possession and control of the vehicle by relinquishing its keys to the attendant. not of ownership. The person who authorizes another to act is called a principal. the bailee. the agent drops out ceases to be a party to the contract and the contract binds the principal and the third party. [Section 183]. which is an intentional transfer of ownership of personal property in exchange for s omething of value.

Thus. Authority of agent An agent can act on behalf of Principal and can bind the Principal. if there is an agreement.e. who is a minor or of unsound mind. Consideration not necessary No consideration is necessary to create an agency.appoint a minor or person of unsound mind as agent. the agent. Agent¶s) acts. . [section 185 ]. Principal will be liable to third parties for acts done by Agent. Agent¶s duty to pay sums received for principal [section 218] Agent¶s duty on termination of agency by principal¶s death or insanity [section 209]. However. Agent¶s duty to communicate with principal [section 214] Not to deal on his own account. Remuneration to Agent Consideration is not necessary for creation of agency. Thus. in business of agency [s ection 215]. In such case. payment of agency commission is not essential to hold appointment of Agent as valid. an agent is entitled to get remuneration as per contract. Rights of Principal y y y y y Recover damages from agent if he disregards directions of Principal Obtain accounts from Agent Recover moneys collected by Agent on behalf of Principal Obtain details of secret profit made by agent and recover it from him Forfeit remuneration of Agent if he misconducts the business. y y y y y y y Conducting principal¶s business as per his directions Carry out work with normal skill and diligence Render proper accounts [section 213]. However. cannot be responsible to Principal. but agent will not be responsible to Principal for his (i. the Principal will be responsible to third parties. Agent s duty to Principal An agent has following duties towards principal.

com/bailment_pledge http://www.dateyvs. [section 201].helplinelaw. or by the agent renouncing the business of the agency.in/acts/indian-contract-act. In following cases.com/docs/THE%20INDIAN%20CONTRACT%20ACT.htm http://www.Duties of Principal y y y y Pay remuneration to agent as agreed Indemnify agent for lawful acts done by him as agent Indemnify Agent for all acts done by him in good faith Indemnify agent if he suffers loss due to neglect or lack of skill of Principal. an agency cannot be revoked y y y Agency coupled with interest (section 202) Agent has already exercised his authority (section 203) Agent has incurred personal liability.php?pageContentID=223 . or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief o f insolvent debtors. or by the business of the agency being completed.1872/CHAPTER% 20IX%20OF%20BAILMENT http://www.co.xomba.com/gener03. or by either the principal or agent dying or becoming of unsound mind. Termination of Agency An agency is terminated by the principal revoking his au thority. References y y y y y http://www.netlawman.

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