Indian Contract Act

1. How is the delivery of the goods deliver to the bailee? Explain with illustration. 5
Ans – As per section 149 of the Indian Contract Act 1872, the delivery to be made 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.

It must be noted that the delivery of possession can either be actual or constructive. It means that either the good
can directly be put in the actual physical possession of the bailee or put the bailee in a position of power over such
goods that can be physically possessed later, if possible. In constructive delivery, the bailor gives the bailee means of
accessing the custody of the good and not its actual delivery. 

There must be a delivery of goods, which means, delivery of possession of the goods by the bailer to the bailee to
fulfill the purpose of bailment. Possession refers to exercising control over the good and excluding any other person
to do the same. 

For example, C has a rare coin locked safe deposit box. As the delivery of a safe deposit box is impossible, when C,
bailor, gives the key of the deposit box for the bailment of the coin to A, bailee, it would be considered as
constructive delivery.

It is important to note that mere custody of goods is not equivalent to the possession of goods. In Reaves v.
Capper(1838),  it was held that a servant can be in the custody of the goods because of the nature of his job but that
does not mean he is in possession of the goods. For example, a servant holding his master’s umbrella is not a bailee.

2. Explain bailor’s duty to the goods bailed. Give illustration to justify your ans. 5
Ans – According to Section 150 of the Indian Contract Act 1872, the bailor is bound to disclose to the Bailee 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 bailor is responsible for such damage, whether he was or was not aware of the
existence of such faults in the goods bailed.

First para of Section 150 imposes a duty on the bailor of defective goods which interfere with the use of them, or
expose the Bailee to extraordinary risks. He is bound to disclose those faults in the goods which create the risk and
of which he is aware. If he fails to make such disclosure, he is responsible for damage arising to the Bailee directly
from such fault. This duty is of gratuitous bailor or the bailor without reward, because when the bailor bails the
goods for reward, he is liable for the damage cause by the defective goods even though he is not aware of the defect
in them. Example: A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is
vicious. The horse runs away. B is thrown and injured. A is responsible to B for damage sustained.

Second para of Section 150 deals with bailment of goods for reward. According to this provision, when the goods are
bailed for hire, the bailor is liable for the damage caused to the Bailee by the defective goods, whether the bailor is
aware of the existence of faults in the goods or not. Example: A hires a carriage of B. The carriage is unsafe, though B
is not aware of it, and A is injured. B is responsible to A for the injury.

3. Explain how goods are restored which are lent gratuitously? State illustration. 10
Ans –

Introduction: The word ‘bailment’, is derived from ‘bailler’, a French word which means ‘to deliver’. Bailment has
been defined under the Section 148 of the Indian Contract Act, 1872, according to which Bailment involves the
delivery of goods from one person to another for a specific purpose and upon a contract, when the purpose is
fulfilled, the good has to be returned or dealt with on the direction of the person who has delivered the goods. 
How goods are restored:

According to Section 159 of the Indian Contact Act 1872, the lender of a thing for use may at any time require its
return. But, if the loan was gratuitous, even though he lent it for a specified time or purpose, the borrower has acted
in such a manner that the return of the thing lent before the time agreed upon would cause him loss exceeding the
benefit actually derived by him from the loan, then, the lender must, if he compels the return, indemnify the
borrower for the amount in which the loss so occasioned exceeds the benefit so derived.

Gratuitous bailments, though very common in private life, are not matters of business and therefore, do not come
into court. Further, an express contract not to recall a thing gratuitously lent before the expiration of a certain time
would be supported by consideration, ought to be good notwithstanding this Section. The Law Commission of India
in its 13th Report thought that Section 159 is no bar to a contract, not to recall a thing lent gratuitously.

Example: A lends his car to B, a friend for a week as B has to go out of town for a family gathering. As B has not paid
any charges for bailment, he fills 30 liters of petrol in the car for the drive. Suddenly after 4 days, A calls B to give his
car back. So, B can demand from a value of petrol remaining in the car after 4 days.

Conclusion:

Contract of bailment involves the transfer of possession of the good from the bailor to the Bailee for the specific
purpose and both, the bailor and the Bailee, have been confronted with some rights and duties which are necessary
for them to follow whenever seem suitable.