Question 5

Bailment

 Goods owned by one person can give to other person on the basis of return back.
 Both persons should understand the good has to be returned back on the same or better
condition
 Good owner : bailer
 Temporary user or temporary keeper: bailee
 Examples:
o You lend your umbrella to a person to protect from rain
o You give your cloths to dry-cleaning for washing
o You give your car to garage for repairs
o You give your watch to watch maker for repairs
 Some bailment involves consideration of money payment while some are not.
o Lend umbrella does not involve money consideration
o Dry cleaning involves money consideration. Hence you have to pay the bailee as agreed.
 If the good is damaged, the bailee is responsible.
 If the good is damaged not due to the negligence of bailee, the bailee will not be responsible.
Eg: Natural disasters (flood, lightening).
o In the case of goods are lost, the bailee is responsible
o In the case of goods are lost by theft, and bailee has taken all the care to protect the
goods by theft, the bailee will not be responsible.
 Nowadays Laundromat have introduced Dry Cleaning Conditions to safe guard themselves. For
example conditions include,
o The customer should collect goods within 15 days.
o If there is any damage, it should be claimed within 24hours.
o Shrinking or fading will not be covered
o Maximum claim will not exceed 10 times of the dry cleaning invoice.

Lien

 Holding some property of another as a security for the performance of an obligation or

payment.
 Examples,
o The hotel keeps the visitors baggage until he pays the room charges. Nowadays since
credit cards are available, the hotel can reserve the required value from the credit for
room charges. Hence lien is going to diminish.
 Lien can be divided into particular possessory lien and general possessory lien. Particular
possessory lean holds only the value of payment, while general possessory lien holds total
amount.
o Particular possessory lien: Hotel example
 o General possessory lien: Architecture holds the total set of documents until he pays the
fee. Keep the car by garage owner until you settle the bill of garage.
 Even though the lienee holds the good, he cannot sell. If he expects to sell and cover his bills, he
has to get approval from court.

Difference between Guarantee and indemnity

 Both secure the performance of obligation or payment of another’s debt.
 The indemnity is considered as primarily liable while guarantee considered as secondarily liable.
 Indemnity: “If you pay 10,000 rupees to “X” I will see that you are paid”.
 Guarantee: “If you pay 10,000 rupees to “X” and he does not pay, I will pay”.
 In the indemnity, the creditor directly can call you for the payment. In the guarantee, the
creditor can call you for payment, only the debtor is not paying.
 Guarantee: For the legal binding, signing is required.
 Indemnity: Signing is not required, but need evidence.

Arbitration
 Due to the long delay in court systems and cost of the lawyers, Alternate Dispute Resolution
procedures are conducted.
 Since the fast decisions help commercial disputes, ADR is suitable.
 Arbitration is a ADR procedure.
 Sri Lankan Arbitration law has been influenced by Swedish Law on commercial international
arbitration.
 Arbitration decisions are taken as final decisions and courts have no interference.
 Two parties can jointly decide the number of arbitrators and the chairmen. Failure of appointing
arbitrators will result the appointment of arbitrators by high court.
 The arbitrator’s duty to settle the issue. It can include mediation, conciliation and making
judgments.
 If the dispute is solved, it is recorded the agreed terms.
 The parties are liable for the payment of arbitrators.