A Project

On
BAILMENT
SUBJECT: CONTRACT

[Submitted as a partial fulfilment of the requirements for B.A.LL.B. (Hons.) 5

Year Integrated Course]
Session: 2022-23
Submitted On: 29-04-2023

Submitted By: Submitted to:

Vanshika Choudhary Ms.Sakshi Poonia
Roll no. : 104 Faculty Of Law
Class: Semester IV (B)

University Five Year Law College

University of Rajasthan
Jaipur
 DECLARATION

I, Vanshika Choudhary, hereby declare that this project titled “Bailment” is based on the
original research work carried out by me under the guidance and supervision of Ms. Sakshi
Poonia.

The interpretations put forth are based on my reading and understanding of the original texts.
The books, articles, websites etc. which have been relied upon by me have been duly
acknowledged at the respective places in the text.

For the present project which I am submitting to the university, no degree or diploma has been
conferred on me before, either on this or in any other university.

Date: 29-04-2023 Vanshika Choudhary

Roll No.: 104

Semester: IV (B)

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 ACKNOWLEDGEMENT

I have written this project, “Bailment” under the supervision of Vanshika Choudhary, Faculty,
University Five Year Law College, University of Rajasthan, Jaipur. Her valuable suggestions
herein have not only helped me immensely in making this work but also in developing an
analytical approach for this work.

I found no words to express my sense of gratitude for Director Dr. Akhil Kumar for her
constant encouragement at every step.

I am extremely grateful to librarian and library staff of the college for the support and
cooperation extended by them from time to time.

Vanshika Choudhary

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 CERTIFICATE

Ms. Sakshi Poonia Date: 29 April 2023

Faculty

University Five Year Law College

University of Rajasthan, Jaipur

This is to certify that Vanshika Choudhary, student of Semester IV (B) of University Five
Year Law College, University of Rajasthan, Jaipur has carried out the project entitled
“Bailment+” under my supervision and guidance. It is an investigation report of a minor project.
The student has completed research in stipulated time and according to the norms prescribed for
the purpose.

Supervisor

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 CONTENTS
Title Page

Introduction…………………………………………………………………………………….1

Chapter 1………………………………………………………………………………………2-3

Bailment

Chapter 2……………………………………………………………………………………...4-6

Duties Of Bailee

Chapter 3……………………………………………………………………………………….7

Obligations Of Bailee

Chapter 4…………………………………………………………………………………….8-10

Rights Of Bailee

Conclusion…………………………………………………………………………………..….11

Bibliography……………………………………………………………………………………12

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 INTRODUCTION

Bailment as defined in section 148 of the Indian contract act 1872 is the delivery of goods by one
person to another for some specific purpose, upon a contract that these goods are to be returned
when the specific purpose is complete. For example, A delivering his car for Service at the
service center is an example of bailment. The person delivering the goods is known as bailor and
the person to whom goods are delivered is known as bailee. However, if the owner continues to
maintain control over the goods, there is no bailment

There are many cases of bailment in our day to day life. For example, in the case of laundry, we
give our clothes for getting washed. Once they are washed, they are to be returned back to us.
We place the other person in temporary possession of our clothes for a specific purpose and there
is an express or implied understanding between the two to return the good once the purpose has
been fulfilled.

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 CHAPTER - 1

BAILMENT

The word ‘bailment’, is derived from ‘bailler’, a french word which means ‘to deliver’.1

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.

Illustration If A gives his car to B his neighbor for 10 days, but at the same time he keeps one
key with himself and during this period of 10 days he used to take the car. Now this will not be a
case of bailment as A is keeping control over the property bailed.

Who are the parties to the contract of Bailment?

There are generally two parties to the contract of Bailment. The person who is the owner and
delivers the good is called ‘bailor’ while the person to whom the goods are delivered is called
‘bailee’.

General rules relating to Bailment are mentioned in Chapter IX (Section 148-181) of the Indian
Contract Act, 1872. Bailment is a type of a special contract, so all essential elements of a valid
contract like consent, competency, etc are required for it to be valid. But, a valid bailment can
arise even without a valid contract between the two parties, for example, a lost good finder
becomes a bailee and has the responsibility to return it to its owner, the bailer, even if no contract
exists between them.

How is Bailment different from the sale of the good?

1
What is the Contract of Bailment?, available at: https://blog.ipleaders.in/what-is-the-contract-of-bailment/ ( last
visited on July 2, 2022)

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Sales involve the transfer of the ownership of the good in exchange for something of value while
on the other hand, Bailment involves the transfer of the possession of the good, not the
ownership.

What goods can be bailed?

Only the goods that are of movable nature can be bailed. However, current money or legal tender
cannot be bailed and deposition of money will not be counted as bailment as money is not a good
and the same money will not be delivered back to the client.

Essentials of Contract of Bailment

1. The existence of a valid contract:- The existence of a valid contract is a foremost

condition in bailment which implies that goods are to be returned when the purpose is
fulfilled. Finder of lost goods is also known as bailee although there may not be any
existing contract between him and the actual owner.

2. Temporary delivery of goods:- The whole concept of bailment revolves around the
fact that the goods are delivered for a temporary period and bailee cannot have
permanent possession. Delivery of goods can be done through actual delivery or
through constructive delivery which means that doing something which has the effect
of putting the goods in possession of bailee or any other person authorized by him.

3. Return of specific goods:- The bailee is bound to return the goods to bailor after the
purpose for which it was taken is over. If the person is not returning the goods then it
will not be bailment.

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 CHAPTER 2

DUTIES OF BAILEE

The duties of bailee are as follows:

1.Duty to take reasonable care

Section 151 of the Contract Act provides that the bailee is under obligation to take care of the
goods bailed to him as an ordinarily prudent man in his place would have taken under the similar
situation. This means that the duty laid down by this section is general and uniform in nature.
This section does not provide for any exceptional situations; rather it covers all the contracts of
bailment. In Giblin v. McMullen2 the court pointed out that “a gratuitous bailee is bound to take
the same care of property entrusted to him as a reasonable, prudent and careful man may fairly
be expected to take his property of the similar description.” 3 Therefore, the bailee is bound to
take reasonable care whether the bailment is gratuitous or non-gratuitous. Additionally, the
obligation of a bailee includes not only the duty to take all reasonable precautions to obviate the
risks but also the duty of taking all proper measures for the protection of the goods when such

risks had already occurred.4 

2
Giblin v. McMullen, (1703) 2 Ld Raym 909.
3
Id.
4
Lakhichand Ramchand v. G.I.P. Rly. Co., (1912) 14 Bom. LR 165.

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The parties under the contract of bailment may insert any special provision increasing the
responsibility of the bailee in respect of care to be taken against the goods bailed, but they cannot
decrease the standard of care. Section 152, in this regard clearly states that one has to fulfill the
requirement of reasonable care mentioned in Section 151 even if the contract has any special
provision. The standard of duty cannot be reduced, as it would be unfair if bailee is not held
liable for his negligence of not taking standard care. Even where he has contracted himself out of
liability due to his negligence, the bailee has still to show that he took as much care of the
pledged goods as an ordinarily prudent man as required by Section 151.5

2.Duty not to make any unauthorized use

In a contract of bailment, the bailor transfers the goods to the bailee for some purpose,
and the bailee is responsible for using the goods bailed according to the purpose of
bailment. Section 154 of Indian Contract Act imposes liability on bailee if goods are not
used authoritatively. Using goods beyond the conditions of a contract would make the
bailee liable to bailor if due to such unauthorized act the bailor has suffered any loss or if
goods are damaged. This implies that the bailee is not entitled to use the goods for
personal benefits (unless the bailment for his use) by doing an unauthorized act. Even if
the goods bailed are for his personal use, he is not authorized to let the goods be used by
another person. Nevertheless, if the situation requires, the bailee may use these goods for
preservation.6 But in the other circumstances, he is required to have express or implied
consent of the bailor to use the goods against the conditions of bailment contract.

5
Central Bank of India v. Grains and Gunny Agencies, AIR 1989 MP 28.
6
Fothergill v. Monarch Airlines Ltd [1980] 2 All ER 696, p 702.

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3.Duty not to mix or part with the goods:
The bailee has to take certainly reasonable care while dealing with the goods of the
bailor. One such responsibility includes his duty not to mix the bailor’s goods with his
own or part of the goods. According to Section 155, if the bailee has mixed the goods
with his goods and while doing so he had the prior consent of the bailor, then the bailor
will have interest over the goods in proportion to the goods he has bailed. But this section
specifically states that the bailee had the consent of bailor.
Section 156 and 157 speaks about the conditions wherein the bailor’s consent was not
there while mixing the goods. In those situations wherein the goods are separable, the law
imposes liability on the bailee for any loss or damage that the bailor might suffer due to
such mixing. But if it is not possible to separate the goods, the bailor is entitled to claim
reimbursement for the loss of goods.

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 4.Duty to return goods
One of the essentials of a contract of bailment is that once the purpose for which goods
are bailed is accomplished, the bailee has to return the goods back to the bailor or dispose
of as per the direction of the bailor. Section 159 states that the bailor may ask for the
return of loan at any point of time if the loan is provided gratuitously to him. And the
bailee is under obligation to return so. However, he can claim compensation if he has
suffered any loss from such act of bailor.
Section 160 provides that if the time of bailment has expired or the purpose is fulfilled,
then the bailee is bound to deliver the goods as per the directions of the bailor without
demanded by bailor, i.e., he has to be cautious about the delivery of the goods. There is
an implied contract in a bailment to return the articles in a reasonable time after the
purpose is served even if no time is stipulated for return. 7 The bailee is under a duty to
return the goods bailed on the expiration of the period of bailment unless he can show
good cause for not returning them. Where an article is hired for use or a purpose but such
article is unfit for such use or purpose, this is treated as a breach of warranty, and the
bailee is not bound to return it to the bailor because the purpose cannot be accomplished.
In such a case, the bailee may give notice to the bailor who is then bound to take it back.8
Section 165 says that in the cases involving more than one owner of the goods bailed, the
bailee is under obligation to return it to any one of the owner or as per directions were
given to him.

7
Chaturgun v. Shahzady AIR 1930 Oudh 395.
8
Isufalli v. Ibrahim, 23 Bom LR 403.

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 Chapter- 3
Oligations Of Bailee

1. If the Goods are not Returned

Section 161 clarifies the responsibility of bailee if he has failed to deliver the goods after
the expiry of time or completion of purpose. The bailee is not liable if the delay in
delivering the goods or disposal of goods is due to default of others. Unexplained failure
to return the thing bailed is presumed to be by the bailee’s default; 9 And it would be
presumed as his negligence. A bailee who refuses to give delivery, except upon some
unjust or unreasonable condition, is by default. 10 Moreover, if the bailee fails to return or
dispose of the good, then the bailee, at his risk, keeps the goods with him and if after that
any loss or damage happens, the bailee would be held liable for the same. 

2. Duty to deliver increase or profit accrued from bailment:

Section 163 of ICA states that “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.” This section provides that if there is any gain
with regards to the goods bailed, then such gain must be handed over to bailor along with
the goods and bailee is not entitled to keep it with him. But the bailor cannot claim profit
or increase before the completion of the purpose of bailment or before the expiry of time
of bailment contract.

9
Kush Kanta Barkakati v. Chandra Kanta Kakati AIR 1924 Cal 1056.
10
GIP Rly v. Firm of Manikchand Premji, AIR 1931 Nag 29.

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 CHAPTER 4

RIGHTS OF BAILEE

The Rights of bailee are as follows –

1) Right to know Material faults in goods.

The bailee has right to know material faults in goods. According to Section150 of the
Indian Contract Act, 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 risk and if he does not make such disclosure he is
responsible for damage arising to the bailee directly from such faults.

Illustrations

(a) 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 damaIllustrations

(b) 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.

2) Right to claim proportionate share in mixed goods :

The bailee has right to claim proportionate share in mixed goods. According to Section
155 of the Indian Contract Act, 1872, It is the duty of bailee, not to mix the goods bailed
with his own goods without the consent of the bailor. 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.

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3) Right to claim Lien for remuneration

The Bailee has right to claim lien for remuneration.The term ‘Lien’ means right of one
person to retain possession of goods owned by another until the possessor’s claims
against the owner have been satisfied.

4) Right to Recover Compensation.

The bailee has right to recover compensation from the bailor for the loss sustained.
Section 164 of the Indian Contract Act, says that the bailor is responsible to the bailee for
any loss which the bailee may sustain the reason that the bailor was not entitled to make
the bailment or to receive back the goods or to give directions, respecting them.

5) Right to claim Damages:

According to Section 150 and 164 of the Indian Contract Act, 1872 the Bailee has right to
claim damages due to defect in bailor’s title or faults in goods.

Section 150 of the said Act says that 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 risk and if he does not make such disclosure
he is responsible for damage arising to the bailee directly from such faults.

6) Right to claim expenses of bailment.

The bailee has right to claim expenses of bailment Section 158 of the Indian Contract
Act, 1872 confers on bailee right to recover expenses of bailment.

Section 158 runs as follows:

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

7) Right to claim Indemnity

According to Section 159 of the Indian Contract Act the Bailee has right to claim
indemnity.

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 CONCLUSION

The bailee has to perform according to the obligations laid down in the contract of bailment and
as per the law of the land. He is being inconsistent or negligent while performing his obligation
or duty would make him liable under various provisions of law. In each contract of law, he has a
certain uniform or fixed obligations to comply with, and he cannot part with those basic
obligations even if a contract does not provide for any such obligations. These obligations are the
essence of bailment contract. The obligations might differ depending on the facts but there are
certain duties which are implied, and reasonable care is to be taken by the bailee. The bailee’s
responsibility towards the goods bailed can be increased by way of providing provisions in that
regard but it cannot be lowered down, i.e., he cannot repudiate his responsibility. 11

11
Duties of a Bailee in a Contract of Bailment, available at: https://blog.ipleaders.in/duties-bailee-contract-
bailment/?amp=1 (last visited on July 4, 2022)

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 BIBLIOGRAPHY

BOOKS REFERRED

 Dr. R.K. Bangia, Contract- ll (Allahabad Law Agency, Faridabad, Haryana, 2009)

WEB SOURCES

 https://blog.ipleaders.in/what-is-the-contract-of-bailment/
 https://blog.ipleaders.in/duties-bailee-contract-bailment/?amp=1
 https://www.srdlawnotes.com/2017/06/bailment-rights-of-bailee.html?m=1

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