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BAILMENT and PLEDGE

Definition : Sec.148
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

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For Instance
Giving clothes to a launderer Leaving car with an auto mechanic Handing over cash or other valuable to a bank

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Essential features of Bailment:


Delivery of goods Contract (Express/written) Return of goods in specie

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Classification of Bailment
Bailment on the basis of benefits: Bailment for the benefit of Bailor only. e.g. a restaurant, the bailee, provides an attended coatroom free of charge to its customer, the bailor

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Bailment for the benefit of Bailee only (e.g., the loan of a book to a patron, the bailee, from a library, the bailor).

Bailment for the mutual benefit of both Bailor & Bailee e.g. a bailment for the repair of an item

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Bailment on the basis of rewards

1. Non Gratuitous bailment A bailment for reward or hire is a nongratuitous bailment. For example, A gives his watch for repair.

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2. Gratuitous bailment
A bailment without any reward or consideration is called gratuitous bailment. For example, A while going out of station, leaves his cycle with his friend B. B is not to get any reward in this case

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Rights of Bailor:
Right of termination. Right to demand restoration of goods lent gratuitously . Compensation from a wrong doer. Right to get an increase or profit from goods bailed. Right to sue the bailee for the enforcement of the duties imposed upon a bailee .

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Duties of Bailor :
Duty to disclose faults in goods bailed (Sec.150) Liability for breach of warranty as to title (Sec.164) To bear expenses in case of gratuitous bailment (Sec.158) In case of non-gratuitous bailment Duty to indemnify the bailee for loss Duty to receive back the goods

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Rights of Bailee:
Delivery of goods to one of several joint bailors of good Delivery of goods to bailor withou title Right to apply to court to stop delivery Right of action against trespassers Bailees lien

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Duties of the Bailee :


To take care of the goods bailed-Sec.151 Not to make unauthorized use of goods-Sec.154 Not to mix Bailors goods with his own-Sec.155-157 To return the goods bailed-Sec.160-161 To return any accretion to the goods bailed-Sec.163 Not to set up an adverse title

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LIEN-(Sec.170-171):
Lien is the right of one person to retain that which is in his possession, belonging to another, until some debt or claim is paid Bailees particular Lien :Sec.170 Bailees general Lien :Sec.171 Right against wrongful deprivation or injury to goods: Sec.180-181
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Termination of Bailment :
On the expiry of the stipulated period On the accomplishment of the specified purpose By bailees act inconsistent with conditionsSec.153 Destruction of the subject-matter Termination of Gratuitous bailment-Sec.159 Death of bailor or bailee
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Finder of lost Goods :


Finding is not keeping. A finder of lost goods is treated as the bailee of the goods found as such and is charged with the responsibilities of a bailee, besides the responsibility of exercising reasonable efforts in finding the real owner.

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Rights :
Right to retain the goods-Sec.168. Right to sue for reward

Right to sell-Sec.169.

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Obligation
He must take reasonable care of the goods and if in spite of this, the goods are destroyed he is not responsible for any loss He must not use the goods for his own purpose He must not mix the goods with his own goods He must try the real owner of the goods
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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.

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Parts of Pledge
Two separate parties. A debt or obligation. A contract of pledge.

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Pledge is a special type of bailment where transfer of goods is for security of something. Pledges are a form of security to assure that a person will repay a debt or perform an act under contract. In a pledge one person temporarily gives possession of property to another party.

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Example
A Borrows Rs.1000 from B and Keeps his watch as a Security for the Payment of the Debt. The Bailment of Watch is Called a Pledge.

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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

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Uses of Pledge: Securing loans. Pawning property for cash. Guaranteeing that contracted work will be done.

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Duties of a Pawnor: Duty to repay the loan Duty to pay expenses in case of default

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Duties of a Pawnee
Duty not use of pledged goods Duty to return the goods

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Right of Pawnor
Right to redeem the goods pledged Right to receive the increase Enforcement of pawnees duties Rights of an ordinary debtors Right to redeem debt

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Right of Pawnee
Right to retain the pledged goods Right to extra ordinary expenses Right in case of default of the pawnor Right against true owner, when the pawnors title is defective

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Pledge by Non-OwnersOnly limited to following: Mercantile agent. Possession under voidable contract. Pledgor with limited interest. Seller in possession after sale. Buyer in possession before sale. Pledge by co-owners.
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Distinction between Bailment & Pledge


Pledge Pledge is the bailment for a specific purpose ie to provide security for a debt or for fulfillment of object. The pledgee has right to sale on default after giving notice thereof to the Pledger. Bailment Bailment is for a purpose of delivery of goods, other than two under pledge ie for repairs, safe custody etc. No right to sale. The bailee may either retain the goods or the bailor for nonpayment of his dues

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Contd.
Pledge USE OF GOODS :There is no such Restriction depends upon the nature of Transactions. RETURN OF GOODS Without Reward the Baillee is bound to return the Goods on Demand by the Bailor
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Bailment USE OF GOODS No right of Using the Goods RETURN OF GOODS Not bound to Return the Goods Delivered

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