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BAILME

NT AND
PLEDGE

Meaning of a bailment
The word Bailment is derived from the French word
Bailer, which means to deliver.
The word Bailment means to change a possession of
the goods i.e to delivery of goods from one person to
another for some specific purpose.
According to section 148,
Bailment means 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 direction of the
person delivering them.

It means that, under the contract of


bailment
One person delivers goods to the other person
for a specific purpose.
When the purpose is over, the goods are to be
returned to the owner
The goods may be disposed of according to the
direction of the owner of the goods.
In the contract of Bailment there are two parties.
i)
Bailor: the person who deliver goods,
ii)
Bailee: the person to whom the goods are
delieverd.

Examples
1.

2.

3.

A delivers a piece of cloth to B, a tailor,


to be stitched into a suit. There is a
contract of bailment between A and B.
A sells certain goods to B who leaves
them in the possession of A. The
relationship between B and A is that of
bailor and bailee.
A lends a book to B to be returned after
the examination. There is a contract of
bailment between A and B.

Case: BASAVVA K. PATIL V/S STATE OF


MYSORE 1977
Bs stolen ornament were recovered by
the police, but disappeared from the
police custody. Held the state was liable
because the contract of bailment was
implied.

Requisites of bailment
1.

2.

Contract: a bailment is usually created


by the agreement between the bailor
and the bailee. The agreement may be
expressed or implied.
Delivery of possession: A bailment
necessarily involves delivery of
Case: Kallaperumal
vs by
visalakshmi
possession
of goods
bailor1938
to bailee.

A lady emoplyed a goldsmith for melting her old jewellery and


making new one out it. Every evening she recevied the unfinished
jewelery and put it in to box kept at the goldsmith premises. She
however, kept the key of the box with herself. One night the
jewellery was stolen from the box. Held there was no bailment as
the goldsmith had redelevered to the lady the bailor the jeweler
bailed with him by her.

3.

4.

For some purpose: he delivery of the


goods from bailor to baliee must be for
some purpose. If goods are delivered by
mistake to a person there is no
bailment.
Return of specific goods:

Examine whether the following constitute a contract of


Bailment under the provisions of the Indian contract act,
1872.
i. V parks his car at a parking lot, locks it and keeps the
keys with himself.
ii. The seizure of goods by the customs authorities.

Cont..

Delivery may be actual or constructive.


Actual delivery may be made by
physically handling over the goods
bailed to the bailee.
Where as constructive or symbolic
delivery may be made by doing
something which has the effect of
putting the goods in the possession of
the intended bailee or of nay authorized
to hold them on his behalf. Example,
delivery of keys of car to a mechanic of

Other examples of
bailment:
1.

2.

3.

Seizure of goods by custom authorities,


who after seizure are in the position of
a bailee.
Acceptance of goods by a transport
company or railway for carriage.
Acceptance of articles by post office as
a value payable parcel.

Classification or types of
Bailments
1.

2.

3.

4.

Gratuitous Bailment: it is the


bailment of goods withour any charges
or reward.
Non Gratuitous bailment: it is the
bailment for some charges or reward.
Bailment for the exclusive benefit
of a bailor.
Bailment of mutual benefit of both
bailor and bailee.

DUTIES OF BAILOR
1.
.

2.
.

3.

To disclose known faults


Example: A hires a carriage of B. The carriage is unsafe,
though B is not aware of it, and is injured. B is reponsible
to A for the injury.
To bear extraordinary expense of bailment.
Example: A leaves his car with B, a friend, for safe
custody for 2 months, B has to pay Rs 100 per month to
the night watchman for keeping a watch over the car. It is
the duty of A to pay B the necessary expenses incurred
by B.
To indemnify bailee for the loss in case of
premature termination of gratuitous bailment.
Example: A lends an old discarted bicycle to B
gratuitously for three months. B incurs Rs. 120 on its
repairs. If A askes for the return of the bicycle after one
month, he will have to compensate B for expenses
incurred by C in excess of the benefit derived by him.

Case study

A hire a carriage of B and agrees to pay Rs. 500 as hire


charges. The carriage is unsafe though B is unaware of it.
A is injured and claims compensation for injuries suffered
by him. B refuses to pay. Discuss the liability of B.
Section 150 provides that 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.
Applying the above provisions in the given case B is
responsible to compensate A for the injuries sustained
even if he was not aware of the defect in the carriage.

DUTIES OF BAILEE
1.
.

2.
3.
.

4.
5.
6.

To take reasonable care of the goods bailed.


Example: A entered a restaurant for dining. His coat was taken by a
waiter who hung it on a hook behind A. when A rose to leave, the
coat was gone. Held, the proprietor of the restaurant was liable for
the loss.
Not to make any unauthorized use of goods.
Not to mix the goods bailed with his own goods.
Example: A bails 100 bales of cotton marked with a particular mark
to B. B, without As consent, mixes the 100 bales with other bales of
his own, bearing a different mark. A is entitled to have his 100 bales
returned and B is bound to bear all the expenses incurred in the
separation of the bales.
Not to set up an adverse title
To return any accretion to the goods
To return the goods

Case study
1.

Sunil delivered his car to Mahesh for


repairs. Mahesh completed the work, but
did not return the car to Sunil within
reasonable time, though Sunil repeatedly
reminded Mahesh for the return of car.
In the meantime a big fire occurred in
the neighborhood and the car was
destroyed. Decide whether Mahesh can
be held liable under the provisions of the
Indian Contract Act, 1872.

RIGHTS OF BAILOR
1.
2.
3.
4.

Enforcement of rights.
Avoidance of the contract
Return of the goods lent gratuitously
Compensate from the wrong doer.

RIGHTS OF BAILEE

Delivery of goods to one of several joint


bailor of goods.
Delivery of goods to bailor without title
Right to apply to court to stop delivery
Right to action against trespassers
Bailees lien

LAW RELATING TO LIEN

Lien means the right of a person to retain


possession of some goods belonging to another
until some debt or claim of the person in
possession is satisfied.
Example: A company agreed to garage the motorcar of H for 3 years, for an annual charge. H was
entitled to take the car out of the companys
garage as and when she liked. The annual payment
being in arrear the company detained the car of the
garage and claimed a lien. Held, as H was entitled
to take the car away as and when she pleased, the
company had no lien.

Types of lien
1.

Particular lien: a particular lien is one


which is available to the bailee against
only those goods in respect of which he
has rendered some service involving
the exercise of labour or skill.
Example: A delivers a rough diamond to
B, a jeweller, to be cut and polished.
This is accordingly done. B is entitled to
retain the finished diamond till he paid
for services he has rendered.

Types of lien
2.

General lien: A general lien is a right


to retain all the goods or any property
of another until all the claims of the
holder are satisfied.
Example: The CA have a general lien
against the books of their clients, which
come into their possession against the
professional fees, not paid to them by
those clients.

Difference between particular lien and


general lien
Particular lien

This is a right available


to a bailee against only
those goods in rspect of
which skill and labour
have been expended by
him.

General lien

This is a right to retain


any property belonging
to the other party in
respect of any payment
lawfully due, provided
the property is in the
possession of the person
exercising the right.
This is a right to retain
This is a right to retain
the goods only for a
any property belonging
charge for labour
to the other party for a
employed or expenses
general balance of
incurred upon the goods. account.

Rights of bailor and bailee against wrongdoer


1.
2.

Suit against wrong doer


Apportionment of reliefs

Finder of goods

A person who comes by an article is not


obliged to pick it up or take, charge of it.
A person who finds goods belonging to
another and takes them into his custody
is subject to the same responsibility as a
bailee.

Rights of finder of goods:


1.
2.
3.
i.

ii.

iii.

Right of lien
Right to sue for reward.
Right to sale:
If the owner cannot with reasonable
diligence be found, or
If found, he refuses to pay the lawful
charges of the finder, or
If the goods are in the danger of perishing
or of losing the greater party of their value.

Obligations of finder of
goods:
1.

2.

3.

4.

He must take reasonable care of the


goods.
He must not use the goods for his own
purpose.
He must not mix the goods with his own
goods.
He must try to find out the owner of the
goods.

Liability of Hotel-Keepers, Inn keepers,


common carriers:

The liability of a hotel keeper or an inn


keeper in respect of goods belonging to
a guest is that of bailee of goods.
By sec. 151, A hotel keeper should take
as much care of the goods as a prudent
man would take of his own goods under
similar circumstances.ss

Termination of bailment:
1.
2.
3.
4.
5.
6.

On the expiry of the period.


On the achievement of the object.
Inconsistent use of goods.
Destruction of the subject matter.
Gratuitous bailment
Death of the bailor or bailee.

Pledge

The bailment of goods as security for


payment of a debt or performance of a
promise is called Pledge.
The bailor is, in this case, called the
Pledger or Pawmor and the bailee
is called the Pledgee, or Pawnee.
(sec 172).

A Pledge is a bailment for security.


It is a special kind of bailment.
Example: If A borrows Rs 200 from B and
keeps his watch as security for payment
of the debt, the bailment of watch is a
pledge.

Difference between bailment and pledge

Pledge

Bailment

1. Pledge is the bailment of


1. Bailment is for a purpose of
goods as a security for the
any kind.
performance of a specific
promise, i.e. the payment of a
debt or performance of a
promise.
2. By the default by the
pawnor to repay the debt, the
pawnee may, after giving
notice to the pawnor, sell the
goods pledged with him.

2. The bailee may either


retain the goods or sue for his
charges.

3. The pawnee has no right to


use the goods pledged with
him.

3. The bailee may do so if the


terms of bailment so provide.

Rights and Duties of Pawnor and Pawnee

1.
2.
3.
4.

5.

i.

ii.

Rights of pawnee:
Right of retainer.
Right of retainer for subsequent advances.
Right to extraordinary expenses.
Right against true owner, when the pawnors
title is defective.
Pawnees rights where Pawnor makes default
(sec 176):
He may file a suit against the pawnor upon the
debt or promise.
He may sell the goods pledged after giving the
pawnor a reasonable notice of sale.

Rights and Duties of Pawnor and Pawnee


Rights of pawnor:
1. Right to get back goods.
2. Right to redeem debt.
3. Preservation and maintenance of the
goods.
4. Rights of an ordinary debtor.

Pledge by non owners


In the following cases even a non-owner can
create a valid pledge:
1. Pledge by mercantile agent.
2. Pledge by seller or buyer in possession
after sale.
. Example: S sells 100 bags of wheat to B,
delivery and payment of price to be made in
the next three months. Before the goods are
delivered to B, S pledges the goods with P who
acts bonafide and has no notice of the prior
sale. The pledge is valid.

3.

4.
5.

Pledge where pawnor has a limited


interest.
Example: F finds a pen on a road and
pledges it with P for Rs. 20. F had,
however, incurred Rs. 10 in getting the
pen repaired. The owner can get the
pen by paying Rs. 10 to P.
Pledge by co owner in possession.
Pledge by person to possession
under a voidable contrat.