1. CONTRACT OF BAILMENT 2.

CONTRACT OF BAILMENT OF PLEDGE
DEFINITION AND EXPLANATION

CONTRACT OF BAILMENT
‡ DEFINITION ‡ A bailment is ³ 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´.

CONTRACT OF BAILMENT cont--‡ Bailor: The person delivering the goods is called the µbailee¶. . ‡ Bailee: The person to whom the goods are delivered is called the bailee.

there is no bailment. by mistake. 2.ESSENTIALS OF BAILMENT 1. Specific purpose: the bailment of goods is always made for some purpose and is subject to the condition that when the purpose is accomplished the goods will be returned to the bailor or disposed of according to the directions of the bailor . Contract: bailment is based on a contract between bailor and bailee. If the goods are delivered without any contract i.e.

Delivery of goods: the most important feature of bailment is the delivery of moveable goods from one to another. Mere custody does not create relationship of bailor and bailee. .ESSENTIALS OF BAILMENT cont--3. A servant who receives goods from his master to take to a third person has only custody.

e. altered in form. There is a bailment even if the goods bailed are. . when a piece of cloth is stitched into a suit.g. Return of specific goods: As soon the purpose is achieved. in the meantime. the goods shall be returned or disposed off according to the directions of the bailor.ESSENTIALS OF BAILMENT cont--4.

.RIGHTS OF BAILOR 1. He is also entitled to compensation if the bailee makes any default in returning the goods. Right to demand the return of goods and compensation: The bailor is entitled to demand the return of the goods bailed as soon as the purpose of bailment is achieved.

Right to terminate bailment: the bailor may terminate the bailment if the bailee does any act which is against the terms of the contract of bailment even though the term (time period) of bailment is not expired.RIGHTS OF BAILOR cont--2. .

Right to claim increase: the bailor has the right to claim increase or profit. which may arise from the goods bailed.RIGHTS OF BAILOR cont--3. .

To disclose known faults: the bailor must disclose the known faults about the goods bailed to the bailee. If he does not make much disclosure.DUTIES OF BAILOR 1. he is responsible for any damage caused to the bailee directly from such faults. .

if any. incurred by the bailee regarding the goods bailed. it is the duty of the bailor to bear extra-ordinary expenses.gratuitous bailment the bailor is not liable to bear the ordinary expenses. To bear extraordinary expenses of bailment: in case of any kind of bailment. In non. .DUTIES OF BAILOR cont--2.

To indemnify for defective Title: the bailor is responsible to indemnify the bailee if the title of the bailor to the goods is defective and due to which the bailee suffers any loss.DUTIES OF BAILOR cont--3. .

RIGHTS OF BAILEE ‡ Right to recover damages for any injury caused due to a defect of the goods bailed. ‡ Right to be reimbursed for legitimate expenses incurred by the bailee. . ‡ Right to be compensated for loss caused due to a defect in bailor¶s title.

DUTIES OF BAILEE ‡ Taking reasonable care of the goods bailed. ‡ He must not mix the goods bailed with his own goods. ‡ Bailee must not make any unauthorized use of the goods bailed. without the permission of the bailor. .

.DUTIES OF BAILEE Cont--‡ He must return the bailed according to the directions of the bailor. ‡ He must deliver the increase or profit if accrued from the goods bailed to the bailor.

BAILMENT OF PLEDGE ‡ DEFINITION ‡ The bailment of goods as security for payment of a debt or performance of a promise is called a pledge. It creates only a right to retain property / goods given as security. . In case of pledge the goods are deposited as security to get a loan. It confers no right to sell the goods placed as security.

‡ Pawnee: the bailee or the person to whom the goods are deposited is known as the Pawnee.BAILMENT OF PLEDGE cont--‡ Pawnor: the bailor or the person who delivers or deposits the goods as security is known as Pawnor. .

‡ . Right to recover extra ordinary expenses: the Pawnee also has a right to recover from the Pawnor extra ordinary expenses incurred by him for the preservation of the goods pledged.RIGHTS OF PAWNEE ‡ Right to retain goods: the Pawnee can retain the goods pledged until his dues are paid as well as the interest due on the debt and all necessary expenses incurred by him.

.RIGHTS OF PAWNEE cont--‡ Right to sue and sell: if the Pawnor makes default in the payment of the debt or the performance of the promise by the stipulated time the Pawnee may sue the Pawnor for the debt or he may sell the goods pledged after giving the Pawnor a reasonable notice.

on making the full payment on stipulated date ‡ . without giving a reasonable notice. if any. Right to claim increase: the Pawnor has the right to receive the pledged goods back along with increase.RIGHTS OF PAWNOR ‡ Right to recover: if the Pawnee makes an unauthorized sale i. the Pawnor can file a case against him.e.