SECOND MODULE
BAILMENT AND PLEDGE
SPECIAL CONTRACT
Definition
A 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.
-Essential conditions (moveable goods, delivery, bailor and bailee, purpose,
contract, returned/disposed, possession)
-Types of Delivery (actual, symbolic and constructive)
-Types of Goods (existing:ascertained/specific and unascertained/generic,
future and contingent)
-Types of bailment (gratuitous/without consideration and
non-gratuitous/with consideration)
-Bailee’s lien-general lien (general goods) and particular lien (particular lien)
-Termination of Bailment
Particular lien General lien
Right goods retain only such goods which Right to retain any goods belonging to
remains unpaid another person for the unpaid amount.
General lien can be exercised only by some
Every bailee has right to particular lien persons like bankers, factors, Attorneys etc.
Particular lien can be exercised only when General lien may be exercised even though
some labour or skill has been used no labour or skill has been used on the
goods.
Eg: A can exercise lien only over the Eg: A banker can retain all/any papers
stitched shirt on which B has not paid belonging to other if payment is not done.
money.
Definition
PLEDGE/ PAWN of goods
The bailment of goods as security for payment of a debt or performance of
promise is called pledge.
-Essential Conditions: bailment ,security for payment of a debt or
performance of promise , goods, two parties, contract, transfer.
Bailment Pledge
Bailment may be for any purpose other Pledge is bailment of goods for security
than as security.
Bailment may be for any purpose. Pledgee only for repayment of debt or
performance of promise.
There is no right of sale to the Bailee. Pawnee, i.e. Pledgee has a right of sale
of goods pledged on default of Pawnor.
Bailee can use the goods bailed as per Pledgee has no right of using goods
terms of contract. pledged.
gratuitous bailment can be terminated at There is no such option in pledge.
any time
Gets a possession right in bailment Get special property rights in pledge
genus species
Pledge by Non-owners
• A mercantile agent
• Seller of goods after sale- buyer owner
• Buyer before the sale- seller owner
• Several co-owners
• Possession of goods under a voidable contract
Rights of BAILOR/PLEDGOR Duties of BAILOR/PLEDGOR
To: get back the goods bailed / redeem To receive the: goods / security
goods pledged
To: get consideration for the goods / To disclose defects of: goods /security
receive money
To cancel the contract [SAME FOR To: bear ordinary expenses in gratuitous
BOTH] bailment / liable for defect in title over the
pledged goods
To file case [SAME FOR BOTH] To bear extraordinary expenses: in non-
gratuitous bailment / for the safe keeping of
the pledged goods
To enforce: Bailee’s / pledgees duties To indemnify: Bailee / pledgee
Rights of BAILEE/PLEDGEE Duties of BAILEE/PLEDGEE
Right to enforce the duties of the: bailor / To take reasonable care of the goods:
pledgor bailed / pledged
Right to claim damages[SAME FOR BOTH] Not make an unauthorized use of goods /
not use the goods at all
Right to indemnify[SAME FOR BOTH] Not to mix the goods bailed/pledged and
his own goods
Right of lien[SAME FOR BOTH] Not to set up an adverse title[SAME FOR
BOTH]
Right to sue for any breach of contract[SAME Return the goods[SAME FOR BOTH]
FOR BOTH]
Pledgee has a right to sell Pledgee has a duty to give notice of sale
to pledgor and to pay back the additional
profit after sale
Finder of Lost Goods
Rights and duties of finder of lost goods is same as rights and duties
of bailee [finder of lost goods gets an additional right to sell the
goods if goods are in danger of perishing, or the owner of the goods
cannot be found]
University Exam Questions 2019
1. Define Bailment? What are the essential conditions of bailment? How can
bailment be terminated?
2. Define pledge? What are the essential conditions of bailment? Differentiate
between pledge and bailment?
3. Explain pledge by non owners?
4. What are the rights and duties of finder of lost goods?
5. Explain the rights and duties of bailor and bailee?
6. What are the rights and duties of pledger and pledgee/ pawnor and pawnee?
Write short notes on:
Types of bailment
Accretion of goods
Types of delivery of goods
Bailee’s Lien
Difference between hypothecation and pledge/ Hire Purchase Agreement
