The term "Bailment" is derived from the French word 'Bailer', which means to deliver. A bailment is a contract where goods are delivered from one person to another for a particular purpose. The definition of bailment is given under Section 148 of the Indian Contract Act, 1872. In the Contract of Bailment, the parties are referred to as Bailor (one who delivers) and Bailee (to whom goods are delivered). Deliveries of clothes to the laundry for ironing, delivery of refrigerator for repairing, parking a car in a paid parking area are all examples of bailment.
Essentials of Bailment
1) Delivery: Delivery to Bailee by the Bailor is the first essential element of Bailment. Section 149 explains the meaning of delivery. The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended Bailee. Delivery of possession is of two kinds. One is the Actual delivery and the other is Constructive delivery. When the physical possession of the goods is handed over to the Bailee then it is the actual delivery. E.g.: Delivery of clothes to the laundry for ironing. When there is no change in the physical possession of the goods such deliveries are known as Constructive delivery. E.g.: Bailment of Projector machinery of Cinema.
Ultzen v.Nicholas, (1894) 1QB 92
An old customer went into a restaurant for dining there. When he entered the room a waiter took his coat, without being asked and hung in on a hook behind him. When the customer rose to leave the coat was gone. The restaurant owner was held liable.
Kaliaperumal Pillai v. Visalakshmi, AIR 1938 Mad 32
A lady handed over to a goldsmith certain jewels for making new jewels. Every evening as soon as the goldsmith's work for the day was over, the lady used to receive half-made jewels and put them into a box in the goldsmith's room and keep the key in her possession. The jewels were lost one night. The lady's action against the goldsmith failed because delivery being necessary to constitute bailment, here there was no delivery as per Section 149 of the Indian Contract Act, 1872 because the key was with the plaintiff.
2) Delivery should be upon a Contract: Delivery of goods should be made for some purpose and upon a contract that when the purpose is accomplished the goods shall be returned to the Bailor. When delivery of goods is done without any contract, then it is not a Bailment within the meaning as given under Section 148. This can be well explained by the case of Ram Gullan v. Govt. Of U.P. AIR 1950 AII 206. In this case, the plaintiff's ornaments, having been stolen, were recovered by the police and while in police custody, were stolen again. The plaintiff's action against the state for the loss was dismissed. Court held that the State was not a party to the contract.
3) Delivery should be upon some purpose: Delivery of goods should be upon some purpose and when the purpose is accomplished, the good is returned to the Bailor.
Duty of Bailor
Section 150 of the Indian Contract Act, 1872 is about Bailor's duty to disclose faults in goods bailed. A Bailor has a responsibility to disclose all the defects of goods delivered by it a gratuitous bailment or a non-gratuitous bailment (bailment for a reward).
Hyman & wife v. Nye & sons
A carriage was delivered for the use of the Bailee. While using the under part of the carriage was broken causing serious injury to the Bailee. The court held the Bailor liable because the defects of the carriage were not disclosed by the Bailor.
Duties of the Bailee
1) Care to be taken by the Bailee: The first and foremost duty of the Bailee is to take reasonable care of the goods bailed. In all case of bailment the bailee is bound to take as much care of goods bailed to him as a man of ordinary prudence would under similar circumstances take of his goods of the same bulk, quality, and value as the goods bailed (Section 151)
If the amount of care as described in Section 151 is taken by the Bailee and any loss occurs, then the Bailee would not be held liable. (Section 152)
2) Duty not to make unauthorized use (Section 154): If the Bailee makes unauthorized use of the goods bailed which is not according to conditions of the bailment, he is liable to make compensation to the Bailor for any damage occurred to goods for unauthorized use.
Illustrations: 'A' delivers his clothes for ironing to 'B'. 'B' is a laundry person. Instead of ironing the clothes, 'B' wears the clothes to a party and the clothes get spoiled from a drink. 'A' sues 'B' and 'B' was held liable to compensate 'A'.
3) Duty not to mix (Ss 155-157): The Bailee should maintain the separate identity of the Bailor's goods He should not mix his goods with Bailor's goods without his consent.
§ Section 155: If the Bailee with the consent of the Bailor mixes the goods of the bailor with his goods, the Bailor and the Bailee shall have an interest in the proportion of their respective shares in the mixture thus produced.
§ Section 156: If the Bailee without the consent of Bailor mixes the goods of the bailor with his goods and the goods can be separated or divided then the Bailee is bound to bear the expense of separation or division and any damage arising from the mixture.
§ Section 157: If the Bailee without the consent of Bailor, mixes the goods of the bailor with his goods in such a manner it is not possible to separate the goods bailed from other goods then the bailor is entitled to compensation by the bailee.
4) Duty to return goods on the expiration of time or accomplishment of purpose (Section 160-161): The Bailee must return the goods to the Bailor after the accomplishment of the purpose or expiration time.
5) Duty not to set up (Section 166): A Bailee is not entitled to set up, as against the bailor's demand, the defence of jus tertii. The Bailee is estopped from denying the right of the Bailor to the bailed goods. According to Section 166, the Bailee is always responsible for the Bailor even if it is found that Bailor has no title to the goods. According to Section 167, if a person, other than the Bailor claims goods bailed, he may apply to Court to stop delivery of the goods to the Bailor and to decide the title to the goods.
6) Bailor entitled to increase or profit from the goods bailed (Section 163): The Bailee is bound to deliver any increase or profit to the Bailor accrued from the goods bailed.
Illustration: 'A' leaves a cow in the custody of 'B' to be taken care of. The cow has a calf. 'B' is bound to return the cow as well as the calf to 'A'.
The Rights of Bailor are not explicitly mentioned under the Indian Contract Act, 1872. But Duties of the Bailee are the Rights of the Bailor.
Rights of the Bailee
The following are the rights to which a Bailee is entitled:
1) Right to Compensation (Section 164): For any loss sustained by the Bailee during the contract of Bailment, the Bailor is responsible for the Bailee.
2) Right to expense or Remuneration (Section 158): For any necessary expenses incurred by Bailee for bailment, the Bailor is responsible to repay all the expenses to the Bailee.
3) Right of Lien (Section 170-171): If Bailee's lawful charges are not paid he may retain the goods. The right to retain any property until the charges due in respect of the property are paid is called the right of lien
Bailee's particular lien (Section 170): Where the bailee has under the purpose of the bailment rendered any service involving the exercise of labor or skill in respect of goods bailed, he has in absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.
Hutton v. Car Maintenance Co 1915 1 Ch 21
The owner of the motor car gave it to a company to maintain it for three years on fixed annual payment. An amount having become due for maintenance charges, the company claimed a lien on the car.
Bailee's right to general lien (Section 171): This means the right to hold the goods bailed as security for a general balance of the account. E.g. two securities are given to a banker but a loan has been taken only against one of them, the banker may retain both securities until dues are paid.
Disclaimer: Kindly note that the views and opinions expressed are of the author, and not Law Colloquy.
Singh, Avtar(1973), Contract and Specific Relief, 12th Edition, EBC, 2018