Bailment

Article on “Bailment “

By Swati Y. Kunchikorve

Introduction:

[1]Definition of “Bailment” “bailor” and “bailee” are, a “Bailment” is 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. The person delivering the goods is called the “bailor”. The person to whom they are delivered is called, the “bailee”. The best example for this is ‘library lend books to members to read for certain period’. In this example, library is bailor, members are bailee, purpose is to read or use that books for certain period.

The bailor and bailee have some rights and bound by some duties and liabilities. Let’s look upon it.

Duties of Bailor:

1. Duty to disclose defect[2] : The bailor is bound to reveal to the bailee defects in the goods bailed, of which the bailor is aware, and to tell the bailee extraordinary risks; and if he does not reveal then bailor is responsible for damage arising to the bailee directly from such defects.

If the goods are bailed for rent, the bailor is responsible for such damage, it doesn’t matter whether he was or not aware of the existence of such defects in the goods bailed.

For example: James bailed a horse on rent, which he knows to be vicious, to George. He does not tell the fact that the horse is vicious. The horse runs away. George is thrown and his one hand injured. James is responsible to George for damage.

2. Compensation by bailor[3] : The conditions of the bailment are such that the goods are to be kept or to be carried upon them by the bailee for the bailor, and the where there is no remuneration received by bailee, the bailor have to repay the necessary expenses incurred by him for the bailment.

3. Re-establishment of gratuitous goods [4]: If the bailor at any time require his goods to be return, if the lending was gratuitous, even though he gave it for a specified time or purpose. But if, on the faith of such debt made for a specified time or purpose, the borrower has acted in such a manner that the return of the goods lent before the time agreed upon would cause him loss exceeding the benefit actually earned by the loan, the bailor must return the exceeding amount to the bailee if bailee compels.

4. Bailor’s duty to bailee [5]: The bailor is liable to the bailee for any loss which the bailee may suffer by reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions respecting them.

Duties of Bailee:

1. Bailee ought to lookout of goods [6]: In all cases of bailment the bailee is absolute to take maximum amount of care of the goods bailed to him as a person of normal prudence would, at similar circumstances, as to take care of his own goods.

2. Bailee when not responsible for loss [7] : The bailee, in the absence of any particular contract, isn’t liable for the loss, destruction or deterioration of the goods bailed, if he has taken the maximum care as it delineated in section 151.

3. Bailee’s act inconsistent with conditions results to termination of bailment [8] : A contract of bailment (legal transfer) is avoidable at the choice of the bailor, if the bailee does any act with relation to the goods bailed, contradictory with the conditions of the bailment.

For Example: James lets to George, for rent, a horse for his own riding. George drives the horse in his carriage. This can be at the choice of James terminate the bailment.

4. Unauthorized use of goods bailed by bailee [9]: If the bailee makes any use of the goods bailed that isn’t consistent with the conditions of the bailment, he’s responsible to compensation to the bailor for any injury arising to the goods from or throughout such use of them.

For Example : James lends a horse to George for his own riding solely. George permits Cyrus, a member of his family, to ride the horse. Cyrus rides with care, however the horse accidentally falls and get injured. George is responsible to compensate James for the injury done to the horse.

5. Impact of mixture, with bailor’s consent [10]: If the bailee, with the consent of the bailor, mixes the goods of the bailor along with his own goods, the bailor and also the bailee shall have an equal interest, in proportion to their individual shares, within the mixture so produced.

6. .Impact of mixture in absence of bailor’s consent [11]: If the bailee, in the absence of the consent of the bailor, mixes the products of the bailor with his own products, and the products are easily separated or divided, the property in the products remains with the parties respectively; but the bailee have to absolutely bear the expense of separation, and any loss arising from the mixture.

For example: James bails a hundred bales of cotton marked with a special-mark to George. George, haven’t taken consent from James, mixes the a hundred bales with another bales of his own, having a own mark: James is entitled to own his hundred bales returned, and George have to absolutely bear all the expense incurred in the separation of the bales, and other incidental losses.

7. Impact of mixture of goods cannot be separated, without bailor’s consent[12]: If the bailee, in the absence of the consent of the bailor, mixes the products of the bailor with his own products, in such a manner that it’s not possible to separate the goods bailed from the other goods, and deliver them back, the bailor is entitled to get compensation from the bailee for the damage of the products.

For Example: James bails a barrel of rice flour price rupees forty five to George. George, without taking prior consent from James, mixes the flour with corn flour of his own, price only rupees twenty five a barrel. George have to compensate James for the damage of his flour.

Rights of Bailor:

We need to understand that whatever the duties of bailee are automatically rights of bailor and vice versa in some cases.

1. Bailee’s act contradictory with conditions leads termination of bailment [13]: A contract of bailment is avoidable at the choice of the bailor, if the bailee does any act with reference to the goods bailed, not contradictory with the proviso of the bailment.

For Example: James permits to George, for rent, a horse for his own riding. George drives the horse in his carriage. This is at the choice of James to terminate the bailment.

2. Restoration of gratuitous goods[14]: The bailor of a goods for use may at any time need its return, if the loan was gratuitous, despite the fact that he lent it for a specific time or purpose. But if, on the belief of such loan created for a specific time or motive, the bailee has acted in such a manner that the return of the goods lent before the time agreed upon would cause him loss exceeding the benefit actually earned by him from the loan, the bailor must, if he compels the return, indemnify the bailee for the amount in which the damage so occasioned exceeds the benefit so derived.

3. Bailor entitled to profit [15]: In the absence of any contract to the contrary, the bailee have to absolutely deliver to the bailor, or in conformity of his directions, any increase or profit which arises from the things bailed.

For example: James leaves a cow within the custody of George to be taken care of it. The cow has a calf. George must deliver the calf as well as the cow to James.

4. Suit against wrong-doer/Third Person [16]: If any person/third person wrongfully deprives the bailee of the utilize or occupy the things bailed, or does them any damage, the bailee is entitled to use such remedies as the owner might have used in the same case if no bailment made; and either of bailor or bailee bring a suit against a third person for such deprivation or injury.

5. Compensation obtained by such suits. [17]: Whatever is obtained by way of relief or compensation in any such suit, shall dealt with according to their respective interests of bailor and bailee.

Rights of Bailee:

1. Bailment by joint owners. [18]: If many joint owners of things bail them, the bailee can deliver them back to, or according to the directions of, one joint owner, no need of the consent of all in the absence of any agreement to the contrary.

2. Bailee not liable to bailor without title for re-delivery [19]: If the bailor don’t have title of the products, and the bailee, in honestness, dispense them back to, or according to the directions of, the bailor, the bailee is not accountable to the owner in respect of such delivery.

3. Right of third person who claims bailed goods[20]: If someone, apart from the bailor, claims products bailed, he shall apply to the Court to stop the delivery of the products to the bailor, and to decide the title to the products.

4. Particular lien of Bailee [21]: Wherever the bailee has, in accordance with the aim of the bailment, rendered any service involving the exercise of labour or talent in respect of the products bailed, he has, without the contract to the contrary, a right to retain that products till he receives due remuneration for the services he has rendered in respect of them.

For Example: James delivers a old gold necklace to George, a jeweller, to be polished, that is consequently done. George is entitled to retain the gold necklace till he is paid for the services he has rendered.

5. Suit against wrong-doer/Third Person [22]: If any person/third person wrongfully deprives the bailee of the utilize or occupy the things bailed, or does them any damage, the bailee is entitled to use such remedies as the owner might have used in the same case if no bailment made; and either of bailor or bailee bring a suit against a third person for such deprivation or injury.

Termination of Bailment:

1. Bailee’s act inconsistent with conditions results to termination of bailment [23] : A contract of bailment (legal transfer) is avoidable at the choice of the bailor, if the bailee does any act with relation to the goods bailed, contradictory with the conditions of the bailment.

For Example: James lets to George, for rent, a horse for his own riding. George drives the horse in his carriage. This can be at the choice of James terminate the bailment.

2. Re-establishment of gratuitous goods [24]: If the bailor at any time require his goods to be return, if the lending was gratuitous, even though he gave it for a specified time or purpose. But if, on the faith of such debt made for a specified time or purpose, the borrower has acted in such a manner that the return of the goods lent before the time agreed upon would cause him loss exceeding the benefit actually earned by the loan, the bailor must return the exceeding amount to the bailee if bailee compels.

3. Termination of gratuitous bailment [25]: A gratuitous bailment is terminated by the death either of the bailor or of the bailee.

Conclusion:

According to me, the concept of bailment is necessary to understand by everyone especially the layman. Now a days, because of advancement in technology and globalization, more people are engaging in small or big business contracts, which are basically bailments, for example : giving a car to Ola or Uber on bail(rent), parking a car in paid parking zone etc. Therefore, it is important to know at least the basics of bailment before making a contract of bailment.

References:

1. The Indian Contract Act, 1872, India, available at: https://www.indiacode.nic.in/bitstream/123456789/2187/1/A1872-9.pdf#search=The%20Indian%20Contract%20Act,%201872

(last visited on 12.01.2021)

[1]The Indian Contract Act, 1872, (Act 9 of 1872), S.148 [2] The Indian Contract Act, 1872, (Act 9 of 1872), S.150 [3] The Indian Contract Act, 1872, (Act 9 of 1872), S.158 [4] The Indian Contract Act, 1872, (Act 9 of 1872), S.159 [5]The Indian Contract Act, 1872, (Act 9 of 1872), S.164 [6]The Indian Contract Act, 1872, (Act 9 of 1872), S.151 [7]The Indian Contract Act, 1872, (Act 9 of 1872), S.152 [8]The Indian Contract Act, 1872, (Act 9 of 1872), S.153 [9]The Indian Contract Act, 1872, (Act 9 of 1872), S.154 [10]The Indian Contract Act, 1872, (Act 9 of 1872), S.155 [11]The Indian Contract Act, 1872, (Act 9 of 1872), S.156 [12]The Indian Contract Act, 1872, (Act 9 of 1872), S.157 [13]The Indian Contract Act, 1872, (Act 9 of 1872), S.153 [14]The Indian Contract Act, 1872, (Act 9 of 1872), S.159 [15]The Indian Contract Act, 1872, (Act 9 of 1872), S.163 [16]The Indian Contract Act, 1872, (Act 9 of 1872), S.180 [17]The Indian Contract Act, 1872, (Act 9 of 1872), S.181 [18]The Indian Contract Act, 1872, (Act 9 of 1872), S.165 [19]The Indian Contract Act, 1872, (Act 9 of 1872), S.166 [20]The Indian Contract Act, 1872, (Act 9 of 1872), S.167 [21]The Indian Contract Act, 1872, (Act 9 of 1872), S.170 [22]The Indian Contract Act, 1872, (Act 9 of 1872), S.180 [23]The Indian Contract Act, 1872, (Act 9 of 1872), S.153 [24] The Indian Contract Act, 1872, (Act 9 of 1872), S.159 [25]The Indian Contract Act, 1872, (Act 9 of 1872), S.162