Bailment
In simple words, A Bailment is
The delivery of goods
By one person to another
For some specified purpose
Upon a contract that they shall be returned, when the purpose is accomplished.
Contract of Bailment
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. The person delivering the goods is called the “bailor”. The person
to whom they are delivered is called the “bailee” [section 148].
- Bailment means the act of delivering goods for a specified purpose on trust. The goods are to be returned after the purpose is over.
- In bailment, possession of goods is transferred, but property i.e. ownership is not transferred.
- Bailment can be only of ‘goods’. As per section 2(7) of Sale of Goods Act.
ESSENTIALS AND LEGAL RULES AS TO BAILMENT:
Contract:
A bailment is usually created by agreement b/w the bailor & bailee.
Delivery of
Goods: In bailment, the possession of goods must be delivered by the
bailor to the bailee.
No Transfer
of Ownership: In bailment, possession is transferred from one person to
another but ownership of goods remains with the bailor.
Delivery of
Goods for Some Purpose: The delivery of goods must be for some specific
performance.
Return of
Specific Goods: Goods are delivered to the bailee with the condition that
the same goods will be returned to the bailor after the accomplishment of
purpose.
Movable
Goods: In bailment, the goods bailed must be movable.
Deposit of
Money Into Bank: Deposit of money into bank by a customer is not a contract of
bailment because the money deposited is not returned in identical coins and
notes deposits.
Duties and Rights of Bailor
1. Duty to disclose
faults
In case
of gratuitous bailment, the bailor is expected to disclose
to the bailee all the defects known to him and which would get in the way with
the use of goods bailed. A non-gratuitous bailment or bailment for reward, however, carries a greater
responsibility on the part of bailor. He will be liable even if he was not in
the know of the defects. The following instances drive home the points.
Example 1
A lends his horse, which he knows to be frisky, to B. He does not disclose the fact that the horse is
frisky. When B tries to ride it, the
horse throws him off its back, and B is
injured. A is responsible to B for injury sustained.
Example 2
A hires a carriage of B, The carriage
is unsafe, though B is not
aware of it, and A is
injured. B is still responsible to
A for the injury.
2. Duty to repay bailee’s expenses
A bailor is
duty bound to repay to the bailee expenses incurred by him for work done on the
goods received under conditions of bailment, and for
which he is not receiving any remuneration or deriving any benefit. In this
regard,
3.
Duty to indemnify the bailee
The bailor is
bound to make good the loss suffered by the bailee that is in excess of the
benefit actually derived, where he had delivered the goods gratuitously and
compelled the bailee to return them before the expiry of the period of
bailment.
4.
Duty to compensate bailee for breach of warranty
Every contract
of bailment warrants the bailee about the bailor’s title being defect free.
Thus, if bailee subsequently suffers any loss by the reason of the bailor’s
title being defective, it is the duty of the bailor to compensate the bailee
for breach of warranty.
5.
Duty to accept back the goods
The bailor is
bound to accept the goods upon being returned by the bailee in accordance with
the terms of bailment. If he refuses or fails to accept back the goods, if
offered at a proper time and at a proper place, without any reasonable ground,
he shall be responsible for any loss or damage to the goods and not the bailee.
Moreover, the
bailee, in such a case, can also claim from the bailor all necessary and
incidental expenses that he might have incurred to keep and protect the goods.
(Note: Duties of Bailor are Rights of Bailee)
Rights of the Bailor
A bailor has the following rights.
1. Right to enforce
bailee’s performance
Since the
bailor delivers goods to the bailee for some specific purpose, the former,
especially in case of non-gratuitous bailment,
has an elemental right to achieve that purpose or obtain the benefit (i.e.,
performance) through the latter.
For example,
if X delivers a suit length to Y, his tailor, to stitch a suit for him, X (bailor) will see that the tailor does the
needful in the desired manner.
2. Right To Get Return The Goods Lent Gratuitously
When the goods are lent gratuitously, the bailor can demand back the goods at any time even before the expiry of the time fixed or the achievement of the object.
Example: A, while going out of station delivered his ornaments to B for safe custody for one month. But A returned to station after one week. He may demand the return of his ornaments even though the time of one month has not expired.
However, due to the premature return of the goods, if the bailee suffers any loss, which is more than the benefit actually obtained by him from the use of the goods bailed, the bailor has to compensate the bailee.
3.
Right to claim damages
In all cases
of bailment, the bailor has the right to claim for damages against the loss, if
any, caused to the goods bailed due to the bailee’s negligence or misconduct.
4.
Right to claim compensation against unauthorized use of goods
A good example
for this is this situation, A lets B use his car but with a condition that
only B shall drive. B allows C, a member of
his family, to drive the car. C rides
with care, but the car meets with some accident. Now B is liable to compensate for the
damages caused.
5.
Right to demand return of goods along with accretion to, if any
The bailor
enjoys the exclusive right to have the goods bailed delivered back to him in
safe and sound condition after the time of bailment has expired or the purpose
behind the bailment has been achieved. Moreover, in the absence of any contrary
term in the contract, the bailor is also entitled to any accretion to the goods
bailed if it occurred while the goods were in the costudy of bailee.
For
example, A leaves his brooding hen in the custody of B to be taken care of for a week. The hen has
hatched the chicks. A is entitled
not only to the hen but also to the chicks.
In addition to
the above mentioned right, A bailor has Right to terminate the contract
under certain conditions too. For example-
Example: A lets a car to B for his private use only. But B
used it as taxi. A can terminate the bailment.
Rights of Bailor are also Duties of a Bailee
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