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BAILMENT BAILMENT AND PLEDGE AND PLEDGE
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36469172 Bailment and Pledge

Mar 07, 2015

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Page 1: 36469172 Bailment and Pledge

BAILMENT BAILMENT AND PLEDGE AND PLEDGE

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PRESENTED BY:PRESENTED BY:

ATIF IRSHAD (9713)ATIF IRSHAD (9713)

SYED SAJJAD (9128)SYED SAJJAD (9128)

HASSAN AHMED (8526)HASSAN AHMED (8526)

IMRAN ALI (4208)IMRAN ALI (4208)

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BAILMENTBAILMENT

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BAILMENTBAILMENT

Bailment is derived from a French Bailment is derived from a French word “baillter” which means to word “baillter” which means to

deliver or any kind of handing over. In deliver or any kind of handing over. In legal sense bailment is change of legal sense bailment is change of

possession. Bailment is only possession. Bailment is only change change in possession of goodin possession of good and does and does

not account change in not account change in ownership.ownership.

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According to According to Contract Act 1872 Chapter Contract Act 1872 Chapter 99 section 148section 148 “Bailment is the delivery of “Bailment is the delivery of goods by one person to another for some goods by one person to another for some purpose, upon a contract that they shall purpose, upon a contract that they shall when the purpose is accomplished, be when the purpose is accomplished, be

returned or otherwise disposed of returned or otherwise disposed of according to the directions of the person according to the directions of the person delivering them". The person delivering delivering them". The person delivering the goods is called “the goods is called “BAILORBAILOR” and whom ” and whom

they are delivered is called “they are delivered is called “BAILEEBAILEE””

BAILMENTBAILMENT

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EXAMPLESEXAMPLES

A lends a book to B to be returned A lends a book to B to be returned after the examination. There is a after the examination. There is a contract of bailment between A & Bcontract of bailment between A & B

A places his damaged car in A places his damaged car in possession of a repairer R. A is bailor possession of a repairer R. A is bailor and R is bailee in this case and there is and R is bailee in this case and there is a contract of bailment between A & Ra contract of bailment between A & R

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REQUISITES OF BAILMENTREQUISITES OF BAILMENT

CONTRACTCONTRACT

DELIVERY OF POSSESSIONDELIVERY OF POSSESSION

DELIVERY FOR SOME SPECIFIC PURPOSEDELIVERY FOR SOME SPECIFIC PURPOSE

RETURN OR DISPOSAL OF SPECIFIC RETURN OR DISPOSAL OF SPECIFIC GOODSGOODS

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CONTRACTCONTRACT

Bailment is a special type of contractBailment is a special type of contract Bailment is usually created by an Bailment is usually created by an

agreement between bailor & bailee.agreement between bailor & bailee. The agreement may be expressed or The agreement may be expressed or

impliedimplied In certain exceptional cases bailment is In certain exceptional cases bailment is

implied by law.implied by law. All the essential of a valid contract are All the essential of a valid contract are

applied.applied.

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DELIVERY OF DELIVERY OF POSSESSIONPOSSESSION

There must be transfer of possession of There must be transfer of possession of goods from bailer to bailee.goods from bailer to bailee.

Possession means control over goods and Possession means control over goods and an intention to exclude other.an intention to exclude other.

Delivery of possession should be of Delivery of possession should be of movable property other than money and movable property other than money and actionable claimsactionable claims

Delivery of possession may be actual or Delivery of possession may be actual or constructive.constructive.

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DELIVERY FOR SOME DELIVERY FOR SOME PURPOSEPURPOSE

Delivery of goods should be for some Delivery of goods should be for some specific purpose, task or specific purpose, task or performance.performance.

If the goods are delivered by mistake If the goods are delivered by mistake it should not be considered as it should not be considered as Bailment.Bailment.

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RETURN OF SPECIFIC RETURN OF SPECIFIC GOODSGOODS

The goods shall be returned to the bailer The goods shall be returned to the bailer as soon the purpose is achieved.as soon the purpose is achieved.

If in agreement disposal of goods is If in agreement disposal of goods is decided so they must be disposed of decided so they must be disposed of immediately after completion of purpose immediately after completion of purpose according to the directions of baileraccording to the directions of bailer

There is no bailment if goods are not There is no bailment if goods are not returned or disposedreturned or disposed

There will be bailment even if the goods There will be bailment even if the goods bailed are in meantime alteredbailed are in meantime altered

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CLASSIFICATION OF CLASSIFICATION OF BAILMENTBAILMENT

Bailment can be classified according Bailment can be classified according to two typesto two types

According to benefit derived from According to benefit derived from bailmentbailment

According to the involvement of According to the involvement of considerationconsideration

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ACCORDING TO BENEFITACCORDING TO BENEFIT

For the exclusive benefit of bailer For the exclusive benefit of bailer

Example:Example: Delivery of some valuables to a Delivery of some valuables to a neighbor for safe custody without chargesneighbor for safe custody without charges

For the exclusive benefit of baileeFor the exclusive benefit of bailee

Example:Example: Lending of bicycle to a friend for Lending of bicycle to a friend for his use without chargeshis use without charges

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ACCORDING TO BENEFIT ACCORDING TO BENEFIT (contd)(contd)

For the mutual benefit of bailer For the mutual benefit of bailer and baileeand bailee

Example:Example: Giving a watch for repair Giving a watch for repair

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ACCORDING TO INVOLVEMENT ACCORDING TO INVOLVEMENT OF CONSIDERATIONOF CONSIDERATION

In a contract of payment In a contract of payment consideration is generally in the form consideration is generally in the form of money payment by bailor or baileeof money payment by bailor or bailee

Gratuitous BailmentGratuitous Bailment

Non Gratuitous BailmentNon Gratuitous Bailment

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Gratuitous BailmentGratuitous Bailment

It is a bailment where no It is a bailment where no consideration is passed between consideration is passed between bailor and bailee.bailor and bailee.

Example:Example: A lends a book to his friend A lends a book to his friend B.B.

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Non Gratuitous BailmentNon Gratuitous Bailment

It is bailment where consideration is It is bailment where consideration is passed between bailor and bailee.passed between bailor and bailee.

Example:Example: A hires a bicycle from B A hires a bicycle from B

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DUTIES OF BAILORDUTIES OF BAILOR

To disclose known faultTo disclose known fault

It is the first and foremost duty of bailor to It is the first and foremost duty of bailor to disclose known faults. If he doe not do so he disclose known faults. If he doe not do so he is responsible for any damage caused to is responsible for any damage caused to bailee from such fault (Sec 150,para 1)bailee from such fault (Sec 150,para 1)

Example:Example: A lends a horse to B which he A lends a horse to B which he knows to be vicious and does not disclose it. knows to be vicious and does not disclose it. The horse runs away B is thrown and injured. The horse runs away B is thrown and injured. A is responsible to B for damage sustained.A is responsible to B for damage sustained.

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DUTIES OF BAILOR DUTIES OF BAILOR (contd)(contd)

To bear extraordinary expense of To bear extraordinary expense of bailmentbailment

The bailee is responsible to bear ordinary The bailee is responsible to bear ordinary expenses of bailment but for extraordinary expenses of bailment but for extraordinary expenses bailor is responsible.expenses bailor is responsible.

Example:Example: A lends his horse to B. The A lends his horse to B. The feeding charges are to be paid by B. If feeding charges are to be paid by B. If horse meets an accident. A will have to horse meets an accident. A will have to repay medical expenses to B.repay medical expenses to B.

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To indemnify bailee for loss To indemnify bailee for loss A gratuitous bailment can be terminated by the A gratuitous bailment can be terminated by the

bailor at any time even the bailment was for bailor at any time even the bailment was for specific time. In such case the loss to bailee specific time. In such case the loss to bailee should not exceed the benefit he has derived from should not exceed the benefit he has derived from bailment. If loss exceeds benefit then bailor have bailment. If loss exceeds benefit then bailor have to indemnify bailee.to indemnify bailee.

Example:Example: A lends an old bicycle to B for three A lends an old bicycle to B for three months gratuitously. B incurs Rs 120 on its repair. months gratuitously. B incurs Rs 120 on its repair. A ask for return of bicycle after one month. A has A ask for return of bicycle after one month. A has to compensate B for expense incurred by B in to compensate B for expense incurred by B in excess of benefit derived by him.excess of benefit derived by him.

DUTIES OF BAILOR DUTIES OF BAILOR (contd)(contd)

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DUTIES OF BAILOR DUTIES OF BAILOR (contd)(contd)

To receive back the goodsTo receive back the goods

It is the duty of bailor to receive back It is the duty of bailor to receive back the goods when the bailee returns the goods when the bailee returns them after the expiry of the term of them after the expiry of the term of the bailment.the bailment.

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RIGHTS OF BAILORRIGHTS OF BAILOR

Enforcement of RightsEnforcement of Rights

The bailor can enforce by suit all the The bailor can enforce by suit all the liabilities or duties of the bailee as his rightsliabilities or duties of the bailee as his rights

Avoidance of contract (Sec 153)Avoidance of contract (Sec 153)

The bailor can terminate the bailment, if the The bailor can terminate the bailment, if the bailee does with regard to the goods bailed bailee does with regard to the goods bailed any act which is inconsistent with the terms any act which is inconsistent with the terms of bailment.of bailment.

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RIGHTS OF BAILOR RIGHTS OF BAILOR (contd)(contd)

Return of goods lent gratuitously (Sec Return of goods lent gratuitously (Sec 159)159)

when the goods are lent gratuitously the bailor when the goods are lent gratuitously the bailor can demand their return whenever he wants can demand their return whenever he wants even though he lent them for specific period or even though he lent them for specific period or purpose.purpose.

Compensation for a wrong doer (Sec 180)Compensation for a wrong doer (Sec 180) If a third person wrongfully deprives the bailee If a third person wrongfully deprives the bailee

of the use or possession of the goods bailed or of the use or possession of the goods bailed or do them any injury the bailor may suit against do them any injury the bailor may suit against third person for such deprivation or injury.third person for such deprivation or injury.

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DUTIES OF BAILEEDUTIES OF BAILEE

To take reasonable care of the To take reasonable care of the goods bailedgoods bailed

Not to make any unauthorized use Not to make any unauthorized use of goodsof goods

Not to mix the goods bailed with Not to mix the goods bailed with his own goodshis own goods

Not to set up an adverse titleNot to set up an adverse title To return the goodsTo return the goods

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RIGHTS OF BAILEERIGHTS OF BAILEE

Delivery of goods to several Delivery of goods to several bailorsbailors

If several joint owners of goods bail If several joint owners of goods bail them, the bailee may deliver them them, the bailee may deliver them back to the directions of one joint back to the directions of one joint owner without the consent of all in owner without the consent of all in the absence of any agreement to the the absence of any agreement to the contrary. (Sec 165)contrary. (Sec 165)

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RIGHTS OF BAILEE RIGHTS OF BAILEE (contd)(contd)

Delivery of goods to bailor without titleDelivery of goods to bailor without title If the bailor has no title to goods, and bailee If the bailor has no title to goods, and bailee

in good faith delivers them back to bailor, the in good faith delivers them back to bailor, the bailor is not responsible to the owner in bailor is not responsible to the owner in respect of such delivery.(sec166)respect of such delivery.(sec166)

Right to apply to court to stop deliveryRight to apply to court to stop delivery If the person other then bailor claims goods If the person other then bailor claims goods

bailed , the bailee may apply to court to stop bailed , the bailee may apply to court to stop the delivery. (Sec 167)the delivery. (Sec 167)

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RIGHTS OF BAILEE RIGHTS OF BAILEE (contd)(contd)

Right of the action against the Right of the action against the trespasserstrespassers

If the third person wrongfully deprives the bailee If the third person wrongfully deprives the bailee of the use of possession of the goods bailed to of the use of possession of the goods bailed to him, he has right to bring an action against himhim, he has right to bring an action against him

Bailee’s lienBailee’s lien Where the lawful charges of the bailee in respect Where the lawful charges of the bailee in respect

of the goods bailed are not paid, he may retain of the goods bailed are not paid, he may retain the goods. This right of bailee to retain the goods the goods. This right of bailee to retain the goods is called is called particular Lienparticular Lien

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PLEDGEPLEDGE

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PLEDGEPLEDGE

Pledge is a special Pledge is a special type of bailment type of bailment where transfer of where transfer of goods is for security goods is for security of something.of something.

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PLEDGEPLEDGEAccording to According to Contract Act 1872 Contract Act 1872

Chapter 9Chapter 9 section 172 section 172 “The “The bailment of goods as security of bailment of goods as security of payment of a debt or performance of payment of a debt or performance of a promise is called “a promise is called “PledgePledge”. ”.

The bailor in this case is called The bailor in this case is called ““PledgerPledger” or “” or “PawnerPawner” and bailee ” and bailee is called “is called “PledgePledge” or “” or “PawneePawnee””

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EXAMPLESEXAMPLES A borrows Rs 200 from B and keeps A borrows Rs 200 from B and keeps

his watch as security for payment of his watch as security for payment of the debt. The bailment of watch in the debt. The bailment of watch in this case in called pledge.this case in called pledge.

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REQUISITES OF PLEDGEREQUISITES OF PLEDGE

Pledge is a type of bailment so it Pledge is a type of bailment so it possess the same requisites as of possess the same requisites as of bailmentbailment

AgreementAgreement Delivery of PossessionDelivery of Possession Return of goods after the performance Return of goods after the performance

of promise or payment of debt of promise or payment of debt

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RIGHTS OF PAWNORRIGHTS OF PAWNOR

Right to get back goodsRight to get back goods On the performance of promise or repayment On the performance of promise or repayment

of loan and interest the pawnor is entitled to of loan and interest the pawnor is entitled to get back the goods pledgedget back the goods pledged

Rights to redeem debtRights to redeem debt If a time is stipulated for payment of debt or If a time is stipulated for payment of debt or

performance of promise, in such case if performance of promise, in such case if pawnor makes default in payment or pawnor makes default in payment or performance at stipulated time he may still performance at stipulated time he may still redeem the pledged goods before actual sale redeem the pledged goods before actual sale

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RIGHTS OF PAWNOR RIGHTS OF PAWNOR (contd)(contd)

Preservation and maintenance of goodsPreservation and maintenance of goods

The pawnor has a right to see that the The pawnor has a right to see that the pawnee preserves the goods pledged and pawnee preserves the goods pledged and properly maintain them.properly maintain them.

Right of an ordinary debtorRight of an ordinary debtor

In addition to above rights, the pawnor has In addition to above rights, the pawnor has the rights of an ordinary debtor which are the rights of an ordinary debtor which are conferred on him by various statutes meant conferred on him by various statutes meant for the protection of debtors.for the protection of debtors.

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RIGHTS OF PAWNEERIGHTS OF PAWNEE

Right of retainerRight of retainer

The pawnee may retain the pledged The pawnee may retain the pledged goods until his dues are paid. He goods until his dues are paid. He may also retain the goods for may also retain the goods for payment of interest due on debt and payment of interest due on debt and expenses incurred in respect of expenses incurred in respect of possession of goods. (Sec 173)possession of goods. (Sec 173)

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RIGHTS OF PAWNEE (contd)RIGHTS OF PAWNEE (contd)

Right of retainer for subsequent Right of retainer for subsequent advancesadvances

When the pawnee lends money to When the pawnee lends money to same pawnor after the date of same pawnor after the date of pledge, it is presumed that the right pledge, it is presumed that the right of retainer over the pledged goods of retainer over the pledged goods extends to subsequent advance also.extends to subsequent advance also.

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RIGHTS OF PAWNEE (contd)RIGHTS OF PAWNEE (contd)

Right t extraordinary expensesRight t extraordinary expenses The pawnee is entitled to receive from the The pawnee is entitled to receive from the

pawnor extraordinary expenses incurred by pawnor extraordinary expenses incurred by him for the preservation of goods pledged.him for the preservation of goods pledged.

Right against true ownerRight against true owner When the pawnor’s title is defective and he When the pawnor’s title is defective and he

has obtained possession of pledged goods has obtained possession of pledged goods under a void able contract, the pawnee can under a void able contract, the pawnee can acquire a good title to the goods provided acquire a good title to the goods provided he acts in good faith he acts in good faith

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RIGHTS OF PAWNEE (contd)RIGHTS OF PAWNEE (contd)

Right t when pawnor makes defaultRight t when pawnor makes default

When the pawnor fails to redeem his When the pawnor fails to redeem his pledge the pawnee can exercise the pledge the pawnee can exercise the following rightsfollowing rights

1.1. He may file a suit against the pawnorHe may file a suit against the pawnor

2.2. He may sell the goods pledged after He may sell the goods pledged after giving a reasonable notice of sale giving a reasonable notice of sale

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Thank youThank you