Bailment

Indian Special Contract Act

BAILMENT AND PLEDGE

Content•Definition•No. of Persons• Essential of Bailment• Types of Bailment•Duties & Rights of Bailee & Bailor• Termination of Bailment• Finder of goods•Duties & Rights of Finder of goods.•Pledge Definition•Duties & Rights of Pledgor & Pledgee•Pledge by Non-owner•Differences

Definition U\S 148

“ 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 direction of the person delivering them.”

Definition in layman language

“ Any contract where by some movable goods are given by one person to another only for some purpose and the goods are to be return back or disposed off as per the desire of the giver is known as Bailment.”

No. of Persons Involved

•There are two persons involved in the bailment contract.

1. Bailor: “ The person delivering the goods is called the bailor.”

2. Bailee: “ The person to whom they are delivered is called the bailee.”

Essentials of Bailment

•Goods: Bailment can be effected only with respect to goods.

•Delivery: Delivery of goods by one person to another is essential.

‘Delivery’ includes: Physical delivery Constructive delivery Symbolic delivery

Cont….

•To be Returned: Without demand unless agreed otherwise.

• In Specie: The same goods are to be returned and not the equivalent. Including any accretion, e.g., calf born to a cow.

•Ownership: Only the possession of the movable goods is transferred and not the ownership.

Types of Bailment Types of Bailment

Bailment on the bases of Reward

Bailment on the bases of Benefits

Gratuitous Bailment

Non-Gratuitous Bailment

Bailor Benefit Bailment

Bailee Benefit Bailment

Mutual Benefit Bailment

Duties of Bailee (Rights of Bailor)

•Duty to take Care.•Responsible of Damage.•Not to make Unauthorized use.•Not to mix other goods with the goods of bailor.•Duty to return the goods.•Not to create the adverse title (Ownership).•Bailee should return any increment in goods.

Rights of Bailee (Duties of Bailor)

•Right to receive the damages from the defect of the goods.•Right to return the Goods.•Right to protect the goods.•Right to recover expense.• If the bailee returns the goods to the bailor in good faith without having knowledge of his defective title then also he is not responsible.• If some third deprives the bailee from using having possession of goods, he as well as the bailor can sue for their rights.

Termination of Bailment

•On the expiry of the stipulated period. •On the accomplishment of the specified purpose.

•By bailee’s act inconsistent with conditions of bailment.

•A gratuitous bailment may be terminated at any time.

Finder of Goods

•Definition:• Finder of goods is a special case of bailment.

• A finder of the goods is a person who finds the goods belonging to some other person and keeps them under his protection till the actual owner of the goods is found.

•Here there is an unintended formation of the contract. The finder of the goods automatically becomes bailee even when there is no bailment from the bailor.

Duties & Rights of Finder of Goods

•Search the real owner and return the goods back to him.•Take a good care of the goods until they are returned back to the real owner. •He has a right to be paid for the expenses which he has incurred to keep the goods safe as well as in searching the real owner.•He also has the right to keep the goods in his possession till he gets the expenses and can sell the goods and recover the expense, if they are not paid by owner.

Pledge \ Pawn

•Definition: • “Any contract where the goods are given by person to another only for the purpose of serving as security against some payment to be made is known as Contract of Pledge”.

No. of Persons Involved

•There are two persons involved in the bailment contract.

1. Pawnor \ Pledgor: “ The person, who delivers the goods as security, is called the pawnor or pledgor”.

2. Pawnee \ Pledgee: “ The person to whom the goods are so delivered is called the pawnee or pledgee”.

Rights of Pawnee (Duties of Pawnor)

•Retainer•Retention for subsequent advances.•Right to extra ordinary expenses.•Right in case of pawnor’s default.

Rights of Pawnor (Duties of Pawnee)

•The pledgor has a right to claim back the security pledged on repayment of the debt with interest and other charges.•He has a right to receive a reasonable notice in case the pledgee intends to sell the goods.• In case he does not receive the notice he has a right to claim any damages that may results.• In case of sale, the pledgor is entitled to receive from the pledgee any surplus that may remain with him after the debt is completely paid off.

Cont….

•The pledgor has a right to claim any accruals to the goods pledged.

• If any loss is caused to the goods because of mishandling or negligence on the part of the pledgee, the pledgor has a right to claim the same.

Pledge by Non-Owners

•Mercantile agents•Person in possession under a voidable contract.•Pledgor having limited interest.•Seller in possession of goods after sale.•Buyer in possession of goods under an agreement to sell•Co-owner in possession.

Difference between ‘Pledge’ and ‘Bailment’.

• Here, one party surrenders goods to another party for specified period or purpose.• Here, the goods are to be returned after time is over or purpose is over.• Here, the goods may be returned in a changed from also according to the instructions of the bailor.• The bailee can not sell the goods.

• Here, goods are surrendered as a security for the loan taken or for performance of a promise.• Here, the goods are to be returned only when pawnor returns money to the pawnee.• Here, the goods are to be returned in the same form.• The pawnee can sell goods after giving a due notice to the pawnor.

Bailment Pledge

Difference between ‘Sale’ and ‘Bailment’.

•Ownership: Not transferred.

•Return: Bailee is bound to return the goods in specie.

•Ownership: Transferred.

•Return: Buyer is in no obligation to return the goods.

Bailment Sale

Difference between ‘License’ and ‘Bailment’.

•Delivery: Goods are delivered to bailee.

•Permission: There is nothing like permission for use.

•Delivery: Goods are not delivered to licenser.

•Permission: Permission is give to only one person for the use.

Bailment License

Thank youDIPESH PATEL