Bailment & pledge 14

Bailment and Pledge

Aashish Mehra

Abhinav Venkat Barkha Sharda Aviral Sinha

Antony Brabhu

Bailment

Sec.148 defines ‘bailment’ as the delivery of goods by one person to another for some purpose, up on 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.

The person delivering the goods is called the ‘bailor’ and the person to whom they are delivered is called the ‘bailee’.

Eg: A delivers a piece of cloth to B ,a tailor ,to be stitched in to a suit. there is a contract of bailment between A and B.

Examples

Hiring a bicycle Giving cloth to a tailor Delivering watch for repair

Kinds of Bailment Gratuitous bailment: Goods given to a

friend or any one else, to be used by him without any (unnecessary) reward or remuneration or consideration.

Bailment for reward or remuneration: For example, goods given on hire, goods given for repair against charges, etc.

Requisites of bailment

Contract Delivery of possession For some purpose Return of specific goods

Bailor: Rights, Duties & Liabilities Termination of bailment (Section 153): For

example, A lets to B for hire a horse for his own riding. B drives the horse in his carriage. A can terminate the bailment.

Return of goods (Sections 160 & 161): Bailor has the right to get back the goods from the bailee as soon as time for which they were bailed has expired.

Right to claim compensation (Section 154): For wrongful use of goods by bailee.

Claim in case of mixture of goods by the bailee (Section 155-157):(i) With the consent of bailor. Bailor can claim proportionate share in mixed goods.(ii) Without consent of bailor. But goods can be separated. Bailor can claim expenses of separation & any damage arising from the mixture.(iii) Without consent of bailor. But goods cannot be separated. Bailor is fully entitled to compensation for the loss of the goods.

Right to receive any increase or profit from goods bailed.

Put bailee into possession (Section 149). Disclose faults in the goods bailed (Section

150). Not disclosing is a liability for bailor. Repay necessary expenses (Section 158). To

repay to bailee who receives no remuneration. To indemnify gratuitous bailee (Section 159).

Indemnifying for any loss due to earlier demand by bailor.

Responsible for any loss due to defect in title (Section 164).

To take back the goods.

Duties of bailor

To disclose known faults To bear extraordinary expenses of

bailment To indemnify bailee for loss in case

premature termination of gratuitous bailment

To receive back the goods To indemnify the bailee

Duties of bailee

To take reasonable care of the goods bailed

Not to make any unauthorised use of goods

Not to mix the goods bailed with his own goods

To return the goods

Rights of Bailee

1. Enforcement of rights2. Bailment by several joint owners3. Right to compensation: imperfect title4. Right to remuneration:extraordinary

damages5. Right to claim damages: defects6. Right to sue7. Right of lein

Finder of Lost GoodsRights of finder of goods

1. Right of lien2. Right to sue for reward3. Right of sale(i) If owner can not be found(ii)If charges are 2/3 rd of value of goods

and owner refuses to pay(iii) If goods are perishable in nature

Obligations of finder of lost goods

1. Take reasonable care of goods2. Not to use for his own purpose3. Not to mix goods with his own goods4. Try to find out the true owner of

goods

Termination of Bailment

Termination Of Bailment

Doing an act inconsistent with terms of bailment[S.153]

At desire of the bailor in case of gratuitous bailment[S.159]

On expiry of period[S.160] On accomplishment of object[S.160] Death of the bailor or bailee [S.162]

PLEDGE

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

pledges are a form of security to assure that a person will repay a debt or perform an act under contract. In a pledge one person temporarily gives possession of property to another party.

Uses Of Pledge

securing loans pawning property for cash guaranteeing that contracted work

will be done

Pledge has three parts: 

two separate parties a debt or obligation a contract of pledge

In sale both possession and ownership of property are permanently transferred to the buyer. In a pledge only possession passes to a second party

PLEDGE OR PAWN

Bailment of goods as security for payment of debt or performance of a promise :PLEDGE

Bailor: PAWNER Bailee: PAWNEE Example: A borrows Rs.100 from B & keeps his

watch as security : pledge

Difference between bailment & pledge:

PURPOSE: security? ; repairs? RIGHT OF SALE: sale on default? ; no

right to sale? RIGHT OF USING THE GOODS: no

right?

Rights of Pawnee: Right of retainer{S.173}: right to retain

goods until dues paid Right of transfer for subsequent advances:

{S.174}: on lending money to same debtor without further security ;right to retain earlier goods extends

Right to extraordinary expenses {S.175} Right to sue the pawner or sell the goods

on default.

Rights of Pawnor:

Enforcement of pawnee’s duties Defaulting pawnor’s right to redeem

John asks to borrow $500 from Mary. Mary decides first that John will have to pledge his stereo as security that he will repay the debt by a specific time. In law John is called the pledgor, and Mary the pledgee. The stereo is referred to as pledged property. As in any common pledge contract, possession of the pledged property is transferred to the pledgee. At the same time, however, ownership (or title) of the pledged property remains with the pledgor. John gives the stereo to Mary, but he still legally owns it. If John repays the debt under the contractual agreement, Mary must return the stereo. But if he fails to pay, she can sell it to satisfy his debt

Example

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