Bailment unit 15

UNIVERSITY OF LUSAKASCHOOL OF LAW

L200 – COMMERCIAL LAWUNIT 15: BAILMENT

George Mpundu [email protected]

mailto:[email protected]

STRUCTURE OF THE PRESENTATION

• Introduction• Definition of Bailment• Parties to Bailment• Essential Features of a Valid Bailment• Duties of a Bailor• Duties of a Bailee• Rights of a Bailor• Rights of a Bailee• Termination of Bailment

INTRODUCTION

• The term ‘bailment’ is derived from a French word ‘bailler’ which means to deliver a thing under a contract for return at a specified time or under specified conditions.

• Like the contracts of ‘guarantee’ and ‘pledge’ the contract of ‘bailment’ is also special types of contract.

DEFINITION OF BAILMENT

• A bailment is a contract, which results from delivery of goods.

• It implies a sort of relationship in which the personal property of one person, temporarily, goes into the possession of another person for some specific purpose, while the ownership is with another person.

• Therefore, the bailment involves a change of possession only (not ownership) from one person to another, for example, delivering a car, cycle, radio, T.V., etc., for repair or delivering garments to a drycleaner, leaving a car at the parking, etc.


• The term bailment may be defined as 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.

• Therefore, the delivery of goods by one person to another for some specific purpose, is known as bailment.


• The delivery of goods may also be for some specified period.

• The goods are delivered on the condition that they shall be returned back on the fulfillment of the specific purpose.

PARTIES TO A CONTRACT OF BAILMENT

• The following are the two parties to a contract of bailment:

• 1. Bailor: The person who delivers the goods is known as a bailor.

• 2. Bailee: The person to whom the goods are delivered for specific purpose is known as the bailee.

• Example: A gave his T.V or car to B, a mechanic, for repair .This is a contract of bailment between A and B.

ESSENTIAL FEATURES OF A VALID BAILEMENT

• The essential features of bailment which are as under:

• 1. The delivery of possession• It is an essential and important element of the

bailment that the possession of the goods must be delivered by the bailor to the bailee.

• If the possession is not delivered to the bailee, then there will not arise any contract of bailment.


• In the case of Ultzen v.Nicolls (1894)QB 92 an old customer went into a restaurant for the purpose of dinning there. When he entered the room, B, a waiter, took A’s coat, without being asked, and hung it on the hook behind him. When A rose to leave the restaurant, the coat was missing.

• It was held that the possession of the coat was given to the waiter and the restaurant keeper was liable to the bailor.


• In this case ,the waiter by taking the coat into his possession had relieved A of its care, and thus, assumed the responsibility of bailee.

• However had A instructed B where and how the coat should be put ,perhaps the results would have been otherwise.

• The delivery of the possession to the bailee may be of two kinds, namely: (a) actual delivery, (b) constructive delivery.


• The ‘actual delivery’ means the delivery when the bailor hands over the physical possession of the goods to the bailee.

• The ‘constructive delivery’, on the other hand, means the delivery when there is no change of physical possession.

• Example: A purchased an air conditioner from B’s shop. A left the air conditioner at B’s shop and requested him to send it to his (A’s) residence. In this case, B has taken the constructive delivery of A’s air conditioner, and therefore, B has become the bailee.


• It is worth noting that there is a difference between the ‘delivery of possession’ and the ‘custody of goods’ from the view point of bailment.

• A mere custody of goods does not create any relationship of bailor and bailee. Therefore, a person who has the mere custody of goods, without possession, is not a bailee, e.g., a servant using a master’s goods, or a guest using his host’s goods, is not bailee.

• The reason for the same is that the possession of the goods remains with the master or host.


• Sometimes, money is deposited by a customer with a bank in his account.

• In such cases, there is not a bailment as there is no obligation on the part of the bank to return the same currency notes. But it establishes a relationship of a creditor and debtor.


2. The delivery should be on the basis of some contract

• According to this element, the delivery of the goods to the bailee should be made on the basis of some contract.

• This is so because the bailmnet is always created by a contract between the bailor and the bailee.

• However ,the contract may be express (that is oral or writing) or implied (that is infered from the circumstances).


• Example: A delieverd car to B ,the owner of a service station ,for the purpose of servicing the car.

• In this case, there is express contract of bailment between A and B.

• It also worth noting that sometimes the bailment may arise even without a contract, for example, the finder of the goods is treated as a bailee.


3. The delivery should be for some purpose.• It is an essential element that the goods

should be delivered by the bailor to the bailee for some specific purpose.

• It is however, not necessary that the purpose should be expressly stated, in that it may implied from the circumstances of each particular case.


4. The delivery should be upon a condition to return• The goods must be delivered to the bailee for some

purpose and subject to the condition that the purpose is achieved, the goods should be returned to the bailor of disposed of according to his directions.

• If the bailee is not bound to return the goods or to dispose them according to bailor’s direction, there is no bailment at all.


• However, goods my be returned in its original form or in its altered form, for example, delivery of a piece of cloth to the tailor to be stitched into a coat.

• This element of bailment distinguishes it from many other contracts of the same kind, such as, sale, barter or exchange.

• In these transactions, the person, to whom the goods have been delivered, is under no obligation to return the same.

• Besides, there is a transfer not only of the possession but also of the ownership of the goods.

CLASSIFICATION OF BAILMENT

• The following are among the more important types of bailment.

• Hire • Custody • Carriage • Pledge • Loan of chattel for use• Delivery of chattel for treatment, as where a car is

taken for repair.

DUITIES OF A BAILOR

• The duties of a bailor, in the bailment, may be broadly grouped under the following heads:

1. Duty to disclose faults in the goods bailed• It is the first and the foremost duty of the bailor.• In Hyman & Wife v. Nye & Sons (1881) 6 QBD685, A

hired from B a carriage along with a pair of horses and a driver for a specific journey. During the journey a bolt in the under-part of the carriage broke away. As a result of this, the carriage became upset and A was injured.

DUITIES OF A BAILOR

• It was held that B was liable to pay damages to A for the injury sustained by him. The court observed that it was the bailor’s duty to supply a carriage fit for the purpose for which it was hired.

• Sometimes, the goods bailed are of dangerous nature(e.g., explosives). In such cases it is the duty of the bailor to disclose the nature of goods. [Great Northern Ry’.case (1932) 2 KB 742]

DUITIES OF A BAILOR

2. Duty to bear extraordinary expenses• It is the duty of the bailor to bear the

extraordinary expenses incurred by the bailee for the purpose of bailment.

• However, the ordinary and reasonable expenses are to be borne by the bailee.

DUITIES OF A BAILOR

• Example: A hired a taxi from B for the purpose of going to Ndola from Lusaka, during the journey, a major defect occurred in the engine. A had to pay K2 million as repair charges.

• These are the extraordinary expenses and it is the bailor’s duty to bear such expenses. However, the usual and ordinary expenses such as the expenses for petrol and minor repairs, etc. are to be borne by the bailee himself.

DUITIES OF A BAILOR

3. Duty of indemnifying the bailee• Sometimes, the bailor has no title to the goods bailed and

the bailee suffers some loss due to the defective title of the bailor.

• In such cases, it is the duty of the bailor to indemnify (i.e., compensate) the bailee for the loss suffered by him.

• The bailors title to the goods may be defective at the time of bailment, or at the time of receiving back the goods from the bailee, or at the time of giving directions in respect of the goods bailed.

DUITIES OF A BAILOR

• If the bailee suffers any loss due to any of such defects, the bailor must compensate him.

• Example: A delivered his car to B for safe custody. Subsequently, A sold the car to C and same has been registered in the name of C.

• In this case, on the sale of car , A’s title to the car ceases, and A must compensate B if he suffers any loss by reason of returning the car to A or disposing it according to his directions.

DUITIES OF A BAILOR

4. Duty to receive back the goods• It is the duty of the bailor to receive back the

goods when they are returned by the bailee on the expiry of the term of bailment or on the fulfilment of the purpose of the bailment.

• If the bailor refuses to receive back the goods, then he becomes liable to pay the compensation to the bailee for the necessary expenses of custody.

DUITIES OF A BAILOR

• Example: A delivered his car to B for two days for safe keeping. However A did not take back the car for one month.

• In this case, B can claim the necessary expenses incurred by him for the custody of the car.

DUITIES OF A BAILEE

• The duties of a bailee may broadly be grouped under the following heads:

• 1. Duty to take reasonable care of the goods bailed

• It is the first and foremost duty of the bailee. • According to this duty, the bailee is required

to take reasonable care of the goods bailed to him.

DUITIES OF A BAILEE

• The degree of care required by the bailee is similar to that of a man of ordinary prudence. Thus, the bailee is bound to take care of the goods bailed to him.

• He must take as much care as an ordinary sensible man would take under the similar circumstances, in respect of his own goods of the same type.

• The standard of care to be taken by the bailee is the same in all types of bailment, i.e., whether the bailment is ‘gratuitous’ or ‘non-gratuitous’.

DUITIES OF A BAILEE

• The measure of care depends upon the nature, quality, quantity and value of the goods bailed. If the bailee is negligent in taking the care of the goods bailed, then he is liable to pay damages for loss or destructive of the goods.

• In Houghland v. R.R. Luxury Coarches (1962) 1QB 694: A was a passenger in one of B’s luxury coaches. A put her suit-case in the boot of the coach from where it was lost.

• It was held that B was liable for damages. In this case, it was B’s duty to take reasonable care for the safety of customer’s laggage.

DUITIES OF A BAILEE

• Also Martin v. London Country Council (1947) KB 628: A was admitted in a hospital as a patient. On her entry, the hospital officials took charge of her jewellery for safe custody. The jewellery was stolen from a room where it was kept.

• It was held that the hospital officials were bailee for reward, and were liable for the loss of jewellery. In this case, the bailee had failed to exercise a care which the nature and quality of the articles required.

DUITIES OF A BAILEE

• (2) Duty not to make unauthorised use of the goods

• (3) Duty not to mix the goods bailed with his own goods

• (4) Duty to return the goods to the bailor• (5) Duty to return the increase in the goods

bailed• (6) Duty not to step an adverse title against the

bailor.

RIGHTS OF A BAILOR

• (1) Right to terminate the bailment• (2) Right to demand back the goods at any

time• (3) Right to file a suit against any wrong-doer• (4) Right to file a suit for the enforcement of

the duties imposed upon a bailee.

RIGHTS OF A BAILEE

• (1) Right to compensation • (2) Right to return the goods to anyone of the

joint bailors• (3) Right to recover agreed charges• (4) Right to file a suit to decide the title of the

goods bailed.• (5) Right to file a suit against a wrong-doer• (6) Right to a lien

TERMINATION OF BAILMENT

• (1) Expiry of the specified period• (2) Achievement of the object• (3) Inconsistent use of goods

THANK YOU

Bailment unit 15

Business

contract of bailment

delivery of goods

delivery of possession

bailment essential features

essential features of

bailee termination of

term bailment

valid bailment duties