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1. Bailment (derived from French word bailer) 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 .
2. The person delivering the goods is called the bailor and the
person to whom they are delivered is called the bailee. E.g.: 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. Hiring a
bicycle Delivering watch for repair
3. 1. Delivery of possession 2. Delivery of goods should be
upon a contract 3. Delivery of goods must be for a specific purpose
4. Return of specific goods in specie(same)
4. 1.Delivery of the Goods: The first unique feature of
bailment is that the bailor must transfer his possession of goods
to the bailee. The goods should be put in the legal possession of
the bailee. Delivery may be of two types: a. Actual delivery:
Handing over physical possession of the goods. b. Constructive
delivery: Only effect of putting the goods into the bailees
possession.
5. 2.Delivery of goods should be upon a Contract : When a
persons s goods go into the possession of another without any
contract there is no bailment. However a finder of lost goods of
another is considered to be a bailee even though there is no real
contract .The contract may be express or implied
6. 3.Delivery of Goods must be for a specific purpose : U/S 148
provides , the delivery of goods from bailor to bailee must be for
some purpose . If goods delivered by mistake to a person , there is
really no bailment .
7. 4.Return of Specific Goods in Specie(same): Goods should be
returned to the bailor or disposed of according to his direction
,either in their original or in an altered form , when the purpose
of bailment is over.
8. Basis of Distinction Bailment Contract of Sale Transfer of
Ownership / Possession There is only transfer of possession of
goods from the bailor to the bailee. There is transfer of ownership
of goods from the seller to the buyer. Consideration Consideration
need not be passed between bailor and bailee. Consideration in
terms of price must be passed between seller and buyer. Return of
Goods The bailee must return the goods to the bailor on the
fulfillment of the purpose for which the bailment is made. There is
no question of such return of goods in contract of sale.
9. Kinds of bailment Based on benefit: Bailment for the
exclusive benefit of : 1] bailor: leaving goods in safe custody
without paying 2] bailee :a loan of some article like a pen 3]
mutual benefit: contracts for hiring, repair ,etc
10. Based on reward: 1] Gratuitous bailment: Goods given to a
friend or any one else, to be used by him without any (unnecessary)
reward or remuneration or consideration. example: lending a book to
a friend 2] Non-gratuitous bailment: bailment of reward: either
bailee or bailor is entitled to a remuneration / Consideration.
example: hire, tailor, etc
11. Duties of Bailor = Rights of Bailee To Disclose faults in
goods bailed [ ] To bear expenses [ ] To indemnify the bailee [ ]
Liability on premature breach of bailment[ ] In case of
non-gratuitous bailment Duty to bear the risk of loss [ ] Duty to
receive back the goods[ ]
12. a) Duty of Disclosure In the case of gratuitous bailment ,
the bailor must disclose all the known faults to the bailee and if
he doesnt make such disclosure , he is responsible for the damage
arising to the bailee directly from such faults . In case of
bailment for reward the bailor is responsible irrespective of the
knowledge of the faults in the goods bailed .
13. b) Duty to Bear Expenses : If the bailment is gratuitous
and the bailee is in no way benefited , the bailor has to bear the
expenses . In the case of bailment for reward , even though the
bailee is to bear the ordinary and reasonable expenses of bailment
(e.g., feeding of horse lent),
14. c) Duty to Indemnify the Bailee : The bailor should
indemnify the bailee for any cost or costs which the bailee may
incur because of the defective title of the bailor to the goods
bailed . Bailor title may be defective: At the time of bailment. At
the time of receiving back the goods from the bailee. At the time
of giving directions in respect of the goods bailed. Premature
termination of gratuitous bailment
15. Duties of Bailee = Rights of Bailor Take reasonable care of
goods[ ] Not to make unauthorized use of goods[ ] Not to mix goods
with his own goods[ ] Duty to return goods[ ] Returning any profit
/ accretions[ ] Not to set up any adverse title
16. 1)To take care of the Goods The bailee is bound by the
contract of bailment to return the goods when the purpose of
bailment is fulfilled .He has to take care of the goods while they
are in his possession . Measure of care depends on nature, quality,
quantity, and value of the goods. Bailee is not liable, if events
are beyond the control of bailee. If stolen, reasonable steps
otherwise liable. Loss due to the negligence of the servant.
17. 2)Duty not to mix with his own goods : : deal with the
provisions governing the rights of the bailor and bailee when there
is an inter- mixing of their goods . The bailee has an obligation
to keep the goods of the bailor separate from his own . a. Mixing
the goods with bailors consent. b. Mixing the goods without the
bailors consent and the goods are separable. c. Mixing the goods
without the bailors consent and the goods are not separable.
18. 3)Duty to Return the Goods Duty of the bailee to return the
goods without demand, on the expiration of the time specified or
when the purpose is accomplished .
19. 4)Duty not to use bailed goods in an Unauthorized Manner [
: Bailee is under an obligation not to use the goods in an
unauthorized manner or for an unauthorized purpose. If bailee does
so , the bailor can terminate the bailment , and claim damages for
any loss or damage caused by the unauthorized use .
20. 5)Duty to return any accretion of the goods [ : The bailee
must return to the bailor any increase or profits which have
accrued from the goods bailed . states that the bailor is entitled
to the profits accruing from the goods , unless there is a contract
to the contrary .
21. 6)Duty of Finder of Lost Goods: A finder of lost goods is a
bailee and such he is bound to take reasonable care of those goods.
He has to return the goods to the real owner if the real owner pays
his lawful charges
22. Lien is the right of one person to retain that which is in
his possession, belonging to another, until some debt or claim is
paid.
23. 1) Particular Lien [Sec.170]: A particular lien is a right
to retain only those goods in respect of which some charges are
due. (Skill & Labor). Generally, bailee has this lien only.
Conditions: a) Bailee must have rendered some service in relation
to the thing bailed, must be entitled to some remuneration- and
must be unpaid b) Service rendered by the bailee must be one
involving the exercise of labor or skill in respect of the goods
bailed. c) Services must have been performed in full directions of
bailor d) There must not be an agreement to perform the services on
credit. e) The goods must be in possession of the bailee. Bailee
loses the lien, if possession is lost. f) Must not be any contract
to contrary.
24. 2) General Lien [ A general lien is a right to retain all
the goods as a security for the general balance of account until
the satisfaction of the claims due whether in respect of those
goods. Bankers: Has general lien on all goods, cash, cheques and
securities deposited with him as banker by a customer, for any
money due to him as a banker. Factors: An agent entrusted with the
possession of goods for the purpose of selling on behalf of his
principal. If goods are delivered for some other purpose, no GL
Wharfingers: A person who owns or keeps a wharf. Wharf: Place,
adjoining to water, used for loading and unloading goods from ships
not to store.
25. Finder of goods is the person who find some goods which do
not belong to him. Right to Lien-[ ] Right to Sue for Reward- [ ]
Right to Sell- [ ] (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.
26. A finder of goods is subject to the same responsibility as
a bailee. The Duties are To take reasonable care of the goods
bailed Not to make any unauthorized use of goods Not to mix the
goods bailed with his own goods To find & return the goods to
Owner
27. On expiry of fixed period[ ] On accomplishment of object[ ]
Inconsistent use of Goods[ ] Destruction of subject matter of
bailment. Termination of Gratuitous Bailment: At desire of the
bailor even before the expiry of fixed period[ ] Death of the
bailor or bailee [ ]
28. PLEDGE OR PAWN PLEDGE [ ]: Bailment of goods as security
for payment of debt or performance of a promise is called Pledge /
Pawn. In other words, 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.
29. The bailor in this case called the Pledgeror Pawnor The
bailee is called Pledgee 'or Pawnee. Example: A borrows Rs.100 from
B & keeps his watch as security : pledge Special Feature of
Pledge is the special property in goods and not the general
property in goods, which passes to the pledgee. General property =
the ownership of the goods Special Property = the possession of
goods
30. Basis of Distinction Pledge Bailment Purpose It is bailment
of goods for a specific purpose, i.e., repayment of a debt or
performance of a duty. Bailment is for a purpose of any kind. Right
to Use Pawnee cannot use the goods pledged. Bailee can use the
goods as per terms of bailment. Right to Sell Pawnee can sell the
goods pledged after giving notice to the pawnor in case of default
by the pawnor. Bailor can either retain the goods or sue the bailor
for his duties.
31. Right of retainer{ }: right to retain goods until dues
paid. Right against true owner { } Right to claim reimbursement of
extraordinary expenses { } Right to sue the pawnor { } Right to
sell { }
32. To take care of the goods pledged. Not to make unauthorized
use of goods. Not to mix goods pledged wit his own goods. To return
goods To return accretions to the goods.
33. Enforcement of pawnees duties (to receive goods, accretions
etc.). Right to redeem { }. To comply with the terms of pledge. To
compensate the Pawnee for extraordinary expenses.
34. According to the general rule, only the true owner can
pledge the goods but under the following cases , even a non-owner
can make a valid pledge. 1. Pledge by mercantile agent 2. Pledge by
seller or buyer in possession after sale [ ] 3. Pledge where pawnor
has a limited interest 4. Pledge by co-owner in possession. 5.
Pledge by person to possession under voidable contract