Rights and Duties of Bailor and Bailee

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This article is written by Preeti Bafna doing BBA L.L.B from Unitedworld School of Law, Karnavati University. 

While understanding the rights and duties it is important to know the concept of bailment. 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. (Section 148 of the Indian Contract Act, 1872)

INTRODUCTION

BAILOR: A bailor is an individual who temporarily give up the possession but not ownership of a good or other property under a bailment. The bailor gives the possession of the good or property to another individual, known as the bailee.

BAILEE: A bailee is an individual who gains possession, but not ownership, of a good or other property. The bailee is also known as a custodian, is given with the possession of the good or property by another individual known as the bailor.

This relationship, in legal terms as a bailment, is based on a contractual agreement between the bailor and the bailee. The bailment specifies the terms and purpose of the change in custody and is outlined in writing such as a receipt or chit.

RIGHTS AND DUTIES OF BAILOR

  1. Right to enforce bailee’s performance: The bailor delivers goods to the bailee for some specific purpose, and in case of non-gratuitous bailment,  the bailor has an elemental right to achieve that purpose or obtain the benefit through the latter.
  2. Right to claim damages: In the case of bailment, the bailor has the right to claim for damages against the loss, if any, caused to the goods bailed due to the bailee’s negligence or misconduct.
  3. Right to claim compensation against unauthorized use of goods: If any third person does some injury to the goods bailed or deprives the rights of bailee of the use of the goods, the bailor may file a suit against the wrong-doer, and recover compensation from him. 
  4. Right to demand return of goods along with accretion to, if any: The bailor enjoys the right to have the goods bailed delivered back to him in a safe condition and after the time of bailment has expired or the purpose behind the bailment has been achieved. And, in the absence of any contrary term in the contract, the bailor is also entitled to any accretion to the goods bailed if it occurred while the goods were in the study of bailee.

DUTIES OF BAILOR

  1. Duty to disclose faults: In the case of gratuitous bailment, the bailor is expected to disclose all the defects to the bailee known to him and which would get in the way with the use of goods bailed. A non-gratuitous bailment carries a greater responsibility on the part of the bailor. He will be liable even if he was not in the know of the defects.
  2. Duty to repay bailee’s expenses: A bailor is bound to repay to the bailee expenses incurred by him for work done on the goods received under conditions of bailment, and in which he is not receiving any remuneration or deriving any benefit.
  3. Duty to indemnify the bailee: The bailor is bound to make good the loss suffered by the bailee that is in excess of the benefit derived, where he had delivered the goods without a reason and compelled the bailee to return them before the expiry of the period of bailment.
  4. Duty to compensate bailee for breach of warranty:  In every contract of bailment warrants the bailee about the bailor’s title being defect-free. And, if bailee subsequently suffers any loss by the reason of the bailor’s title being defective, it is the duty of the bailor to compensate the bailee for breach of warranty.
  5. Duty to claim back the goods: The bailor is bound to accept the goods returned by the bailee in accordance with the terms of bailment. If he refuses or fails to accept back the goods, if offered at a proper time and at a proper place, without any reasonable ground, he will be responsible for any damage to the goods and not the bailee.

RIGHTS AND DUTIES OF BAILEE

  1. Right to compensation: The bailor is responsible to the bailee for any loss which the bailee may sustain and the bailor was not entitled to make the bailment, or to give directions respecting them. If the bailor has no right to bail the goods or to give directions respecting them and consequently the bailee is exposed to some loss, the bailor is responsible for the same.
  2. Right to expenses or remuneration: The conditions of the bailment, the goods are to be kept, or to have work done upon them by the bailee for the bailor, thus the bailee is to receive no remuneration, the bailor will have to repay to the bailee the necessary expenses incurred by him for the purpose of the bailment.
  3. Right of Lien: If the bailee lawful charges are not paid he may retain the goods. So the right to retain any property until the charges due in respect of the property are paid is called the right of lien. The Supreme Court cited the following passage from HALSBURY’S LAWS OF ENGLAND as to the nature of this right.

DUTIES OF BAILEE

  1. Duty of Reasonable Care:  In the cases of bailment the bailee is bound to take as much care of the goods bailed to him as an ordinary and prudent man of sound mind.
  2. Duty of unauthorized use of goods: The bailee should use the goods bailed to him strictly in accordance with the conditions of the contract of bailment. If he illegally uses the goods bailed to him, the contract of bailment becomes voidable at the option of the bailor. 
  3. Duty of not to Mix the goods bailed with his own goods: The bailee must keep the goods bailed separate from his own goods. He should not mix his goods with another without any prior permission of the bailor.
  4. Duty of not to set up an adverse title: The bailee holds the goods on behalf of the bailor. So he has to return them to him. He cannot have the right of the bailor as to the ownership of the goods. 
  5. Duty of Return the goods: The bailee should return the goods bailed to the bailor on the expiry of the period on the fulfilment of the object for which the goods were bailed. The goods must be returned according to the directions of the bailor. If he fails to do so, he is responsible to the bailor for the loss, even if it arises without his negligence.

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