Tag: #bailment

The Law Of Bailment

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Introduction

Section 148 of the Indian Contract Act, 1872 defines the term Bailment, that upon a contract when one person delivers goods to another for some purpose and when the motive is achieved. That bail was either returned or else disposed of according to the directions discussed earlier in the contract of the person delivering them. Thus the Law of Bailment involves the transfer of possession from one person to another. The title of ownership did not get affected in this case.” bailor” is the one who delivers the goods. And “bailee” is another person to whom goods are delivered.

Essential Elements of the Law of Bailment

  • Delivery of possession.
  • Delivery of Goods upon contract.
  • Delivery of Goods for purpose.

How Bailed goods delivered to the bailee

Section 149 of the Indian Contract Act states that when the bailee made delivery by doing anything which has the effect of putting the possession of the goods of any person authorized to hold them on his behalf. Then, bailment happens between the parties.

Delivery of possession is of two types.

  • Actual delivery- when goods possession is delivered from the bailor to bailee, then actual delivery happens. 
  • Constructive delivery- physical transfer of goods does not happen here. Goods are remaining with bailor only, but something decided which has the effect of putting them in possession of bailee. 

Duty of Bailor

  • Duty of bailor to disclose faults in goods bailed- Section 150 of contract act, binds the bailor to reveal all the defects of goods bailed which he knows. And if he is not doing so, he will be responsible for damage arising from such faults directly to the bailee.

Duty of Bailee

  • Duty of reasonable care
  1. Section 151 of the act binds the bailee to take as much care of the goods bailed to him as a prudent man takes care of his goods.
  2. Section 152 states that if the bailee has taken due care, he is not responsible for loss, deterioration, or destruction of goods bailed.
  • Duty not to make unauthorized use

Section 154 of the provides that the bailee is liable to compensation if he makes any use of the goods bailed that is not according to the conditions of the bailment.

  • Duty not to mix goods
  1. Section 155 of the act states that if the bailee mixes the bailor’s goods with his goods but with the bailor’s consent, the bailor and bailee shall share an interest in proportion to the mixture produced.
  2. Section 156 states that if the bailee mixes the bailor’s goods with his goods which is separable. Without the bailee’s consent, then the bailee is bound to give the expense of separation and any damage arising from the mixture.
  3. Section 157 holds the bailee liable to pay compensation for the loss of the goods by mixing the bailor’s goods to his goods which cannot be separated and mixed without the bailor’s consent.
  • Duty to return goods bailed
  1. Section 160 of the act provides bailee duty to return or deliver goods bailed according to the direction of bailor as soon as the time expired for bailment, or the purpose has been accomplished for goods bailed.
  2. Section 161 states that on account of faults of Bailee the goods are not delivered at the proper time, then it is Bailee’s responsibility for any loss or destruction of the goods from that time.

Rights of Bailee

  • Right of lien – it gives the right to the bailee to retain goods or property until some charges due upon it or services rendered for its improvement to be paid by the bailor.

Two types of lien in bailment-

  1. Particular lien
  2. General lien
  •   Right to sue the wrongdoer

Section 180 of the Act confers the right of the bailee to sue wrongdoers.

Landmark Judgments

  • Hutton v Car Maintenance Co. – In this case, the plaintiff company maintained the defendant’s car. The defendant does not pay some dues. Then the plaintiff’s company took the car into its possession and claimed a lien for expenses. The court rejected the claim. 
  • Ram Ghulam v Government of Uttar Pradesh – In this case, police recovered some stolen ornaments from the plaintiff. But in the police station, they were again stolen. Plaintiff sued the government for the loss. The court dismissed the case.
  • Ultzen v Nicolas – In this case, a waiter took the overcoat of the plaintiff and hung it on behind the chairs. After having dinner, the plaintiff found that his overcoat was missing. He sued the owner for the loss of the coat. The owner was held liable.
  • Shaw &Co.v Simmons & Sons- In this case, the plaintiff consigned books to the defendant, a bookbinder. But the defendant failed to deliver them within a reasonable time. The defendant was held liable for the loss of the books.
  • Installment Supply (P) Ltd v Union of India – In this case, the court held that the Hire-purchase contract is not merely a bailment. But it has two aspects, bailment and an element of the sale.
  • Ashby v Tolhurst – In this case, the court held that the main essence of bailment is the transfer of possession of goods.
  • Jan and Son v A. Cameron – In this case, the plaintiff stayed at the hotel, his article stolen by someone. The court held the Hotelier liable.
  • Morvi Mercantile Bank Ltd v Union of India – In this case, the court held that Railway receipt delivery would amount to delivery of goods.

Conclusion

The position of bailment in India is clear from section 153 of the Contract Act. The law of bailment specifies the rights, duties, and liabilities of the bailee to avoid disputes between the bailor and the bailee. It forms a very vital part of the Indian Contract Act. Bailment is something people enter daily, even without realizing it. Its development with time has been crucial. Therefore, the laws should be dynamic but should also be rigid at the same time. 

The article is written by Megha Patel, a 2nd –year law student at The Mody University of Science and Technology, Laxmangarh, Rajasthan.

The article is edited by Shubham Yadav, pursuing B.com LL.B. from Banasthali Vidyapith.

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