Contract of bailment – kinds , Rights & Liabilities of Bailor and Bailee

Contract of bailment – kinds , Rights & Liabilities of Bailor and Bailee

BAILMENT (Ch. IX: ss. 148—181)

DEFINITIONS (ss. 148-149, 153, 159, 162 & 165)

The word “bailment” comes from the French verb Bailler, to deliver. “Bailment” is a technical term of the Common Law, signifying delivery goods, which are to be returned according to the directions of the giving such goods. Thus, handing over a cloth to a tailor (to be stitched into a shirt) would be an example of a “bailment’. Lending a novel to a friend — assuming that the friend will (hopefully) return it after reading — is yet another example of a bailment.

Bailment defined (S. 148)

A “Bailment” is the delivery of goods by one person to another for some purpose, upon a contract that they (i.e. the goods) shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.

Bailor, bailee (S. 148)

The person delivering the goods is called the “Bailor”. The person to whom they are delivered is called the “Bailee”

If a person who is already in possession of the goods of another, contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.

REQUISITES OF BAILMENT

the three important elements of a bailment are the following:

• Contract

In a bailment, the delivery of goods is upon a Contract that, when the purpose is accomplished, they shall be returned. But it may be noted that though bailment is based on a Contract, there are some exceptions, e.g., the case of a finder of goods. There is no contract between the finder of a lost article and its owner; nonetheless, as will be seen later, the finder is treated in law as a bailee of the lost article. (Sec. 168)

• Temporary delivery of goods

The main characteristic of a bailment is that the delivery contemplated is for a temporary purpose. There can be no bailment if the whole property is transferred, and the thing delivered is not to be specifically returned or accounted for; nor where the delivery of property is for an equivalent in money or another commodity; if so, it is a sale or exchange, not a bailment. Similarly delivery of Government promissory notes to a treasury for cancellation and consolidation into a single note, is not a bailment, because the person who gives them retains no interest in the individual notes.

Now, the delivery may be actual or constructive. Actual delivery may be made by handing over something to the bailee. Constructive or symbolic delivery may be made by doing something which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf (Sec 149). Thus, the delivery of a document of title may amount to the delivery of goods referred to therein.

It may be noted that bailment involves a change of Possession Mere custody without possession does not create the relationship of a bailor and bailee. Thus, a servant in possession of his master’s goods, or a guest using his host’s goods, cannot be called a bailee.

But, as stated earlier, if a person is already in possession of the goods of another and contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they were not delivered to him by way of bailment.

• Return of specific goods

The person to whom the goods have been delivered is to return the specific goods either to the bailor or to somebody else according to the directions of the bailor. If the thing delivered is not to be specifically returned or accounted for, there is no bailment. Even if the goods bailed are in the meantime altered in form, as, for instance, if corn is converted into flour, or a piece of cloth is made into a coat, still the contract is one of bailment. It is sufficient if the right to have re-delivery of the same matter rests with the owner,

It is to be noted that the bailor need not be the owner of the goods which he delivers, because his business is to transfer possession and not ownership. (Cases where a valid pledge – which is a form of a bailment — can be made by a person who is not the owner of the goods is discussed later in the Chapter.)

DIFFERENT KINDS OF BAILMENTS

In a leading English case, Lord Holt mentioned six kinds of bailments, as under.

• Deposit: A simple bailment of goods by one man to another to keep for the bailor’s use.
• Comodatum: When goods are lent to a friend gratis to be used by him.
• Hire: When goods are delivered to the bailee for hire.
• Pawn: When goods are delivered to another by way of security for money borrowed. (This is also referred to as a pledge)
• When goods are delivered to be carried or something to be done on them, for reward payable to the bailee.
• Delivery as in the last case, but without reward.

Rules as to delivery (ss. 149 and 165)

The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf: S. 149. If several joint owners of the goods bail them, the bailee may deliver thornback to, or according to the directions of, one joint owner, without the consent of all, in the absence of any agreement to the contrary: S. 165.

Case— A jeweller was engaged by a lady to melt old jewellery and make new ornaments. This work was done at the jeweller’s house under the lady’s supervision. Every evening, the lady would lock the half-made jewellery into a box, leave the box in the jeweller’s house, but take its key with her. One night, the jewels were stolen. On a suit filed by the lady, the question arose whether the jewels were in the possession of the jeweller or of the lady on the night when they were stolen. The court held that in the circumstances, there was a re-delivery of the jewels to the lady every evening and that they could not be said to be in the possession of the jeweller when they were stolen. (Kalya Peruma/ v. Visalakshmi, A.I.R. 1938 Mad. 32)

Bailment when voidable (S. 153)

A contract of bailment is voidable at the option of the bailor if the bailee does any act with regard to the goods bailed, which is inconsistent with the conditions of the bailment. (S. 153).

Illustration— A lets to B, for hire, a horse for his own riding. B drives the horse in his carriage. This is, at the option of A, a termination of the bailment.

Gratuitous bailments (ss. 159 & 162)

A gratuitous bailment is one in which a loan is made without any charge, detriment or consideration. Thus, when a person borrows a book from a friend, it is a case of a gratuitous bailment. The following three points are to be noted with respect to such bailments:

1. The lender of a thing for use may at any time require its return, if the loan was gratuitous, — even though he lent it for a specified time or purpose. (S. 159)

But if on the faith of such loan made for a specified time or Purpose, the borrower has acted in such a manner that the return of the  thing lent before the time agreed upon would cause him loss exceeding the benefit actually derived by him from the loan, the lender must, if he compels the return, indemnify the borrower for the amount in which the loss so occasioned exceeds the benefit so derived. (S. 159)

3. A gratuitous bailment is terminated by the death of either the bailor or the bailee. (S. 162)

DUTIES AND LIABILITIES OF A BAILOR (SS. 150, 158—164)

The following are the three duties and liabilities of a bailor:

1. The bailor is bound to disclose to the bailee, faults—in the bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults

However, if the goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of the existence of such faults in the goods bailed. (S. 150)

Illustrations:

(a) A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and injured. A is responsible to B for damages sustained.

(b) A hires a carriage of B. The carriage is unsafe, though B is not aware of it, and A is injured. B is responsible to A for the injury.

The same principle is to be found in Roman Law, under which if a man knowingly lent his neighbour foul or leaky vessels, whereby the wine or oil put into them perished or was lost, he was liable for the damage caused.

2. Where, by the conditions of the bailment, the goods are to be kept or to be carried or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration,—the bailor must repay to the bailee the necessary expenses incurred by him for the purpose of the bailment. (S. 158)

3. The bailor is also responsible to the bailee for any loss which the   bailee may sustain by reason of the fact that the bailor was not entitled

1. to make the bailment; or
2. to receive the goods; or
3. to give directions respecting them. (S. 164)

RIGHTS OF BAILEE (Ss. 170-171, 180-181)

1. Right to recover charges:-If the bailment is non-gratuitous, Bailee has the right to recover the agreed charges. If charges are not fixed or agreed upon. Then Bailee can recover reasonable charges or charge which is charged by another bailee.

For Example: (1) A gives suit length to B, a tailor for stitching Shirt Pant Tailor tells A that charges of Stitching will be Rs. 500. In then case Tailor B has the right to recover from A Rs. 500 as stitching charges. Similarly, Mohan gives his mobile for Repairing to Mechanic B. B does not tells the repairing charges, In this case, Mechanic B can recover reasonable charges or charges which he takes from other consonner.

2. Right to return the goods in cases of joint bailers [S.165]:- If several joint owners of goods bail them the bailee may deliver them back to, or according to the directions of, one joint owner without the consent of all, in the absence of any agreement to the contrary. Thus when the goods have been delivered by several owners, Bailee can return goods to any one of the owner if there is no contrary Agreement. Right to recover charges Right to return the goods in cases of joint bailers [S.165] Right of Compensation [S.164] Right to apply to the court [S.167] Right against wrong does [S.180-181] Right of lien [S.170, 171]
3. Right of Compensation [S.164]:-The bailor is responsible to the bailee for any loss which the bailee may sustain by reason that the bailor was not entitled to make the bailment or to receive back the goods. or to give directions respecting them. Thus, bailee can recover the amount of loss which he has suffered due to the defective title of Bailor.
4. Right to apply to the court [S.167]:- If a person, other than the bailor, claims goods bailed, he may apply to the Court to stop the delivery of the goods to the bailor, and to decide the title to the goods. Thus, where a person, other than the bailor claims goods bailed the bailee may apply the court- (i) to the stop delivery of goods to the bailer; and (ii) to decide the title of the goods
5. Right against wrong does [S.180-181] :- If a third person wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment had been made; and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury. S.181:- Whatever is obtained by way of relief or compensation in any such suit shall, as between the bailor and the bailee, be dealt with according to their respective interests. This right has been discussed in the Bailor rights.
6. Right of lien [S.170, 117] :- Bailee can retain the possession goods belong to bailor until the charges due to the bailor are paid.

Author: Akshada Sarpande,
MIT School of law, student of FY BBA LLB