Rights and Duties of Bailor

RIGHTS AND DUTIES OF A BAILOR

INTRODUCTION

Chapter IX of the Indian Contract Act, 1872 talks about Bailment.

BAILMENT refers to- “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”.

BAILOR is the person who is delivering such goods.

BAILEE is the person to whom such goods are delivered by the bailor.

• The contract of bailment may be express or implied but in simple words, bailment is the shift of possession of the goods from the bailor to the bailee. It can also be considered as any kind of handing over of goods in a simple language.
• Bailment may or may not be an enforceable contract i.e., it is not necessary to enter into a contract of bailment to have a legal relationship of the bailor and bailee. It is sui generis which means of “its/his/her/their own kind, in a class by itself”.
• The Bailor is the owner or the possessor of the goods and possession is central to bailment.

RIGHTS OF THE BAILORS

GENERAL RIGHTS

• In case where the goods are transferred to pay a debt or to fulfil a promise, the Bailor has the full right to get the possession of the goods back in case of fulfilment of the promise or the payment of the debt, whatever the case may be.
• The Bailor has the right to give directions to the Bailee, regarding the manner of dealing with the goods bailed, which have to be obliged by the bailee.
• In the case of bailment for consideration, it is not necessary that the consent must flow from the bailor itself.
• Like action against the bailee, the bailor even has the right to action, in case of breach of the duties by the sub-bailee.
• The bailor may have an action in tort for conversion against the third party, if without any bailor’s express or implied authority the bailee himself bails the goods to the third party.
• A bailor who has lent the goods for use gratuitously has the right to demand its return anytime, even if it is for a specified time or purpose, subject to an exception explained further.
• The bailor has the right to give directions to the bailee regarding the manner of delivering or returning the goods bailed. If two or more bailors deposit property jointly then it should not be delivered by the bailee except on the authority of all bailors.
• Any profit or increase which may have occurred from the goods bailed is entitled to the bailor.
• If the bailee doesn’t act according to the purpose of the bailment or does any act inconsistent with the conditions of the bailment, the bailor has the right to terminate the contract of bailment i.e., voidable at the choice of the bailor.

RIGHTS IN CASE OF MIXTURE

There are cases where the bailee mixes the goods of the bailors with his own goods, with or without his consent and also a situation may arise where the goods mixed cannot be separated.

• In case of the consent of the bailor to the mixture, the bailor and the bailee shall have an interest, in proportion to their respective shares, in the mixture thus produced.
• In cases where the mixture was made without the consent of the bailor and the goods can be separated or divided, the property in the goods remains in the parties respectively and the bailee has to pay all the expenses arising out of separation, division or damage.

For Example: X bails 20 bags of cloth with a particular mark to Y and Y without X’s consent mixes those 20 bags with his own 20 bags, bearing a different mark. So, in this case the Bailor X is entitled to have his 20 bags of cloth back and the bailee Y would bear all the expenses.

• Where bailee’s own goods are mixed with the bailor’s goods without his consent and it is impossible to separate or divide the goods and deliver them back to the bailor, the bailor has a right to receive a compensation for the loss of the goods.

For Example: X bails 5L of Milk worth rupees 200 to Y and Y mixes it with his 3L of milk worth rupees 120 without X’s consent, then Y must compensate the Bailor X for his loss.

RIGHTS IN CASE OF DEFAULT BY BAILEE

There are cases where the bailee doesn’t duly return, deliver or tender the goods at proper time or in a proper condition for which there are remedies for the bailor.

• Though the Contract Act doesn’t specify the extent of the remedies that the bailor has in cases the good are not duly received, he can have an action for damages in contract as well as torts, against the bailee.
• The bailor also has equitable rights according to which when the goods are sold by the bailee, the bailor can, in equity, follow the proceeds, and can follow the proceeds wherever they can be distinguished either being actually kept separate, or being mixed up with other moneys.
• The bailee can also be sued by the bailor, in case of non-delivery of the goods, for wrongful detention or wrongful conversion of the goods.
• Under the provisions of Hire Purchase Agreement, a financer has a right to repossess the goods, however the recovery should be in accordance of the law.
• Along with the default of goods by the bailee, in cases where a third person causes any harm or injury to the goods or any sort of deprivation, the bailor can sue the third person for such injury or deprivation.

DUTIES OF THE BAILOR

GENERAL DUTIES

• In order to constitute bailment, the bailor has to deliver the goods to the bailee in such a manner that there is a shift of possession of the goods to the intended bailee or any person on his behalf.
• In the case where according to the contract of bailment, a bailee is to keep goods, carry goods or do work upon them and is doing the work without any remuneration, it is the duty of the bailor to repay all the necessary expenses incurred by the bailee to fulfil the conditions of bailment.
• A bailor who has lent the goods for use gratuitously has the right to demand its return anytime, even if it is for a specified time or purpose expect in the case where the bailee has performed certain actions due to which if he has to return the goods before the time earlier agreed upon, he would suffer considerable losses which would be more than what was gained through the goods. In such a case it’s the bailor’s duty to indemnify the bailee for the amount by which the loss exceeds the benefit.
• If a bailor refuses to accept the goods from the carrier at a proper time, all the necessary expenses borne by the bailee which were incidental to the safe custody by him would be borne by the bailor. Even if the goods returned by the bailee are damaged, it is the duty of the bailor to accept the goods and then later claim damages.
• If the bailee suffers any loss due to the fact that the bailor was not authorised to give directions or when the he had no right to receive back the goods or even when the bailor was not entitled to enter into a contract of bailment, the bailor would be liable for the losses to be paid.

DUTIES IN CASE OF FAULTS IN GOODS

• It is a bailor’s obligation to disclose all the faults, which he is aware of, in the goods bailed, that would materially interfere with the use of them, or expose the bailee to extraordinary risks.
• Not doing the abovementioned, would hold the bailor responsible for all the damage suffered by the bailee, arising directly from such faults.
• In cases where the goods are bailed for hire, the bailor would be responsible for the damage arising due to faults, irrespective of him being aware of such faults.

For Example:

1. If X lends a car to Y knowing that its breaks do not work properly and Y is injured in an accident caused due to the malfunctioning of breaks, then X would be held responsible for the damage sustained by Y.
2. If Y hires a car of X and X is not knowing that its breaks do not work properly and Y is injured in an accident caused due to the malfunctioning of breaks, even then X would be held responsible for the damage sustained by Y.

 

• It is the bailor’s duty to reveal to the carriers the nature of the goods and if it requires extra care in case, he knows them to be dangerous such as explosives and when he omits such a duty, he is himself liable for any damage arising out of it.
• It is the duty of the bailor to keep for hire only the goods which are fit for the purpose for which they are being hired. There is a duty to take reasonable care to make the goods reasonably safe for the purpose for which they are being hired. There also exists an implied warranty in a bailment for hire.
• A gratuitous lender is not liable for defects in the things lent of which he is not aware.

These were the rights and duties of a bailor.

Author: Anshpreet Singh Chowdhary,
National Law University, Delhi. 2025