Contract of Bailment, Rights And Duties of Bailor and Bailee, License, Sale
Contract of Bailment, Rights And Duties of Bailor and Bailee, License, Sale

 

Synopsis

  • Introduction
  • Essential Features of Bailment
  • Difference between Bailment and License
  • Difference between Bailment and Sale
  • Duties of Bailor and Bailee
  • Rights of Bailor and Bailee
  • Conclusion

Introduction-

The word “bailment” has been derived from the French word “ballier” which means “to deliver”. In general, Bailment means the delivery of goods of a person to whom permission is given to have the goods of another person.

The contracts of bailment come under a special class of contract and are dealt under Sections 148 to 181 of the Indian Contract Act, 1872. Though the Contract Act covers the general principles related to contracts of bailment but it does not deal with all types of bailment. The Carriers Act, 1865, The Carriage Act of Goods by Sea Act, 1925 and The Railways Act, 1890, are the few Acts which deal with special types of bailment.

According to Section 148 of the Contract Act, “Bailment means 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”.

The person delivering the goods is called the “bailer and the person to whom they are delivered is called the “bailee”.

Illustrations-

  1. Sanju delivers a piece of cloth to Manju, a tailor, to be stitched into a suit. There is a contract of bailment between Sanju and Manju.
  2. ‘Z’ lends a novel to ‘Y’ to be returned after a month. There is a contract of bailment between ‘Z’ and ‘Y’.
  3. Najuk sold some goods to Komal who left them in the possession of Najuk. The relationship between Najuk and Komal.

 

Essential Features of Bailment-

  • Agreement: Bailment is always created by an agreement between the bailer and the bailee. It can be either express or implied.
  • Delivery of Goods: Bailment involves the change of possession without giving ownership. The possession means the right to keep control over the delivered goods.
  • Movable Property: Goods in Bailment involves all types of movable goods except money. Thus, bailment of immovable goods cannot be done.
  • Definite Purpose: Goods are delivered for a definite purpose. For ex. repairing, tailoring, security, etc.

 

Difference between Bailment and License

Bailment License
a) The concept of Bailment is governed by the   Indian Contract Act, 1872. a) The concept of License is governed by the Easement Act, 1882.
b) Section 148 of the Contract Act, defines Bailment as “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.” b) Section 52 of the Easement Act defines Licenses as “a transfer of right in a specific immovable property to do or continue to do in or upon the immovable property of the grantor, something in absence of which would be unlawful but such right does not amount to an easement and interest in the immovable property.
c) Bailment is in regard to movable property. c) License is in regard to immovable property.
d) Bailment always requires consideration except in certain circumstances. d) License may or may not require consideration.
e) In the case of bailment, the goods are delivered by the bailer to bailor for a certain purpose with a condition that on fulfillment of such conditions, the goods shall be returned back. e) In case of license, the licensee is authorized to do or continue to in or upon immovable property of the grantor.

 

Difference between Bailment and Sale

Bailment License
a) The concept of Bailment is governed by the   Indian Contract Act, 1872. a) Sale is covered under Sale of Goods Act and Transfer of Property Act.
b) The parties involved in a Contract of Bailment are “bailor” and “bailee.” b) The parties involved in Sale are “vendor” and “purchaser.”
c) Bailment is in regard to movable property. c) Sale can be in respect of movable as well as immovable property.
d) In case of bailment, the goods are delivered by the bailer to bailor for a certain purpose and the goods can be used by the bailee only as per the instructions of the bailor. d) In case of sale, the goods or the property are transferred by the seller to buyer. Thus, the buyer can use the goods the way he wants.
e) Bailment may be without any consideration (gratuitous) or with consideration (non-gratuitous). e) Sale always requires consideration.
f) Ownership is not transferred in case of bailment. f) Ownership is transferred in case of sale.
g) Registration is not mandatory for the contract of bailment. g) A sale of immovable property which is of more than one hundred rupees, the sale must be in writing, registered and attested.

 

Duties of Bailor and Bailee-

  • Duties of Bailor:

1) Disclosure of known faults (Section 150): Bailor is supposed to disclose the known faults in the goods bailed to the bailee and if he fails to do so, he will be held liable for the damage casued to the bailee due to such faults. If the bailor bails goods for hire, he will be liable for even the faults which he isn’t aware of. However, in a bailment for consideration, he can be held responsible only for the faults which he is aware of and failed to disclose them.

2) Bear unordinary expenses of bailment (Section 158): The bailor has to bear any unordinary expenses incurred under contract of bailment. In case of bailment for consideration, when the goods are required to be carried or kept or some work is done in relation to them by the bailee, the bailor is required to repay all the expenses incurred by the bailee to him.

3) Indemnification of bailee for incurring loss when bailment is terminated prior to its term (Section 159): A bailment for consideration can be terminated at any time by the bailor even when the bailment was for a specific purpose or time. Any loss accrued to the bailee from such termination shall not more than the benefit derived from the bailment. In case the loss is more than the benefit, the bailee shall be indemnified by the bailor.

4) Receive back the goods: The bailor shall receive the goods back when the bailee returns them after the expiry of term or fulfillment of purpose of bailment. If the bailor denies the receipt of goods, the bailee shall receive compensation from bailor for the expenses incurred due to custody of such goods.

5) Indemnification of the bailee (Section 164): If the bailor’s title to the goods is defective and he is not entitled to make bailment and the bailee suffers any loss or damage as a consequence, the bailor will be liable for such loss or damage.

 

  • Duties of Bailee-

  • 1) Reasonable care of the goods (Section 151): The bailee has a duty to take care of the goods bailed as any reasonable man would take of his own goods under similar circumstances. The burden of proof that he exercised reasonable care negligently when he fails to return the goods or return them in a damaged condition lies on the bailee. If the goods are destroyed or damaged even after bailee’s reasonable care, then the bailee is not responsible for such loss under section 152.

2) Not use the goods inconsistently with the contract (Section 154): A bailee shall be liable for the loss incurred due to use of goods inconsistent with the terms of contract even if he did not act negligently and the damage has resulted due to an accident.

3) Not to mix the goods bailed with his own goods (Section 155, 156): The bailee has a duty not to mix his goods with the goods of the bailor and shall keep them separate. If he does so:

  1. with the consent of the bailor, the bailor and the bailee shall have an equal proportion of interest in this mixture of goods.
  2. without the consent of the bailor, the bailee has to bear the expenses of division and separation and the damages arising from such mixture, if the goods can be divided/separated.
  • without the consent of the bailor, the bailee shall compensate the bailor for the loss if the goods mixed cannot be separated.

4) Not to set up an adverse title (Section 117): The bailee shall not hold the goods for the bailor on behalf of him as per Section 117 of the Evidence Act, 1872. The bailee cannot deny the rights of the bailor to have the goods and receive them back. The bailor is bound to prove that the other person had a right to goods as against the bailor if he delivers them to person other than the bailor.

5) Return accretion to the goods (Section 163): The bailer shall deliver any increase or profit accredited from the goods bailed to the bailor except as otherwise provided in the contract.

6) Return the goods (Section 161): The bailee has a duty to return or deliver the goods bailed according to the bailor’s directions when the time of the bailment expires or the purpose of bailment has been fulfilled.

 

Rights of Bailor and Bailee-

  • Rights of Bailor

1) Enforcement of Rights: The bailor has a right to sue the bailee for enforcing all the liabilities and duties of him.

2) Avoidance of Contract (Section 153): The bailor has a right to terminate the bailment if the bailee doesn’t any act inconsistent with the terms of the bailment with regard to the goods bailed.

3) Return of goods (Section 159): When the goods are lent for consideration, the bailor has a right to demand their return as and when he wants even if he lent them for a specific period of time or purpose.

4) Compensation from wrongdoer (Section 180): If a bailee is deprived of the use or possession of the goods bailed by a third person wrongfully or if the goods are damaged, the bailee or bailor has a right to sue the third person for such damage or deprivation.

 

  • Rights of Bailee-

1) Delivery to one of several joint bailors of the goods bailed (Section 165): If goods of several joint owners are being bailed, the bailee may deliver them back to one joint owner without the consent of all owners when there is no agreement to the contrary.

2) Delivery of goods to bailor without title (Section 166): If any person other than the bailor claims the goods bailed, the bailee has a right to apply to Court to prevent the delivery of goods to the bailor and to decide the title of such goods.

3) Right to take action against trespassers (Section 180): If any third person deprives the bailee wrongfully of the possession or use of goods bailed to him, the Bailee can file a suit against that person in respect of the goods bailed.

4) Bailee’s Lien: When the charges incurred by the bailee in regard to the goods bailed are not paid to him, he has a right to lien i.e. right to retain the goods with him.

 

 

Conclusion-

On the basis of above discussion, it can be analyzed that bailment is a contract in which a delivery of possession of specific goods is given to another person for a specific purpose and it is different from the concept of license and sale. The bailee and the bailor have to perform in accordance with the provisions of the Indian Contract Act, 1872 and the contract of bailment.

 

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