Q. Define Bailment. Explain the Duties of Bailor and Bailee.
Ans. Definition of bailment:
Section 148 of the Indian Contract Act, 1872 defines 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. In bailment the person delivering the goods is called the ‘bailor’ and the
person to whom they are delivered is called the ‘bailee’. There are five kinds of bailment.
Examples - Hiring of goods, car , furniture etc.
Essential elements of bailment
To constitute a contract of bailment, the following conditions are to be satisfied.
(1) Delivery of possession of goods: Delivery of goods from one person to another person
for some purpose is an essential elements of bailment. According to Section 149 of the
Indian Contract Act, 1872 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.
(2) Delivery of possession upon a contract : There can be no bailment without a
contract. all conditions for valid contract are to be satisfied, such as Competent parties,
free consent lawful object etc.
(3) Return or dispose of goods according to the direction : In bailment the goods are
delivered for specific purpose. after the purpose is accomplished the goods may be
returned to the bailor in the same or altered direction, condition or maybe disposed of as
directed by bailor. If the person to whom the goods are delivered is not bound to restore
them to the person delivering them or to deal with them according to the mandate their
relationship will not be that 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.
3. without the consent of the bailor, the bailee shall compensate the bailor for the loss if the
goods mixed cannot be separated.
4) 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.
5) 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.
6) Duty to return any increase [Section 163].-In the absence of any contract to the contrary, the
bailee is bound to deliver to the bailor or according to his direction, any increase or profit which
may have accrued from the goods bailed.
