CONTRACTS

OF BAILMENT
 • Concept of Bailment
• Bailment v. Other Transactions like Sale
• Elements of a Contract of Bailment
• Non-Contractual Bailment / Bailment Sui Generis
• Types of Bailment
•
Scheme of
Rights of the Bailor
• Against the Bailee

Discussion •
• Against the Third Party
Duties of the Bailor
• Rights of the Bailee
• Duties of the Bailee
• Termination of Bailment
• Finder of Goods
 BAILMENT - CONCEPT

Bailment – French Word –

Etymologically – Any kind of
‘Bailler’ = to give or to deliver Common Parlance – something
handing over i.e. change in
 any kind of handing over of which is in the hands of a person
possession with a condition to
certain property, particularly who is to return it in specie.
redeliver the goods.
goods, for a certain period.

Delivery of goods in trust, upon a Halsbury’s Law of England – “Bailment is

Blackstone – “Delivery of goods defined as a delivery of personal chattels in
contract, express or implied, that
in trust upon a contract, express trust, on a contract, express or implied, that
the trust shall be executed, and the trust shall be duly executed and the
or implied, that trust shall be
the goods returned by the bailee, chattels re-delivered in either their original or
faithfully executed on the part of altered form, as soon as the time of use for, or
as soon as the purpose of condition on which they were bailed shall
the bailee”.
bailment shall be answered. have elapsed or been performed. ”
BAILMENT - CONCEPT

• Pollock and Wright – “any person is to be considered as a bailee who otherwise than as a servant either
receives possession of a thing for another or consents to receive or hold possession of a thing for another upon
an undertaking with the other person either to keep and return or to deliver to him the specific thing or to
(convey and) apply the specific thing according to the directions antecedent or future of the other person”.

Section 148 of the Indian Contract Act 1872 – “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.
The person delivering goods is called the bailor.
The person to whom the goods are delivered is called the bailee”
 BAILMENT SALE

Transfer of Possession – Not Ownership Transfer of both Possession and Ownership

Concerned only with Movable Goods Both Movable and Immovable Goods

May be even Gratuitous – Finder of goods Must have a price

Bailee has to return the goods to the Bailor or has to

Buyer need not return the goods to the seller
dispose of according to his directions

Object of Bailment is temporary Object of Sale is permanent transfer to the purchaser

Purchaser can appropriate the property purchased by

Bailee cannot appropriate the property bailed to him
him
ELEMENTS OF
BAILMENT
 BAILMENT - ELEMENTS

Section 149 : Delivery to bailee how made.—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 authorized to hold them on his
behalf
• Property – Article / Personal Property – Movable
• Transfer of Possession / Delivery of Goods by the Bailor
• For a specified purpose – Obligation to deal according to the directions
• Delivered back to the Bailor or to a third person upon completion of the object
of Trust.
• Under a Contract – delivery of goods is the consideration for contract
 Movable Property: Q: Whether Money Q: Whether Animals

I: Goods that can be

moved from one place
qualify as Movable
Property?
qualify as Movable
Property?
to other.
MOVABLE
PROPERTY

Bailor should either Bailor should have the

own the property or right to deal with the
property in question
 • Possession is central to bailment
• Delivery of Goods from Bailor to Bailee
• Method of Transfer of Possession : Immaterial i.e.
II - TRANSFER may be through lending, pledge, hire or deposit for
safe custody, etc.
OF
• Transfer of Possession should be contract oriented
POSSESSION / – Either express or implied.
DELIVERY OF • Transfer is subjected to
GOODS • Knowledge and Express Consent of the Bailor
• Certain Obligations
• Delivery is Temporary
• Transfer could be actual or constructive
 • Bailee is entitled to Possessory Remedies against strangers
including the bailor not only in the contract but also in tort
and criminal law.
• Q: Can a servant or a guest using his master’s looking after
or using his / her’s master’s goods be called as a Bailee?? –
No – he has mere custody not possession
II - TRANSFER OF
POSSESSION /
• possessor has complete dominion over the property
while a custodian merely has the duty of care or
DELIVERY OF supervision over the property.
GOODS • Test of Bailment – Test of Effective Control – With whom
does the Control lies?
• If the owner maintains control over the goods, then there
is no bailment.
• Kaliaperumal Pillai v. Visalalakshmi Achi [AIR 1938
Mad. 32]
 • Constructive Delivery: Test: Look at the effect of putting the goods
in possession of the intended bailee or of any person authorized to
hold them on his behalf.
• Eg: Transferring the keys of a Warehouse
• Hiring of Locker – Bailment?
II - TRANSFER OF • No – Exclusive Possession of the Property remains with the
POSSESSION / customer.

DELIVERY OF • Customer is merely using the safe premises of the bank to store
a valuable item.
GOODS • In case anything happens to the contents of the locker, the
customer can sue the bank in the capacity of an aggrieved
customer who was denied the contracted service of Security as
assured by the bank.
• What if the Locker can be operated without a Key?
• National Bank of Lahore v. Sohan Lal [ AIR 1962 Punjab 534]
• Held: Bank – Bailee – Liable as well as Vicariously liable
 • Obligation to deal according to directions
• Alteration of the product as per the directions of
the bailor
III – SPECIFIC • No Purpose – No Bailment – Eg. A leaves a piece
PURPOSE of cloth with B, a tailor, without mentioning its
purpose. There is no bailment between A and B
• Purpose – Lawful Purpose
 • Transfer of Possession is temporary
• The direction for return or disposal
of the thing
may be given even after the purpose is
accomplished.
IV – • Even where the terms of the contract are silent
about return, there is an implied contract in a
POSSESSION TO bailment to return the articles in a reasonable time
after the purpose is achieved.
BE RETURNED
• Return could be in the same or altered form
• Q: Whether Carrier of Goods or Transporter of
Goods qualify as Bailee?
• A: No – The goods are delivered by seller to the
purchaser through a common carrier. Requirement
of Section 148 – Not satisfied.
 • Legal Liability arises out of the fact that the chattel is delivered
• The obligation of bailee is a contractual obligation and spring
only from the contract of bailment and not independently
• Delivery of goods is the consideration for a contract of
bailment

V – UNDER A • Contract could be express or implied

Ultzen v. Nichols [(1894) 1 QB 92]
CONTRACT • The plaintiff went to the defendant’s restaurant for the purposes
of dining there. When the plaintiff entered the restaurant, a
waiter took the plaintiff’s coat from him without being
requested to do so, and hung it on a hook behind the plaintiff.
When the plaintiff wanted to leave, he found that the coat was
lost. It was held that the defendant was the bailee of the coat as
his servant had assumed the possession of the same and he was
therefore liable for its loss which was due to his negligence.
NON-CONTRACTUAL
BAILMENT
 • Sui Generis – of his own kind ; peculiar to himself
• Every Contract of Bailment is enforceable at Law.
BAILMENT – • Exception – Those contracts which do not seek to increase or diminish
the burdens imposed upon on the bailee by the very fact of bailment. It
RELATIONSH is not necessary to incorporate it into the Law of Contract and to
provide a Consideration.
IP SUI • For eg. Finder of Goods / Safe Custody.
GENERIS – • Finder of goods is not bound to take them into custody and hence is not
a bailee, but if he takes them then as per Section 71 of ICA he is
NON subjected to same responsibilities as a Bailee.
CONTRACTU • Therefore there can be Bailment of Specific Property without there
being an enforceable contract
AL
• The legal relationship of a bailor and bailee can exist independently of
BAILMENT any contract and is created by the Voluntary taking of custody of goods
which are the property of others.
• Consent of Bailor to create a relationship of Bailment – Not required.
 NON-CONTRACTUAL BAILMENT

• Can there be bailment when a person obtains the possession without a contract
of bailment?
Ram Gulam v. Government of UP [AIR 1950 All. 106]
• Allahabad High Court - the obligation of a bailee can arise only out of a contract of bailment and not
otherwise.
• In this case, plaintiff’s property had been stolen. The same was recovered by the police and was kept
in the police Malkhana. From there it was again stolen and could not be traced. The plaintiff brought
an action to recover the value of property.
• The State was held not liable, firstly because it did not occupy the position of a bailee and therefore it
was not liable as such and secondly the police when it took and kept the property in its possession,
was acting in discharge of the obligations imposed by law, rather than in obedience to some executive
orders.
 Non-Contractual Bailment
State of Gujarat v. Memon Mahomed [AIR 1967 S.C. 1885]
Facts:
• The customs authorities seized two motor trucks, a station wagon and other goods belonging to the
plaintiff for non-payment of import duties on the said trucks and that they were used for smuggling
goods and that some of the goods were smuggled goods.
• The Revenue tribunals set aside the said order of confiscation and directed the Custom Authority to
return of the said vehicle to the plaintiff.
• Plaintiff applied for return – Informed that the goods were disposed off under the orders of the
Magistrate.
• Later discovered that the disposal was obtained making false representation that the property was an
unclaimed property.
• Plaintiff brought an action for the return of the said vehicles or in the alternative their value
amounting to Rs. 32000.
• Revenue Tribunal: Held that Customs Authorities were the ‘bailee’ of the abovementioned goods
pending the trial at the Tribunal. Hence liable to compensate the Plaintiff
• Supreme Court (on appeal): there is a possibility of bailment even without a contract. It has
been observed in the case that the bailment is dealt with by the Contract Act only in cases
where it arises out of a contract but it is not correct to say that there cannot be a bailment
without a contract.
 TYPES OF BAILMENT
Classic Categories enumerated in Coggs v. Bernard [(1558 – 1774) All ER Rep 1, (1703) 2
Ld Raym 909 per Holt J., 92 ER 107]
 TYPES OF BAILMENT

DEPOSITUM COMMODATUM LOCATIO ET CONDUCTI

O

when goods or chattels when goods are left with

Bare naked bailment of that are useful, are lent the bailee to be used by
goods, delivered by one to a friend gratis, to be him for hire; this is called ,
man to another to keep for used by him; and this is and the lender is
the use of the bailor called , because the called locator, and the
thing is to be restored in borrower conductor.
specie
 TYPES OF BAILMENT

VADIUM CLASSIC BAILMENT BAILMENT GRATIS

when goods or chattels when goods or chattels when there is a delivery of

are delivered to another as are delivered to be carried, goods or chattels to
a pawn, to be a security to or something is to be done somebody, who is to carry
him for money borrowed about them for a reward them, or do something
of him by the bailor; and to be paid by the person about them gratis,
this is called in Latin who delivers them to the without any rewards for
vadium, and in English a bailee, who is to do the such his work or carriage,
pawn or a pledge. thing about them which is this present case.
 Types of Bailment
• Gratuitous Bailment :
• Where goods are deposited gratuitously to be kept by the bailor and to be
returned on demand to the bailor or to his nominee
• Bailee receives no Compensation
• Eg: Borrowing a Friend’s bike – liable for compensate for loss only if gross
negligence on the part of the bailee is proved
• made only for the benefit of the bailor and is not a source of profit to the bailee
• Bailment for Consideration:
• Bailment for Consideration or Reward
• Consideration need not flow from the bailor
 Types of Bailment
• Sub-Bailment :
• A Sub-bailee is a person to whom the actual possession of the goods is
transferred by someone who is not himself the owner of goods but has a
present right to possession of them as a bailee of the owner
• If the Sub-bailee accepts the possession of the goods, he assumes the
obligations of a bailee towards the original bailor.
• The Bailor has a right of action against the sub-bailee for breach of any of his
duties.
RIGHTS OF THE BAILOR
Against the Bailee
Against Third Party
 AGAINST THE BAILEE

Right to Take back the Goods bailed (Section 148)

• To take back the goods bailed after fulfilment of the specific purpose or after completion of the time fixed
or within a reasonable time

Right to Terminate the Bailment and claim damages (Section 154)

• For unauthorized use of bailed goods

Right to Demand Return of Goods (Section 159):

• In the case of gratuitous bailment, the bailor can demand the return of goods whenever he pleases even
though he lent them for a specific time or purpose.
• Exception: if the bailee has acted in such a manner that returning the goods would result in a loss
exceeding the benefit derived by the bailment, then the bailor would be liable to indemnify the bailee for
the amount by which the loss exceeds the benefit.
• Right to claim the increase or profit from goods bailed (Section 163)
• In absence of contract to the contrary, bailor is entitled to claim any increase or
profit from the goods bailed.
• Right to claim damages due to mixing up of goods (Section 155-156)
• When goods are mixed with the consent of the Bailor (Section 155)
• Bailor and Bailee shall have interest in the mixed product in proportion to their respective
shares in the mixture thus produced.

• When goods are mixed without the consent of the Bailor (Section 156-157)
• Section 156: Mixed Product Separable –
• Property to be divided back
• Bailee bound to bear the cost of separation and damage arising from the mixture
• Section 157: Mixed Product Inseparable
• Bailor is entitled to compensation by the bailee for the loss of goods.
 Rights against third party
• Section 180 : if a third person wrongfully deprives the bailee of the use or possession of
the goods bailed, or does any injury, the bailor may bring a suit against the third person
for such deprivation or injury.
• Both Bailor (by virtue of Ownership) and Bailee (by virtue of Possession)
• Bailee entitled to Possessory Remedies – includes
• The Right to Recover Full Damages from a stranger who caused loss against a wrongdoer
• Claim for Specific Delivery of Bailed Goods

• Section 181 : The bailor has a right to obtain the apportionment of relief or compensation
obtained by such suit.
• Irrespective of whether bailor and / or bailee sue individually or collectively, the
defendant cannot be liable in all for more than the value of the goods and special
damages, if any.
DUTIES OF THE BAILOR
Disclose Faults in the Goods Bailed (Section 150)
Section 150: The bailor is bound to disclose to the bailee faults in the goods
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.
If such 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.

• Duty of the bailor to disclose defect or facts in the goods bailed.

• Duty is limited to only to the defects and faults which are known to the
bailor or can reasonably know.
• What to disclose? – Facts that materially interfere with the use of the goods.
 DUTY TO REPAY NECESSARY EXPENSES
Section 158: 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 shall repay to the bailee
the necessary expenses incurred by him for the purpose of the bailment

• Gratuitous Bailment for the services provided by the Bailee

• Duty of the Bailor to Compensate the bailee, necessary expenses incurred by
him towards the bailment.
• But the bailment should be either for
• Safe Custody
• Carriage
• Working upon
• Duty to Compensate (Section 164):
• Responsibility of Bailor for any loss which the bailee may sustain for bailment of
goods that the Bailor was not entitled to make
• Compensation for loss due to imperfect title in the goods.
• To Receive Back the Goods
• Duty of the bailor to receive back the goods when the bailee returns them after
the expiry of the time or period of bailment
• Refusal to take return – Bailor is responsible for the delay caused on his part –
Liability to pay demurrage charges
DUTIES OF THE BAILEE
 To Take Reasonable Care of the Goods bailed – Section 151-152

• Section 151 -
• Reasonable Care – Test of Reasonability – As much of care as a man of ordinary
prudence under similar circumstances will take of his own goods
• Duty of Reasonable Care – Same for bailment for consideration and gratuitous bailment
• Liability for the Negligence of Servants
• If Negligence in the course of employment / scope of authority of the servant– Master vicariously
liable

• No liability for third party interference. Eg. Destruction by Mob

• Section 152 – Exception Unless contract to contrary –– Bailee is not liable – Section 152
• loss / damage despite reasonable precaution
• Loss / Damage due to reasons beyond the control of the bailee
• Cause was of such a nature that he could not have foreseen it and averted the same by
exercise of reasonable care and precaution.
Calcutta Credit Corporation Limited v. Prince Peter of Greece [AIR 1964 Cal 374]
• Car received for repairs by an automobile garage was damaged by the fire.
• Structure of the garage: Pucca structure with wooden walls. Within the garage
existed vehicles containing petrol along with combustibles like thinners and
paints
• Garage partitioned by wooden walls and a part of it was also used for cooking
• Inadequate arrangements for fire extinguishment
• The room in which plaintiff’s car was kept could not be opened for 15 min after
the fire broke out as the keys were not readily available
• Held: Defendants had not taken due care and were hence liable
• Defendant – Appellant (on appeal): Same care as their own goods. Own goods
also destroyed in fire.
• Plaintiff – Respondent had seen the condition of the garage before handing over
the car at the garage. Hence Law of Estoppel to apply.
• Calcutta High Court: The words ‘as a man of ordinary prudence would take of
his own goods" do not mean that if the bailee's own goods are lost together
with the bailed goods, kept at the same place, it necessarily shows that the
bailee has taken the reasonable care required of him by law with respect to the
bailed goods’………
• ………. Even a knowledge on the part of the bailor that the bailee keeps the
goods in his possession in a particular manner would not estop the bailor from
pleading that the bailee had failed to take the care required of him by statute
• ………The only cases where the bailee would be immune are laid down, in India,
expressly in Section 152 of the Contract Act, namely, "if he has taken the
amount of care of it as described in Section 151“
• …..The degree of care varies with the kind of engagement and therefore when
a person undertakes such job, the law not only requires that he should possess
the requisite skill but also that he has requisite plants and appliances and that
his premises are also reasonably suitable for doing that job.
 Not to Unauthorizedly Use the Goods bailed
Section 153: A Contract of bailment is voidable at the option of the bailor if the
bailee does any act with regards to the goods bailed inconsistent with the
conditions of bailment
Section 154: If the bailee makes any use of the goods bailed which is not according to
the conditions of the bailment, he is liable to make compensation to the bailor for any
damage arising to the goods from or during such use of them

• Bailee to act according to the purpose agreed or otherwise instructed by the bailor
• Unauthorized use of bailed goods can result in
• termination of bailment and claiming back the goods
• damages for loss due to unauthorized use, if any
• If, however the loss or destruction was due to some inherent defects in the goods themselves and
the loss would have occurred in any case, then this will not be considered as a loss resulting from
the unauthorized use.
• Ground for termination of contract
Not to mix the goods bailed with his own goods
• Duty of the Bailee to maintain a separate identity of the Bailor’s goods
• When goods are mixed with the consent of the Bailor (Section 155)
• Bailor and Bailee shall have interest in the mixed product in proportion to their respective
shares in the mixture thus produced.

• When goods are mixed without the consent of the Bailor (Section 156-157)
• Section 156: Mixed Product Separable –
• Property to be divided back
• Bailee bound to bear the cost of separation and damage arising from the mixture
• Section 157: Mixed Product Inseparable
• Bailor is entitled to compensation by the bailee for the loss of goods.
 To Return the Increase in the Goods
Section 163: In the absence of any contract to the contrary, the bailee is bound
to deliver to the bailor, or according to his directions, any increase or profit
which may have accrued from the goods bailed.

• Bailee is bound to deliver to the bailor any increase or profit accruing from the goods bailed.
 To Return the Goods Bailed
Section 160: It is the duty of the bailee to return, or deliver according to the
bailor’s directions, the goods bailed, without demand, as soon as the time for
which they were bailed has expired, or the purpose for which they were bailed
has been accomplished.

• Duty of the Bailee to return the goods bailed:

• On expiration of time
• On accomplishment of purpose
• Bailor can demand the goods if the time is over irrespective of whether the
purpose if accomplished.
Bailee’s Responsibility when the goods are not duly returned
Section 161: If by the fault of the bailee, the goods are not returned,
delivered or tendered at the proper time, he is responsible to the bailor for
any loss, destruction or deterioration of the goods from that time

• Bailor can sue the Bailee for :

• Wrongful Conversion / Wrongful Detention of the goods as the case may be.

• ‘Deterioration’ – Extent of Claim –

• Claim for Physical or Actual Deterioration of Goods and not full Market Price of the Goods
unless where the goods are completely destroyed.

• Section 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.
 Not to set up any adverse title against the bailor

• Bailee must not set up a title adverse to that of the bailor

• He must hold the goods on behalf of and for the bailor
• He should not deny the title of the bailor
• He should not set up his own title or that of a third party
RIGHTS OF THE BAILEE
 Right to Recover Necessary Expenses Incurred on Bailment
– Section 158
Section 158: 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 shall repay to the bailee the necessary expenses incurred by him for the
purpose of the bailment

• This right irrespective of whether the bailment is for reward or gratuitous.

• Recovery of Necessary Expenses –
• For instance – Bailment of Dog – Necessary Expenses – Feeding it food. Extra Expenses – Buying
the dog a toy.
 Right to Recover Compensation from the Bailor
Section 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

• If the bailee suffers a loss because the bailor was not entitled to make the bailment or to receive
the goods, or give directions relating to the goods, the bailor is liable to make it good to the
bailee.
• Q: What about Non-Contractual Bailment?
 Right of Lien on the Goods Bailed

• Lien: a right to keep possession of property belonging to another person until a

debt owed by that person is discharged.
Section 170: Particular Lien: Where the bailee has, in accordance with the purpose of
the bailment, rendered any service involving the exercise of labour or skill in respect
of the goods bailed, he has, in the absence of a contract to the contrary, a right to
retain such goods until he receives due remuneration for the services he has
rendered in respect of them

• This right can be exercised so long as the remuneration in respect of those goods
has not been paid.
• Where the bailee has waived off his right of lien, he cannot exercise the same –
Illustration B
• Once the Bailee parts with the possession, the right of lien comes to an end.
 Right of Lien on the Goods Bailed
• Common Law Principle – “ If a man has an article delivered to him, on the
improvement of which he has to bestow trouble and expense, he has a right to detain
it, until his demand is paid.”
• The lien never arises unless the bailee has the rightful possession of goods
• The Right of Lien is only available in bailment where the bailee rendered any
service involving the exercise of labour and skill in respect of the goods bailed.
• Elements:
• Labour and / or Skill must have been spent
• To improve the goods bailed
• Lien to apply to only those goods on which labour and skill have been spent.
• Eg: Storage of goods in warehouse. Warehouse owner not entitled to Lien – as no
labour / skill is being spent.
 Right of Lien on the Goods Bailed – Exception
Section 171: General Lien: Bankers, factors, wharfingers, attorneys of a High Court
and policy-brokers may, in the absence of a contract to the contrary, retain as a
security for a general balance of account, any goods bailed to them; but no other
persons have a right to retain, as a security for such balance, goods bailed to them,
unless there is an express contract to that effect

• Persons who are entitled to general lien as a security for the general balance of
account, unless excluded by contract
• Right of General Lien has been conferred upon:
Bankers Wharfingers Policy Brokers
Factors Attorneys of High Court Any other person as agreed under the contract
• General Lien: Right to Retain the Property of another for general balance of
account
• Particular Lien: Right to Retain it only for a charge on account of labour employed
or expenses bestowed upon the identical property detained.
 Right of Lien on the Goods Detained - Exception
• General Lien only confers the right to retain the goods until the amount is paid but
not the right to otherwise alienate the property.
• Banker’s Lien : Confined to securities and properties in the custody of the banker and
those properties which belong to the customer and held by bank as security
• Factor’s Lien: A Factor is an agent entrusted with the possession of goods for the
purpose of sale.
• Wharfinger’s Lien: A Wharfinger is the owner or occupier of a wharf, who for hire
receives merchandise on his wharf, either for the purposes of forwarding it or for
delivery to the consignee on such wharf. Eg: Port Trusts
• Attorney’s Lien:
• Lien on Property recovered or preserved by the efforts of the solicitor
• Papers or Documents given to advocates for records / evidences – Lien? No – SC judgements read
with the provisions of the Advocate Act 1961

• Statutory Lien: Right of Lien prescribed under Statutes – Eg. Sale of Goods Act
TERMINATION OF
BAILMENT
 Grounds for Termination of Bailment
Section 160: Accomplishment of Purpose / Expiration of Time
Section 153: Bailee’s Act inconsistent with conditions
• Bailor has a right to Terminate not bailee
• Advance Notice of termination to be given
Section 162: Termination by Death of Bailor and / or Bailee
• Heir continues to occupy the character of Constructive Trustee in regards to
the goods bailed.
• Bailee’s estate liable for any default in his lifetime
Section 159: At the Will of the Bailor:
• But the bailor has to compensate the bailee if returning the bailed goods
would result in a loss exceeding the benefit derived by the bailment

Deterioration of Perishable Goods: Contract ends once the goods extinguishes

Usual Grounds for Termination of Contracts under the Indian Contract Act 1872
FINDER OF GOODS
 • Quasi-Contractual Relationship
• Section 71: When Finder of Goods = Bailee?
• When the finder takes the goods into his custody
POSITION OF • Same Duties as that of a Bailee +
FINDER OF • Duty to Return the Goods once the true owner is
found.
GOODS • If by the default of the bailee to return the goods,
there is loss, destruction or deterioration of goods,
the bailee shall be liable.
• Rights of the Bailee (Section 168 and 169)
 RIGHTS OF THE FINDER OF GOODS
Section 168: The finder of goods has no right to sue the owner for compensation for trouble and
expense voluntarily incurred by him to preserve the goods and to find out the owner; but he
may retain the goods against the owner until he receives such compensation; and where the
owner has offered a specific reward for the return of goods lost, the finder may sue for such
reward, and may retain the goods until he receives it.

General Rule: No Right to receive compensation as the trouble and expenses are
voluntarily incurred.
Exception:
1. Where the owner has offered a specific reward for the return of the goods lost. –
then finder may sue for such reward and consequently is entitled to the right of
Lien over the goods.
2. Where the lost goods are returned to the Owner and the owner promises to
compensate for the trouble and expenses the finder undertakes with respect to the
goods – then the finder can sue for enforcement of promise.
 RIGHTS OF THE FINDER OF GOODS
Section 169: When a thing which is commonly the subject of sale is lost, if the owner cannot
with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges
of the finder, the finder may sell it—"
1. when the thing is in danger of perishing or of losing the greater part of its value, or
2. when the lawful charges of the finder, in respect of the thing found, amount to two-thirds
of its value.

Finder’s / Bailee’s Right to Sell to Goods Found :

• Owner of the goods cannot with reasonable diligence be found
• Owner found, but he refuses to pay the lawful charges as declared under S. 168
• When the goods found is in danger of perishing or of losing the greater part of its value
• When the lawful charges of the finder, in respect of the thing found, amount to two-thirds
of its value.