Bailment is derived from the French word ‘bailer’ means ‘to deliver a thing under a control’ its a relationship in common law where physical possession but not ownership of personal property, is transferred from one person to another for a specific reason or purpose with a condition to return goods when the purpose is over otherwise disposed of according to the direction of the owner.
The person who delivers the goods is known as the ‘Bailor’ and the person who receives the goods is known as ‘Bailee’ and the transaction is known as ‘bailment’ and the relation between them is defined in Section 148 of the Indian Contract Act. Bailment is a voluntary delivery of goods for a temporary purpose ‘on the understanding that they are to be returned in specie in the same or substitute form.
‘Bailment’, ‘Bailor’ and ‘Bailee’ defined.—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 the goods is called the ‘Bailor’. The person to whom they are delivered is called the ‘Bailee’. —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 the goods is called the ‘Bailor’. The person to whom they are delivered is called the ‘Bailee’.”
Explanation.—If a person is already in possession of the goods of other 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.
A seller of goods becomes a bailee if the goods continue to be in his possession after sale is complete. Here the original possession of goods was with the seller as the owner of the said goods and after the sale, his possession is converted into a contract of bailment.
One of the requirements of bailment is the delivery of goods to the bailee. Delivery of possession to the bailee is ‘sine qua non’ of bailment. In order to constitute a bailment change of possession is necessary.
Illustration of Bailment: Mr. B rents his car to A, to pick up his goods and drop it to A’s house. Here B is the bailor or owner of the car, and the car is the movable property and A is the bailee who subsequently has possession of that movable property.
Bailment is only acted on movable property. Current money or legal tender cannot be bailed. Deposition of money in a bank is not bailment as money is not ‘goods or property’ and it cannot be returned to the client. But the currencies that are no longer legal tender and are the objects of curiosity of antiques, can be bailed.
There are three essential elements to constitute a contract of bailment:
Here the delivery of goods means delivery of possession which is essential for bailment. The transfer of possession of the bailed goods from bailor to bailee for whatever is the purpose of bailment must be distinguished from mere custody. One who has custody without possession of goods is not a bailee.
As per Section 149, the delivery can also be made to the bailee by doing anything which has the effect of putting the bailed goods in the possession of the intended bailee or any person authorized by him for this purpose. Thus, the delivery of possession may be of two types:
Also known as physical delivery, where the delivery takes place when the goods are physically handed over by the bailor to the bailee.
illustration: X, the bailor gives his car in the service center to Y the bailee. Here, there is actual delivery of possession by X.
when some action is taken to mean handing over of the physical possession of goods, though in fact no physical transfer of goods is made at that time.
Example: delivery of railway tickets, or bill of lading amounts to constructive delivery.
Mere custody of goods is not the same as the delivery of possession. A guest who uses the goods of the host during a party may not consider a bailee. Similarly, it was held in Reaves vs. Capper [1838 5 Bing NC 136] that a servant in the custody of certain goods by the nature of his job is not a bailee. Similarly, a servant holding his master’s umbrella is not a bailee but a custodian.
Similarly, hiring and storing goods in a bank locker by itself is not bailment thought there is the delivery of goods to the bank premises. The goods are in no way entrusted to the bank. A bank cannot be presumed to know what goods are stored in any given locker at all times. If a bank is given actual and exclusive possession of the property inside a locker by the person who hired the locker, only then bailment under Section 148 can be assumed.
In bailment, the delivery of goods is upon a contract and once the purpose is done, such goods shall be returned to the bailor. This means there should be a contract between two parties for transaction of delivery and subsequent return. If there is no possession of goods obtained by someone other than contract, there should be no bailment.
The contract giving rise to bailment can be express or implied; In express where the parties agree to be bound are declared either orally or in writing, in implied where the parties formed a contract on a no-verbal contract.
The exception to the delivery upon contract:
In a contract of Bailment where the goods are delivered(in the sense of possession) from one person to the another, on some purpose. Once the purpose of bailment has been completed it is mandatory for a bailee to return the property to the bailor, or be disposed of as per bailor’s instructions depending upon the terms and conditions of the contract. If through no fault of bailee own, the return of the property is delayed or become impossible to return for example if the property is lost during bailment or get destroyed by natural calamities- the bailee will not be held liable for non-delivery on demand. In other situations, the bailee will be held responsible for the Tort of conversion for unjustifiable failure to redeliver the property as well as its unauthorized use.
Section 150 of the Indian Contract Act 1872, The bailment can be broadly classified into two heads:
Gratuitous bailment is one where no consideration passes between the bailor and the bailee. No mutual benefits will be acted upon by both parties in the contract.
non-gratuitous bailment is one where consideration passes between the bailor and the bailee. In this case both parties get mutual benefits.
A bailment in which goods are delivered by the bailor to the bailee only for the exclusive benefit of the bailor himself.
illustration: A give his valuable goods to his relative B for safe custody without any charges. This is a bailment for the exclusive benefit of the bailor ‘A’.
This is a bailment in which goods are delivered by the bailor to the bailee only for the exclusive benefit of the bailee.
illustration: X lent his car to his friend Y, for the temporary use without any charges. This is the bailment for the exclusive benefit of the bailee ‘Y’.
This is a bailment in which goods are delivered by the bailor to the bailee only for the exclusive benefit of the bailee.
illustration: P gave his car keys to Q to drop his as well as Q’s kid to their respective home. This is the bailment for the mutual benefit of both the bailor ‘P’ and the bailee ‘Q’ as both of them are benefitted.
Duties of a bailor are as follows:
The rights of Bailor are as follows:
The duties of Bailee are as follows:
The rights of Bailee are as follows:
From Section 170 of the Indian Contract Act, 1872, the bailee has a lien on the goods that he receives under the contract of bailment. When the bailor bails the goods to the bailee for a particular purpose and the bailee expands skill and labor on these goods, he has a right to retain the goods until the bailor pays him his charges in respect of skill and labor.
However, the right of lien arises only when the bailee uses skill and labor on the goods to confer an additional value on the goods.
Section 171 states the provisions for a general lien which deals with the right to detain any property belonging to another person which is in the possession of the person performing the lien, in respect of any payment lawfully due to him.
Contributions such as these help us build and sustain a community of curious minds. We welcome Contributors to Sign up on our website through this link and send us their articles or blog posts.
Striving to create a community of like minds,
team SL,
A law student who has knowledge of numbers. A nerd who invests his ideas in new things.
