IPCCPaper2

BusinessLaws,Ethics&Communication

TheContractAct
1872
Unit1Part8 Bailment andPledge

CA.ManishDafria
LearningObjective

WhatisContractofBailment

LegalRulesastoBailment RightsandDutiesofBailor
andBailee

MeaningofContractofPledge

DifferencebetweenContractofBailmentandContract
ofPledge
ContractofBailment
Meaning(Sec.148)
Whenaperson
deliverssomegoodstoanotherperson forsomepurpose,

withtheunderstandingthat
goodsshallbeeitherreturnedtoor disposedoff

accordingtoinstructionofthepersondeliveringit

Thisiscalledacontractforbailment.
ExamplesofContractofBailment

Delivering old Handing over

Sending T.V. to
jewellary to goods to
service centre for
goldsmith for transporter for
repairing
polishing transportation

Giving clothes for Hiring of taxi for

Dry Cleaning tour purposes
BailorandBailee

Bailor Bailee

is the person is the person

delivering to whom the
the goods goods are
delivered
LegalRulesAsToBailment
DutiesoftheBailor:DiscloseFaultsIn
Goods(Sec150)
which
materially
interfere
Thebailor
withthe
isbound ofwhich
faultsin useof
to thebailor
thegoods them,or
disclose isaware,
bailed, expose
tothe and
thebailee
bailee,
to
extraordi
naryrisks.
DutiesoftheBailor:Disclosefaultsin
goods(Sec150)

heisresponsiblefor
Ifhedoesnot
damagearisingto
makesuch
thebailee,directly
disclosure,
fromsuchfaults.
DutiesoftheBailor:Disclosefaultsin
goods(Sec150)

Ifsuchgoodsarebailedforhire,

..thebailorisresponsibleforsuch
damage,

whetherornothewasawareofthe
existenceofsuchfaultsinthegoods
bailed.
A hires a taxi car from B. The car brake fails and A is injured.
Though
B was not aware of brake problems in car, B is responsible to A for
the injury.
DutiesofBailee:CareofGoods(Sec
152)
Thebailee,intheabsenceof
anyspecialcontract,isnot
responsiblefortheloss,
destructionordeterioration
ofthethingbailed,

ifhehastakenasmuch
careofthegoodsbailedto
himselfasamanof
ordinaryprudencewould
takeofhisowngoods.
InconsistentActbyBailee(Sec153)

A contract of bailment is voidable at the option of the

bailor,

if the bailee does any act with regard to the goods bailed,

inconsistent with the conditions of the bailment.

A lets to B, for hire, a horse for his own riding. B drives the horse in his
carriage. This is, at the option of A, a termination of the bailment.
LiabilityOfBaileeMaking
UnauthorizedUseOfGoodsBailed
(Sec154)

..he is liable to make

If the bailee makes any use
compensation to the bailor
of the goods bailed which
for any damage arising to
is not according to the
the goods from or during
conditions of the bailment,
such use of them.

A lends a horse to B for his own riding only. B allows C, a member of his
family, to ride the horse. C rides with care, but the horse accidentally falls and
is injured. B is liable to make compensation to A for the injury done to the
horse.
Repayment,ByBailor,OfNecessary
Expenses(Sec158)
Where,bytheconditionsofthebailment,thegoods
aretobekeptortobecarried, ortohaveworkdoneuponthem

bythebaileeforthebailor,

andthebaileeistoreceivenoremuneration,

thebailorshallrepaytothebaileethenecessaryexpensesincurred
byhimforthepurposeofthebailment.
RestorationOfGoodsLent
Gratuitously(Sec159)
Bailorinthecaseofgratuitous
bailment,hasarighttodemandthe
goodsbackevenbeforetheexpiryof
theperiodofbailment.

Ifinthisprocess,lossiscausedto
thebailee,bailorisboundto
compensate.
DutyofBaileeReturnOfGoodsBailed,
(Sec160)

Itisthedutyofthebailee

toreturn,ordeliveraccordingtothebailor'sdirections,

thegoodsbailed,withoutdemand,assoonas
thetimeforwhichtheywerebailed orthepurposeforwhichtheywere
hasexpired, bailedhasbeenaccomplished.
Bailees ResponsibilityWhenGoods
AreNotDulyReturned(Sec161)

If by the fault of the he is responsible to

bailee, the goods are the bailor for any loss,
not returned, destruction or
delivered or tendered deterioration of the
at the proper time, goods from that time.
Bailor Entitled To Increase Or Profit
From Goods Bailed (Sec 163)
In the absence of any contract to the contrary,
the bailee is bound to deliver to the bailor, any
increase or profit which may have accrued
from the goods bailed.

A leaves a cow in the custody of B to be taken care of. The cow has calf. B is
bound to deliver the calf as well as the cow to A.
BailorsResponsibilityToBailee
(Sec164)
Thebailorisresponsibletothebailee
foranyloss,whichthebaileemaysustain

byreasonthatthebailorwasnot,entitled
tomakethe ortoreceiveback ortogivedirections
bailment, thegoods, respectingthem.
BaileeNotResponsibleOnRedelivery
ToBailorWithoutTitle(Sec166)
If the bailor has no title to the goods, and the
bailee, in good faith, delivers them back to the
bailor, the bailee is not responsible to the
owner in respect of such delivery.
FinderofGoods
RightOfFinderOfGoods(Sec168)

Thefinderofgoodshas

NOrighttosuetheownerfor
compensation

fortroubleandexpensevoluntarily
incurredbyhimtopreservethegoods
andtofindouttheowner.
RightOfFinderOfGoods(Sec168)

Howeverhe
untilhe
mayretainthe
receivessuch
goodsagainst
compensation.
theowner
FinderOfGoods,MaySueForSpecific
RewardOffered(Sec168)
Wheretheownerhas
offeredaspecific
rewardforthereturn
ofgoodslost,

thefindermaysuefor
suchreward,

andmay
retainthe
goodsuntil
hereceives
it.
WhenFinderOfThingCommonlyOn
SaleMaySellIt(Sec169)
Whenthingwhichiscommonlythesubjectofsaleislost,

andtheownercannotwithreasonableeffortbefound,

orherefuses,topaythelawfulchargesofthefinder,thefinder
maysellit
Whenthelawfulchargesofthefinder,in
Whenthethingisindangerofperishingor
respectofthethingfound,amounttotwo
oflosingthegreaterpartofitsvalue,or
thirdsofitsvalue.
 Lienmeansarightto
retainthegoods

GeneralandParticular
Lien
A delivers a rough diamond to B, a jeweller, to be cut and polished, which is
Bailees ParticularLien(Sec170)
accordingly done. B is entitled to retain the stone till he is paid for the services he has
rendered.

Wherebaileehas,inaccordancewiththepurposeofthe
bailment,

renderedanyserviceinrespectofthegoodsbailed,

hehasarighttoretainsuchgoods

untilhereceivesdueremunerationfortheserviceshehas
renderedinrespectofthem.
GeneralLienOfBankers(Sec171)

Bankersmay, retainasa
inthe securityfora anygoods
absenceofa general bailedto
contractto balanceof them.
thecontrary, account,
Pledge
Pledge(Sec172)
Pledge is a Bailment of goods as security for
payment of a debt or performance of a
promise

Eg.,AborrowsRs.200fromBandkeepshiswatchassecurityforpaymentofthe
debt,thebailmentofwatchisapledge.
Pledge(Sec172)

Bailorof Baileeof
thegoods thegoods
iscalled iscalled
Pawnor . Pawnee.
PawneesRightOfRetainer(Sec173)

Thepawnee mayretainthegoodspledged,

forpaymentofthedebtortheperformanceofthepromise,

andalsofortheinterestsonthedebt,

andallnecessaryexpensesincurredbyhim
inrespectofthepossessionor forthepreservationofthegoodspledged.
Norightofretainerforotherdebtor
promise(Sec174)
Thepawnee shallnot,in
theabsenceofacontract
tothateffect,

retainthegoodspledgedfor
anydebtorpromise

otherthanthe
debtorpromise
forwhichthey
arepledged.
PawneesRightAsToExtraordinary
ExpensesIncurred(Sec175)

extraordinaryexpenses
Thepawnee isentitled
incurredbyhimforthe
toreceivefromthe
preservationofthe
pawnor
goodspledged.
Pawnee'sRightWherePawnor Makes
Default (Sec176)
Ifthepawnor makesdefaultin
paymentofthedebt,inrespectof
whichthegoodswerepledged,

thepawnee maysue hemaysellthething

thepawnor andretain pledged,ongivingthe
thegoodspledgedasa pawnor reasonable
collateralsecurity;or noticeofthesale.
Pawnee'srightwherepawnor makes
default (Sec176)

Iftheproceedsofsuchsaleare

lessthantheamount
greaterthenthe
dueinrespectofthe
amountsodue,
debtorpromise,

thepawnor isstill thepawnee shallpay

liabletopaythe overthesurplustothe
balance. pawnor.
 PledgeV.Bailment
Pledge
Purpose: As security
Sale of goods: Pledgee has
a right of sale of pledged
on default of pawnor
Use of goods: No right
Bailment
Purpose: other purposes
like repairs, safe custody,
etc.,
Sale of goods: No right
Use of goods: Can use as
per the terms of the
contract
ThankYou