BAILMENT

Bailment implies a sort of relationship in which the personal property of one person temporarily
goes into the possession of another. The ownership of the article or goods is in one person and
the possession in another. The circumstances in which this happens are numerous. Delivering a
cycle, watch or many other articles for repair, or leaving a cycle or car, etc, at a stand, depositing
luggage and so forth are all familiar situation which create the relationship of bailment. Thus
bailment is a subject of considerable public importance.
Definition: delivery of goods by bailor to bailee for a definite purpose on condition of their
return or disposal, when the purpose is accomplished.
Bailor delivering the possession to the bailee, he should to return or under the instruction of
bailor. It is temporary and it is different from the sales of goods.
Section 148:
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 direction of person delivering them.

Bailor and Bailee:

Bailor

 The person delivering the goods.

 Actual owner or agency.
Bailee

 The person to whom they are delivered.

 Actual owner or agency.

Explanation:
If a person already in possession of goods of another contract to hold them as a bailee, he thereby
becomes the bailee, and the owner become the bailor of such goods, although not have been
delivered by way of bailment.

Characteristic:
Specific immovable property

 Goods – any kind of movable property other than money / actionable claim.
 Money – only the medium to get the goods.
 Specific – it quality and quantity should be very much specified.
Delivery of possession

 Transfer – delivery of possession.

 Delivery of possession should be distinguished from a mere custody. One who has
custody without possession, like a servant, or a guest using his host’s good is not a bailee.
The good must be handed over to the bailee for whatever is the purpose of bailent.
 Bailment: A purpose / entrustment.

Case law 1: ultzen v nicols, (1894) 1 GB 92

Facts: An old customer went into a restaurant for the purpose of dining there. When he entered
the room a waiter took his coat, without being asked, and hung it on book behinds him. When the
customer rose to leave and gone. When return back the coat was not there? Customer sue the
waiter whether the waiter held liable under the bailment contract?
Decision: The waiter did might be no more than an act of voluntary courtesy toward the
customer, yet the restaurant – keeper was held liable as a bailee. The waiter by taking the coat
into his possession has relived the plaintiff of its care and had thus assumed the responsibility of
a bailee. It was he who selected the place where the coat should be put.

What if the customer had instructed the servant where and how the coat should be put?
The waiter is not liable because he was only mere custody of the coat and the customer did not
handed the possession over the waiter and he did not entrusted the waiter.

Bank locker:
In case Atul Mehra v. bank of Maharashtra and port swettenham authority v. wu & co.
In the case of hiring the locker in the bank when the hirer gives the necessary information about
the material inside the locker then only the bank held liable for the material in the locker.
And it is necessary to the show the actual and exclusive possession of the property was given by
the hirer of the locker to the bank.

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.

Delivery of the possession of the two kinds

 Actual delivery, and

 Constructive delivery.
Actual delivery:
When the bailor hands over to the bailee physical possession of the goods.

Constructive delivery:
When there is no change of physical possession, goods remaining where are, but something is
done which has the effect of putting them in the possession of the bailee.

Obligation to return the goods / dispose off

 Implied duty to return even if not provision in the bailment.

 Same from / altered from as per the direction.
 It needs to be returned / disposes or it’s invalid.

Bailment vis a vis sale

 Question in sales tax law/ specific-bailment non specific-sale.

 Sale: ip/im sold out the intension of transferring the ownership.
 Bailment: temporary transfer of ownership.

Case law 2: kaliaperumal pillai v visalakshmi, AIR 1938 Mad 32.

Facts: A lady handed over to a goldsmith certain jewels for the purpose of being melte and
utilized for making new jewels. Every evening as soon as the goldsmith’s work for the day was
over, the lady used to receive half – made jewels from the goldsmith and put into the box in the
goldsmith’s room and keeps the key with him. The jewels were lost one night. Did the goldsmith
held liable where the jewels?
Decision: Any bailment that could be gathered from the facts must be taken to have come to end
as soon as the plaintiff was put in possession of the melted gold. Delivery is necessary to
constitute bailment. The mere leaving the box in a room in the defendant’s house, when the
plaintiff herself took away the key, cannot certainly amount to delivery within the meaning of the
provision in section 149.
Case law 3: united breweries ltd v. state bank of andhrea pradesh 1997, sc
Such cases were basically a bailment / instead of the sale.
BUT THE POSSESSION IS OVERULED

Duties of bailor
Section 150.
According to section 150 which deal with the duty of bailor, bailors of two kinds, namely

 Gratutious bailor, and

 Bailor for reward.

Gratuitous bailor
Bailor’s duty to disclose fault in goods bailed.- The bailor is bound to disclose to the bailee
faults in the goods bailed, or which the bailee is aware, and which materially interfer with the use
of them, or expose the bailee to extraodinary risk; and if he does not make such disclosure, he is
responsible for damage arising to the bailee directly from such fault.
A person, who lends his article or goods without any charge, is called a “gratuitous bailors”. His
duty is much less than that of bailor for hire or consideration.
The conditions of his liability are:

 He should have the knowledge of the defect and the bailee should not be aware.
 The defect in the goods must be such as exposes the bailee to extraordinary risk or
materially interferes in the use of the goods.

Duty if bailor for reward (non gratuitous bailor)

If the goods are bailed for hire, the bailor is responsible for such damage, whether he was or was
not aware of the exixtence of such faults in the goods bailed.
The duty of a bailor for consideration is much greater. He is making profit from his profession
and, therefore, it is his duty to see that the goods which he delivers are reasonably safe for the
purpose of the bailment.
There is no defence for him to say that he was not aware of the defect.
He has to examnie the goods and removes such defect as reasonable examination whould have
disclosed.
Case law 4: hymen & wife v nye & sons
Facts:
The plaintiff hired from the defendant for a specific journey a carriage, a pair of horses and a
driver. During the journey a bolt in the underpart of the cariiage broke, the splinter bar became
displaced; the carriage was upset and the plaintiff injured.

Decision:
The defendant was liable, his duty is to suppply a carriage as fit for the purpose for which it is
hired as acare and skill can render it. So it was the duty of the bailor to the bailee. So the bailor
liable for the injury

Section 158: Repayment by bailor of necessary expence

Where, by the condition of the bailment, the goods are to 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.

Bailors duty to necessary expenses

Application in 3 type of contract

 Expenses on custody.
 Contract on carriage.
 Contract for workdone.
In the case of extraodinary expenses bailee got. It can be reimbursed by the bailor.

Duties of bailee
Duties of reasonable care (151 – 152)
Section 151:- care to be taken by bailee
In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a
man of ordinary prudence would, under similar circumstance take, of his own goods of the same
bulk, quality and value as the goods bailed.
The section lays down a uniform standard of care for “all cases of bailment”. In India, however,
section 151 prescribed a uniform standard of care in all cases of bailment, that, is a degree of
care which a man of ordinary prudence whould take of his own goods of the same type and under
similar circumstances. If the care devoted by the bailee falls below this standars, he will be liable
for loss of or damage to the goods.

Case law 5: UOI v. Amar singh, 1960, SC.

Negligence contradiction as to dis claimless

Case law 6: rampal ramchand agarwal v gourishankar hanuman Prasad.

In this case, a bailee kept the bailor’s ornament locked in a safe and kept the key in cash – box in
the same room. The room was situated on the ground floor and, being locked from outside, was
easily accessible to burglars removing the latch. The ornament having been stolen.
Held: The bailee was held liable.

Case law 7: UCO Bank v. hem Chandra sarkar.

In this case the bailee (banker), gratuitous or for reward, is bound to take the same care of the
property entrusted to him as a reasonably prudent person and careful man may fairly expected to
employ all precaution in respect of the goods deposited with him. If the property is not delivered
to the true owner, the banker cannot avoid his liability in conversion. The liability in such a case
is absolute even if no negligence is proved.

Burden of proof
The burden of the proof is on the bailee to show that he was exercising reasonable care and if he
can prove this he will not liable. If the bailee places before the court evidence to show that he
had taken reasonable care to avoid damage which was reasonably foreseeable or had taken all
reasonable precaution to obviate risks which was reasonably apprehended, he would be absolved
of his liability.

Section 152: Bailee when liable for loss, etc, of things bailed
The bialee, in the absence of any special contract, is not responsible for the loss, destruction or
deterioration of the thing bailed, if he has taken the amount of care of it described in section 151.

Section 154: duty not to make unauthorized use

Liability of bailee making unauthorized uses of goods bailed.- if the bailee makes any use of the
goods bailed which is not according to the condition 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.
  Only for authorized used
 If unauthorized & acts of god / inevitable – no escape

Case law 8: Alias v. em patil, 2004

Where the vehicle was delivered to a workshop for repair and the owner of the workshop
allowed an unlicensed employee to drive the vehicle and he caused an accident resulting in the
death of the person, it was held that the bailee liable to compensate the deceased as also the
owner of the vehicle because it was an unauthorized use of the vehicle and the liability was
absolute. The insurer was also liable to pay compensation to the deceased and recover indemnity
from the vehicle owner.