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Bailment Contracts:
A Contract where one party delivers goods to the other upon return basis to fulfil a
specific purpose is called bailment contract. It includes two parties namely; bailer
and bailee. The person who is delivering the goods is called bailer and the person
to whom goods are delivered, is called bailee.

Example: A has handed over his fan to B for the purpose of repairs. It is bailment
contract. A is bailer and B is bailee. Similarly X has handed over his dress Y for
the purpose of washing. It is also bailment Contract where X is bailer and Y is
bailee.

Types of Bailment Contracts

The bailement contracts are classified into Gratuitous bailments and Non –
Gratuitous bailments.

Gratuitous Bailments: If there is only one directional consideration, it is called

Gratuitous bailment. In here, the bailment contract is for the benefit of either the
bailer or the bailee only.

Example 1: Mr. A, while going to abroad, has handed over his gold to this friend
namely B for Safe custody. Here bailer only is getting benefited.

Example 2: Y has taken Scooter for X who is his friend for 1 day. Here only bailee
is being benefited.

Non – Gratuitous bailments: If there is two directional consideration it is

called Non-Gratuitous bailment. In here, the bailment contract is for the benefit of
both parties.

Example: X has handed over his dress to B who is owner of a laundry for washing.
At a charge of Rs. 10/-. Here both parties are being benefited.
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Features of Bailment
1. In case of bailment, as there is delivery of goods, there will be change
in procession.
2. Though there is change in possession, there will be no change in title.
3. Bailment includes return of goods after fulfillment of purpose.
4. In delivering the goods, there must be specific purpose.

Difference between Bailment and Sale

BAILMENT SALE
1. Here parties are called buyer and
1. Here parties are called bailer and bailee.
seller.
2. There must be returnable. 2. Such rule is not applicable.
3. There is no question of Shipping of title.
3. Here title will get shifted from
Though procession goes to bailee, title rests
seller to buyer.
with bailer.
4. The concept of Sale is
4. The concept of bailment is applicable to
applicable to both movable and
movable property only.
immovable.
5. Bailment may be with one directional 5. Sale always will be with two
consideration or two directional consideration. directional consideration.

Rights and Duties of Bailer

Rights of Bailer
1. If bailee does not take care and destruction of goods takes place,
bailer can claim compensation.
2. If bailee uses the goods for un-authorized purposes, bailer has the
right to claim compensation.
3. Bailer has the right to claim return of goods.
4. Bailer has right to claim not only delivered goods but also accruals on
goods if any.
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5. In case where bailee has mixed the goods and they are of sufferable
nature, bailer can claim cost of separation from bailee.
6. In case where the goods are of insufferable nature, bailer has right to
claim compensation.
7. Bailer has right to repudiate the Contract of bailment whenever he
wants but, by doing so, if bailee comes across any suffering, bailer has to
compensate.
Duties of Bailer
1. Duty to dispose faults: Bailer should disclose faults present in goods
at the time of making delivery. Faults are of two types namely ; Known
faults and Un-known faults. On the other hand bailments also are of two
types namely Gratuitous bailment and Non-Gratuitous bailment. In case of
gratuitous bailment, bailer is liable to compensate for bailee injuries arising
out of known faults. In Gratuitous bailment, bailer is not answerable to un-
known faults. In case of Non-Gratuitous bailment, bailer is answerable to
both known faults and Un-known faults.
2. Duty to contribute for expenses: Bailer should Contribute for
expenses incurred by bailee. In case of Gratuitous bailment, bailer need not
contribute for ordinary expenses and extra ordinary expenses or to the
contributed by bailer. In case of Non-Gratuitous bailment, bailer should
contribute for both ordinary expenses and extra ordinary expenses.
3. Duty with regard to defective title: In case where bailer has delivered
the goods with defective title, the bailee may come across suffering from the
side of true owner due to bailers defective title. In such a case bailer with
defective title should compensate bailee.
4. Duty to Indemnify: Principal of indemnity operates between bailer
and bailee, where bailer becomes implied indemnifier and bailee becomes
implied indemnity holder. So bailer has duty to indemnify bailee.
5. Duty to take the Goods back: After fulfillment of purpose bailee
returns the goods to bailer. Then bailer should take them back. If bailer
refuses to take the goods back, bailer has to compensate bailee.
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Rights and Duties of Bailee

Rights of Bailee
1. Bailee has right to claim compensation for injuries arising out of
faults present in goods, If it is gratuitous bailment, bailee can make bailer
answerable with regard to known faults only. But not to un-known faults. In
case of Non-gratuitous bailment bailee can make bailer answerable to known
as well as un-known faults.
2. Bailee has right to claim contribution for expenses. If it is Gratuitous
bailment, bailee can claim only extraordinary expenses. But in case of Non-
Gratuitous bailment, bailee can claim both ordinary and ordinary expenses.
3. In case where bailer has given goods with defective title and bailee,
therefore, comes across suffering, then such bailee has right to get
compensated by defective titled bailer.
4. Bailee has right of indemnity, for making involvement in bailment
Contract, bailer can make bailee answerable.
5. Bailee has right of lien. It is only particular lien. That means he can
exercise right of lien against those goods only on which amount is due.
6. Bailee can return the goods to any one of the joint owners.
7. In times of need Bailee has right to approach Court of law.
Duties of Bailee
1. Bailee should take reasonable care on goods.
2. Bailee should not use the goods for an unauthorized purpose.
3. Bailee should not setup adverse title.
4. Bailee should return the goods after fulfillment of purpose.
5. Bailee should return not only delivered goods, but also additions.
6. Bailee should not mix up the goods with his own goods or others
goods. If bailee has mixed the goods and the goods are of sufferable nature,
bailee has to face the cost of separation. If the goods are of insufferable
nature, bailee has to compensate bailer.