Contract of Bailment

Bailment
Bailment means any kind of handing over

In legal sense, it involves change of

possession of goods from one person to another for some specific purpose

Bailment
Definition
Section 148 defines bailment as 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

Bailment
The person delivering the goods is called the bailor

The person to whom they are delivered is called the

bailee e.g.: A teacher lends a book to a student, which to be returned after the examination Here the teacher is a bailor and the student is bailee

Requisites of Bailment
1. Contract: the agreement between the bailor and

the bailee may be express or implied

2. Delivery of possession: bailment involves

delivery of possession of goods by bailor to

bailee
The delivery may be actual or constructive (Sec. 149)

Requisites of Bailment
3. For some purpose: the delivery of goods from bailor to

bailee must be for some purpose

4. Return of specific goods: it is agreed between the bailor and bailee that when the purpose is accomplished, the goods to be returned or otherwise disposed of according to the directions of the bailor

Bailment is concerned with Goods only

Goods : Sec. 2(7) of the sale of goods Act, 1930
Every kind of movable property other than money & actionable claims. In a contract of bailment only possession passes from bailor to the bailee and not ownership. Hence if the property in goods is transferred for money consideration, it is a sale and not a bailment. Ex. Of Bailment Seizure of goods by the custom authoriy, acceptance of goods by the transport company/ railway / post etc.

Consideration in contract of Bailment

In a contract of bailment the consideration
is in the form of money payment either by
the bailor or by the bailee

TYPES OF BAILMENT
Bailment can be categorised in two
ways; they are
Bailment for reward/ Gratuitous bailment

Bailment only for benefit

Bailment for Reward

Gratuitous Bailment
Where none of the parties get any
remuneration the Bailment is gratuitous

e.g.: lending of a book to a friend

Bailment for Reward

Non- Gratuitous Bailment

Where either of the parties gets

remuneration the Bailment is non-gratuitous

e.g.: Giving a scooter for repair

Gratuitous Vs. Non-Gratuitous Bailment

Basis of distinction Gratuitous Bailment Non-Gratuitous Bailment Some consideration is passed between the Bailor and the Bailee It is for mutual benefit of Bailor and bailee

Consideration No consideration is passed between the Bailor and the Bailee Benefit It is for the exclusive benefit of Bailor and Bailee

Gratuitous Vs. Non-Gratuitous Bailment

Liability of Bailor for unknown defects (Sec.151)
The Bailor is not liable to the Bailee for loss due to defects in goods if the defects are unknown to him
The Bailor must repay to the Bailee all the necessary expenses which, the Bailee has already incurred for the purposes of Bailment

The Bailor is liable to the Bailee for the loss due to defects in the goods whether he is aware of the defects or not
The Bailor must repay to the Bailee only the extraordinary expenses which, the Bailee has already incurred for the purpose of bailment

Bailors duty to bear expenses (Sec. 158)

Gratuitous Vs. Non-Gratuitous Bailment

Bailment for a period of purpose
It can be terminated at any time even though the Bailment was for a specific purpose It is terminated on the expiry of the specific period or on the fulfillment of the purpose

Effect of death

It is terminated with the death of Bailor or Bailee

It is not terminated with the death of Bailor or Bailee

Bailment only for Benefit

Bailment for the exclusive benefit of the
Bailor
e.g.: delivery of some valuables to a neighbor

for safe custody without charge

Bailment only for Benefit

Bailment for the exclusive benefit of the
Bailee
e.g.: lending of vehicle to a friend for his use,

without charge

Bailment only for Benefit

Bailment for the mutual benefit of both
Bailor and Bailee
e.g.: giving a car for repair

Duties of Bailor
To disclose known faults
According to section 150, it is the first and foremost
duty of the bailor to disclose the known faults about the goods bailed to the bailee If the goods are bailed for hire the duty of the bailor is greater

Duties of Bailor
To bear extraordinary expenses of the bailment
The bailee is bound to bear ordinary and reasonable
expenses of the bailment but for any extraordinary expenses the bailor is responsible In case of gratuitous bailment the bailor must repay all the necessary expenses incurred by him for the

purpose of bailment (Sec. 158)

Duties of Bailor
To indemnify bailee for loss in case of premature
termination of gratuitous bailment
According to section 159, if the contract of bailment is terminated before the time specified and because of which the bailee suffering losses more than the benefit he has derived from that, the bailor shall have

to indemnify the bailee

Duties of Bailor
To receive back the goods
If the bailor refuses to receive back the goods
after the termination of time specified he is

liable to pay the compensation to the bailee

Duties of Bailor
To indemnify the bailee
According to section 164, if the bailee is suffering
losses because of the title of the goods i.e. where the title of the bailor to the goods is defective, the bailor has to pay the compensation for the losses incurred by the bailee