Contract of Bailment - Legal Katta
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Contract of Bailment

Contract of bailment has been provided under sections 148 to 181 of the Indian Contract Act, 1872. A bailment involves the contractual transfer of assets or property from a bailor, who temporarily relinquishes possession but not ownership, to a bailee.

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Contract of Bailment

What is a Bailment Meaning?

What is a bailment Meaning? The term 'Bailment' has been derived from the French word 'bailer' which means 'to deliver a thing under control or possession'. 

In common law, the person holding possession of the thing but not ownership of that property is transferred from one person to another for a specific reason and for a specific time with a condition to return the thing when the purpose is over or otherwise disposed of according to the direction of the owner, this is called Bailment

Meaning of Contract of Bailment

Meaning of Contract of Bailment has been defined under section 148 of the Indian Contract Act, 1872. Bailment is defined as 'The delivery of goods by one person to another for some specific purpose, upon a contract that these goods are to be returned when the specific purpose is complete.'

For example, A person delivering his bike for service at a service centre or one person hiring a bike for travelling to Delhi is an example of contract of bailment.

The person delivering the bike is called a 'bailor' and the other person to whom the bike is delivered is called a 'bailee'.

Section 148 of the Indian Contract Act, 1872

Section 148 of the Indian Contract Act, 1872, defined the contract of bailment meaning as '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. This is the bailment definition. 

A bailor and a bailee has defined under section 148 of the Contract Act. Bailor and Bailee have been defined under this section as the person delivering the goods are 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 another contract 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.

Essential Elements of Contract of Bailment

1. Valid Contract

The first and important essential element of the contract of bailment is that there must be an existence of a valid contract. The valid contract implies that the goods are to be returned to the original owner when the purpose of the contract of bailment is fulfilled.

2. Temporary Delivery of Goods

In a contract of bailment, the concept of bailment revolves around the fact that the goods are delivered temporarily and the bailee has no right to possess these goods. Such delivery of goods can be done either in actual delivery or constructive delivery.

Actual Delivery

Where the delivery of the goods takes place when the goods are physically handed over by the bailor to the bailee. This is also known as physical delivery.

For example, A gives his bike to the service centre to B. Here, there is the actual delivery of possession by A to B.

Constructive Delivery

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. This is known as constructive delivery.

For example, the delivery of railway tickets or bus tickets.

3. Return of Goods

The bailee is bounded to return the goods delivered by the bailor to the bailor when the purpose for which the goods are taken is over. If the person is not willing to return the goods then it is not a bailment.  

Types of Bailment

Types of bailment:- there are five kinds of bailment as discussed below;

Gratuitous Bailment

The meaning of gratuitous bailment is a bailment made without any Consideration for the benefit of the bailor or for the benefit of the bailee is called Gratuitous Bailment. In simple words, A bailment with no consideration is Gratuitous bailment. 

Non-Gratuitous Bailment

Non-Gratuitous is a bailment for reward. It is for the benefit of both the bailor and bailee.

Bailment for the Benefit of the Bailor  

In this case, the bailor delivers his goods to a bailee for safe custody without any benefit/ reward.  It is called " the bailment for the benefit of the bailor".          

Bailment for the exclusive Benefit of the Bailee

In this case, Bailor delivers his goods to a bailee without any benefit for his use, it is called "the bailment for the exclusive benefit of the bailee"

Bailment for the Benefit of the Bailor and Bailee

In this case, goods are delivered for consideration, and both the bailor and bailee get benefit hence it is called the bailment for the benefit of the bailor and bailee.

Rights and Duties of Bailor

Duties of Bailor

1. Duty to disclose defects (sec. 150): - It is the duty of the bailor to disclose all the material and well-known defects in the goods to the bailee. In case the bailor failed to disclose defects in the goods with the bailee and thereafter occurs some loss to the bailee then the bailor is held liable to pay compensation to the bailee.

2. Duty to bear necessary and extraordinary expenses (sec. 158): - In gratuitous bailment, the bailee must be repaid with all the expenses which the bailee has incurred already for bailment by the bailor. 

3. Duty to indemnify loss for premature termination of bailment (sec. 159): - The bailor would be held liable to indemnify the bailee for any loss incurred to him which the bailee has to pay to the original owner of the title of the delivery of the goods does not fall under the bailor's reach.

4. Duty to indemnify the bailee against the defective title of the bailor (sec. 164): - In a case, if the bailee has incurred any loss to the bailee by reason that the bailor has not entitled to male a bailment or to receive the goods back from the bailee. In such a situation, the bailor will be held responsible for all the losses.

5. Duty to bear a loss (sec. 162): - If the bailee has taken reasonable care and taken necessary steps to protect the bailed goods from the occurrence of any possible damage or loss and still any loss or damage is occurred then it is the duty of the bailor to bear the loss or damage.

Rights of Bailor

1. Right to claim damages in cases of negligence from the bailee (sec. 152): - It is the right of the bailor to be compensated for the damages of the goods which are bailed if the bailee has failed to take all the necessary due care to abstain that damage or loss according to the direction.
 
2. Right of termination of the contract in case of unauthorized use of goods (sec. 153): - If there is unauthorized use of goods by the bailee, the bailment contract can be terminated before its completion.
 
3. Right of compensation in case of the unauthorized use of goods (sec 154): - If the use of goods is not done by the bailee as per the terms and conditions of the bailment contract, the bailor has a right to claim compensation from bailee for any damages arising to the said goods.
 
4. Right to claim compensation in case of the unauthorized mixture of the goods which cannot be separated (sec. 157): - If the bailee without the consent of the bailor mixes goods of the bailor with his own goods and they cannot be separated, the bailor has right to claim compensation from bailee for loss of the goods.
 
5. Right to claim separation of the goods in case of an unauthorized mixture of goods (sec. 156): - If bailee, without consent of the bailor mixes with his own goods the goods of the bailor and goods can be separated, the bailor has right to claim his own goods after separation.
 
6. Right to demand the return of goods (sec. 160): - The bailor has a right to demand the return of goods after the completion of purpose or after the expiry of the period of bailment.
 
7. Right to claim compensation in case of unauthorized retention of goods (sec. 161): - If the bailee does not either return or deliver the goods according to bailor's directions, even after accomplishment of the purpose or after the expiry of a period of bailment, the bailor has a right to claim compensation for any loss, destruction and deterioration of goods from that time.
 
8. Duty to deliver any accretion to goods: - It is the duty of the bailee to deliver the respective goods to the bailor and any natural increase or profit accruing from goods bailed unless there exists a contract to the contrary.

Rights and Duties of Bailee

Duties of Bailee

1. Duty to take reasonable care (sec. 151): - In the contract of bailment, it is the duty of the bailee to take reasonable care of the bailed goods which are delivered to him. 

2. Duty not to use goods unauthorizedly (sec. 154): - It is the duty of the bailee not to use the bailed goods beyond the terms and conditions of the contract of bailment. If the bailee used the goods delivered to him unauthorizedly then the bailee is made liable to pay compensation to the bailor for any damage arising during the use of the goods. This liability is an absolute liability.

3. Duty not to mix bailed goods (sec. 155 - 157): -  It is the duty of the bailee not to mix bailed goods with any other his own goods without the prior permission of the bailor. If the bailee has mixed the bailed goods with his own goods without the permission of the bailor then there's no breach of duty and therefore the bailor and the bailee shall have an interest, in proportion to their respective shares, within the mixture thus produced.

4. Duty to return the goods (sec. 160): - It is the duty of the bailee to come, or deliver, according to the bailor's directions the respective goods bailed, without demand, as soon because the time for which they were bailed has expired, or the aim that they were bailed has been accomplished.

5. Duty to deliver any accretion to goods: - It is the duty of the bailee to deliver the respective goods to the bailor and any natural increase or profit accruing from goods bailed unless there exists a contract to the contrary

Rights of Bailee

1. Right to claim the damages (sec. 150)

2. Right to claim reimbursement of expenses if any (sec. 158)

3. Right to get indemnified if termination of gratuitous bailment takes place (sec. 159)

4. Right to give bailed goods to any of the bailors in case of joint bailment (sec. 165)

5. Right to recover damages for the losses in case the bailor refuses to take the goods back (sec. 164)

6. Right to deliver the goods to the bailor in case of the title of bailor is defective (sec. 166)

7. Right to recover damages for the loss in case title of bailor is defective (sec. 164)

Conclusion

Contract of bailment has been provided under sections 148 to 181 of the Indian Contract Act, 1872. A bailment involves the contractual transfer of assets or property from a bailor, who temporarily relinquishes possession but not ownership, to a bailee.

Akash is a YouTuber by Hobbie and Blogger by Passion. He Loves to spread information that helps others to live in this legal world.

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