BAILMENT AND PLEDGE
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.Sec. 14.
The person delivering the goods is called Bailor. The person to
whom they are delivered is called the Bailee. The transaction is
called Bailment.
Examples:
1.P lends his book to Q.
2.P delivers a pen to Q for repair.
3.P gives Q his watch as security for a loan.
In all thse cases P is the Bailor and Q is the Bailee.
Characteristics features or the Requisites of Bailment:
Bailment has the following characteristics features:
• Delivery: It is delivery of goods one person to another.
• Purpose: The goods are delivered for some purpose.
• Return: It is agreed that when the purpose is accomplished
the goods are to be returned or otherwise disposed of
according to the direction of the Bailor.
• Contract: Bailment arises from express or implied contract. In
case of finder of goods Bailment arises by implication of law.
• Ownership: In Bailment the bailor continues to be the owner
of the goods. Therefore Bailment does not cause any change
of ownership.
• Moveable goods: Bailment is only concerned with movable
goods money is not included. A deposit of money is not
bailment.
• Possession: A person already in possession of the goods may
become a bailee by a subsequent agreement, express or
implied.
Types of Bailment:
• Gratuitous Bailments
• Bailment for reward
• Gratuitous Bailments:
• A gratuitous Bailment is one in which neither the bailee nor
the bailor is entitled to any remuneration e.g., loan of an
article gratis; safe custody without charge, etc.
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• Bailment for reward:
• A Bailment for reward is one where either the bailee or the
bailor is entitled to remuneration e.g., .a motor car let out
for hire; goods given to a carrier for carriage at a price;
articles given to a person for being repaired for a
remuneration; pawn, etc.
DUTIES OF THE BAILEE
1. Duty of Reasonable Care
2. Bailee’s Liability for Negligence of Servants:
3. Unauthorised use of Goods
4. Mixture of Bailor’s goods with the Bailee’s
5. Duty of Returning Goods
6. Accretion to the Goods Bailed
7.Liabilities of the Innkeepers and Hotelkeepers
DUTIES OF THE BAILOR
• 1. Bailor’s Duty to Disclose Faults in Goods
Bailed
• 2. Payment of Expenses in Gratuitous
Bailments
• Responsibolity for the Breach of Warranty of
Title:
BAILEE’S RIGHTS
• 1. Enforcement of Rights
• 2. Baiment by Several Joint Owners
• 3. Bilee not Responsible on Re-delivery to
Bailor without Title
• 4. Bailee’s Particular Lien
• 5. Bailee’s General Lien
BAILOR’S RIGHTS
• 1. Enforcement of Rights
• The bailor can enforce by suit all the liabilities or duties of the bailee.
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• 2. Act Inconsistent with the Terms
• “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” sec.-153.
•
• 3. Restoration of Goods Lent Gratuitously
• When goods are lent gratuitously the bailor cn demand their return
whenever he pleases, even though he lent of for a specified time or
purpose. But if the bailee in such cases had acted in such a manner that
the return of the goods before the stipulated time would cause loss
greater than the benefit which he has received, the bailor msut indemnify
him for the loss if he compels as immediate return-sec. 159.
TERMINATION OF BAILMENT
• A contract of bailment terminates under the following circumstances:
• 1. Efflux of Time
• If the bailment is for a stipulated period the bailment terminates as soon as the
dtipulated period expires.
• 2. Fulfillment of Purpose
• If the bailment is for a specific purpose, the bailment terminates as soon as the
purpose is fulfilled.
• 3. Act Inconsistent with the Terms
• If the bailee does any act, with regard to the goods bailed, which is inconsistent
with the terms of the bailment, the bailment terminates-sec. 153.
• 4. Goods lent Gratuitously
• A gratuitous bailment can be terminated any time but if premature termination
causes any loss to the bailee, the bailor must indemnify the bailee. Sec. 159.
• 5. Death
• A grstuitous bailment terminates upon the death of either the bailor or the bailee.
Sec. 162.
RIGHTS AND DUTIES OF FINDER OF GOODS
• Rights
• A finder of goods is in the position of a bailee if he takes charge of the goods. The rights of the finder can be summarized as follows, sec 168 & 169:
• 1. Possesion
• He can retain possession of the goods against everybody except the true owner.
• 2. Compensation and Lien
• He is entitled to be compensated for the trouble and expense incurred by him to preserve the goods and to find out the owner. He has a lien upon
the goods for the payment of these sums i.e. he can refuse to return the goods until they are paid.
• 3. Reward
• He cannot file a suit for the expense he has incurred but can sue for any reward which the owner might have offered for the return of the goods lost.
• 4. Sale
• If the goods found are commonly the subject-matter of sale and if the owner cannot with reasonablediligence be found or if he refuses the lawful
charges of the finder, the goods can be sold provided the following further conditions are fulfilled-
• When the thing is in danger of perishing or of losing the greater part of its value.
• When the lawful chages of the finder amount to two third of its value.
•
• Duties and Obligations
• The founder of goods is a bailee. Therefore, he has the following duties and obligations:
• He must take reasonable care of the goods (sec. 151).
• He must not mix the finder’s goods with his own goods (secs. 155-157).
• The goods must be returned to the real owner (secs. 160 & 161).
• If there is an accretion to the goods bailed, it must be given to the real owner (sec.163).
• He must not use the goods for his purpose.
• He must try to find the true owner of the goods.
SUITS BY BAILEES OR BAILERS AGAINST WRONG-DOERS
• 1. Right to Interplead
• If a person other than the bailor, claims the goods bailed he may
apply to the courts to stop delivery of the goods bailed and to
decide the title of the goods, Sec.167.
• 2. Suit by Bailor or Bailee Against Wrong-Doer
• If a third party wrongfully deprives the bailee of the use of the
goods bailed or does them any injury, the bailee is entitled to use
all such remedies as the owner of the goods might have used.
Either the bailee or the bailor may file a suit against the third party
in such cases.-sec. 180.
• 3. Appointment of Releif or Compensation Obtained by such Suits
• Whatever is obtained by way of relief or compensation in any such
suits shall, as between the bailor and the bailee be dealt with
according to their respective interests.-sec. 181.
BAILMENT BY WAY OF PLEDGE OR PAWN
• The bailment of goods as security for payment of a debt or
performance of a promise is called Pledge or Pawn. The
bailor in this case is called the Pledgeor or the Pawnor. The
bailee is called the Pledge or the Pawnee. Sec. 172.
•
• Difference between Bailment and Pledge
• Pldge is a particular kind of bailment. The difference
between Pledge and other kinds of bailment lies in the
purpose or objectives of the transaction. The purpose of a
pledge is to provide security for a debt or the performance
of a promise. In other kinds of bailment there are other
purposes for example, repair, safe custody etc. The Pledgor
and the pledge have certain special right s and duties.
When can a Non-owner make a Valid Pledge
• The owner of goods can always make a valid
pledge. In the following cases, one who is not
an owner can make a valid pledge.
• 1. Mercantile Agent
• 2. Possesion under aviable contract
• 3. Pawnor with a Limited Interest
• 4. Possesion with Co-owner:
RIGHTS OF PLEDGEE OR PAWNEE
• 1. Right of Retainer
• 2. Retainer for Subsequent Advance
• 3. Extraordinary Expenses
• 4. Pawnee’s Rights where Pawnor Makes
Default
RIGHTS OF PLEDGOR
• 1. Defaulting Pawnor’s Right to Redeem:
• “ If a time is stipulated for the payment of the debt, or performance of the
promkse, for which the pledge is made, and the pawnor makes default in payment
of the debt or performance of the promise at the stipulated time, he may redeem
the goods pledeged at any subsequent time before the actual sale of them; but he
must, in that case, pay, in addition, any expenses which have arisen from his
default”, Sec-177.
• 2. Preservation and Maintenance
• The pledgor can enforce the preservation and proper maintenance of the goods
pledged.
• 3. Protection of Debtors
• The Pledgor as debtor has various rights given to him by statutes enacted for the
protection of debtors e.g. the Money Lenders Acts.
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