Responsibilities of Bailee in case of lost goods

Research Paper – Law of Contract -2

Submitted By- Aryan A. Shrivastava

SAP- 81022019348
Roll No. – F007
Submitted to- Prof. Priya Garg

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Serial Number Content Page Number
1. Introduction 3
2. Research Objectives 3
3. Research Methodology 3
4. Review of Literature 4
5. Care to be taken by the Bailee 5
6. Understanding S. 151 of Indian Contract Act, 5
1872.
7. Understanding S. 152 Of Indian Contract Act, 6
1872
8. Common Carriers 6
9. Remedies for the Bailor 7
10. Recent Developments 7
11. Conclusion 8
12. Bibliography 8

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Introduction
Bailment is a kind of relationship in which personal property is temporarily transferred from
one person to another. The ownership of the articles or goods is with one person and the
possession with another. There are numerous instances in which this occurs in daily life1. In
this article, the researcher's main concern is pertaining to circumstances where a bailee failed
to return the goods back to their owner (Bailor) and parted with the possession due to his
negligence in caring for them as a reasonably prudent person would2. The researcher discusses
the responsibilities of bailee for lost goods in light of both Indian Law, such as the Indian
Contract Act of 1872 and Common Law rules regarding bailment. Additionally, the researcher
discusses the limitation of liability regarding the care that the bailee should take.
Research Objectives
1. To understand the responsibilities of Bailee for lost goods.
2. To understand the Section Section 151 and Section 152 of the Indian Contract Act,
1872.
Research Methodology
The main source of data gathering used is secondary data. Responses have been collected
through google forms and the secondary research has been done through Various research
papers, newspaper, articles and websites have been examined and used to gather information.

1
T. S. Venkatesh Iyer, TREATISE ON LAW OF CONTRACTS, 330 (6th edn. 1995).
2
Avatar Singh, LAW OF CONTRACTS AND SPECIFIC RELIEF, 660 (10th edn. 2008).

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Review of Literature
1. Parashar (2020) In this paper, the author has explained the definition of Bailment as
defined under S. 148 of Indian Contract act, 1872. The author also explains various
ingredients necessary to form a contract of Bailment and important precedents
surrounding it have also been examined. As the paper proceeds, the paper specifically
focused on Ss. 151 & 152 that forms the duty of reasonable care by the bailee towards
the bailor.
2. Raghuveer Meena (2019) The concept of ‘bailment’ is dealt with in chapter IX of the
Indian Contract Act, 1872. ‘Bailment’ is a technical common-law term that
encompasses change or transfer of possession of goods, upon a contract to return or
dispose of the goods in accordance with the direction of the person’s delivering them,
once the purpose for such transfer is completed.
3. William King Laidlaw (1974) Although it is frequently said that bailment is founded
upon contract, the actual decisions show that it is not so founded. Although a bailment
usually is created by a contract, it is not necessarily always so created;2 nor, indeed, is
even mutual consent to the relationship a requisite
4. Kartik Mandloi (2018) The researcher has done the research on the Commercial utility
of Bailment. Bailment means Transfer of personal property by one party (the bailor) in
the possession, but not ownership, of another party (the bailee) for a particular purpose.
Such transfer is made under an express or implied contract (called bailment contract or
contract of bailment) that the property will be redelivered to the bailor on completion
of that purpose, provided the bailee has no lien on the goods (such as for non-payment
of its charges
5. Parinsha Sharma (2014) According to the Section 148 of Indian Contract Act,
bailment is the delivery of goods by one person to another. It is done for a specific
purpose. The person to whom goods are given is called the bailee and the person who
gives the goods is called bailor. To understand bailment imagine that you are going
to shift from an apartment to a house.

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Care to be taken by the Bailee
Therefore, the contract of bailment imposes certain duties on the bailee. The first and most
important duty of a bailee is to protect the goods entrusted to him. A standard of care expected
of a bailee or the level of negligence that makes him responsible for lost goods has always been
a question that has been debated. There are three types of diligence defined under Common
Law as high degree of diligence, ordinary and slight diligence3. A man's diligence in his own
affairs can generally be classified as common or ordinary diligence. Sir William Jones defined
it as "the care which a prudent person takes in managing his own affairs." High or great
diligence is defined as exceptional diligence or that which very prudent persons take care of
their own affairs, and slight diligence is that which persons who are less prudent take care of
their own affairs. A bailee's responsibilities are defined under Section 151 of the Indian
Contract Act, which requires that the bailee take the same care of the goods that a person of
ordinary prudence would take of his own under similar circumstances. For all types of
bailments, the degree of care is the same, but the measure of care varies from case to case.
According to this section, the amount of care required of different bailees under English law is
abolished. In Coggs v. Bernard4, the distinction was made between the mandate and the
deposit, where the mandate was defined as the duty to use reasonable care, while the deposit
was defined as no liability, except gross negligence.

Understanding S. 151 of Indian Contract Act, 1872.

Duty of reasonable care (Ss. 151-152):
In S.151, the following is stated;
The bailee, in all bailment cases, must take as much care of the goods bailed to him as a man
of ordinary prudence would, under similar circumstances, take of his own goods of the same
bulk, quality, and value as the goods bailed. In cases of bailment, Section 151 establishes a
"Uniform standard of care". The standard of care and precaution is the same regardless of
whether bail is gratuitous or involuntary. This position has not always been held5. Bailees had
been subject to absolute liability in English law prior to the 1800s. This law left bailees in a
disadvantageous position in that there would be no remedy available even if reasonable care
was taken to preserve the goods.

3
B. Sanyal, Loss, Destruction or Damage of Goods in the Custody of a Bailee related Issues and Concepts,
28(1) INSURANCE TIMES 21, 21 (2008).
4
Coggs v. Bernard, (1703) 2 Ld Raym 909
5
C.V. Davidge, Bailment, (1925) 41 LQR 433, 436

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Understanding S. 152 Of Indian Contract Act, 1872.
Section 152 provides that "The bailee, in the absence of any special contract, is not responsible
for the loss, destruction, or deterioration of the thing bailed if he takes the amount of care
described in Section 151."
A bailee is protected by Section 152 in all cases of bailment if he takes all the steps that a
reasonable person would take under similar circumstances for his own goods of the same bulk,
quantity, and value. The section describes the duty of cure described in section 151 as the
standard for reasonable care.

Common Carriers
As a common carrier, one carries or transports goods for hire as a business and not as a hobby.
As an independent contractor, he should be prepared to transport goods for anyone and to carry
passengers of any kind. As long as he has the right to choose whom and what to carry, he
cannot be considered a common carrier. Common carriers may be by land and inland
navigation or they may be common carriers by sea6.
Carriage by Air
The Carriage of Goods by Air Act, 1974, a law based on the provisions of the Regulations,
governs the transportation of goods by air for domestic flights. Convention of Warsaw of 1929
and Hague Protocol of 1955 (amended provision of the convention of Warsaw of 1929). This
legislation requires the bailee to prove that he and his servants or agents have taken all
necessary measures to prevent the loss of the good or that the loss was the result of negligence
impossible for them to take such measures. In Fothergill v. Monarch Airlines Ltd.7, the plaintiff
travelled by air and his baggage was damaged. The defendant admitted liability for the loss of
the articles, but rejected the liability for the damage to the suitcase. The carriage was governed
by the Warsaw and Hague Conventions. The airline was not held responsible for the loss of
items because the plaintiff had only complained about damage to his suitcase in time and not
about the loss of articles.
Carriage by Sea
In the decisions regarding the liability of such carriers, there is a conflict as to whether it is
governed by the Common Law of England or the provisions of Sections 151 and 152 of the
Contract Act. The High Court of Calcutta in MacKillican v. Compagnie Des Messageries

6
Cheshire, Fifoot and Furmston's Law of Contract, 220 (M. P. Furmston ed., 15th edn. 2007)
7
Fothergill v. Monarch Airlines Ltd., [1980] 2 All ER 696.

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Maritimes De France8, has held that foreign companies are not a common carrier but later in
Hajee Ismail Sait v. Compagnie Des Messageries Maritimes of France. Madras High Court
held that they were common carriers because they were foreign companies, and that the liability
of the company was governed by the Common Law of England, and not by the provisions of
Contract Act (Section 151 and 152).
Remedies for the Bailor
If the goods do not turn up as agreed, there are no provisions in the Contract Act describing the
bailor's remedies. It is possible to sue the bailee in both contract and tort for damages. There is
also an equitable right to sue the bailee. When a bailee fails to return the goods, he must make
good their market value as of the date of the liability. If the bailee has unlawfully or negligently
lost or parted with the goods, he must pay damages for their value. Only when the bailee fails
to return the goods due to his default does Section 161 impose liability9. A bailor claiming
damages for failure to take care by a person to whom section 151 applies may discharge his
responsibility in one of two ways, first by showing that the bailee has failed to produce before
the court all the materials available to him under Section 106.
Recent Developments
In Indian Airlines Ltd. v. Prakrithi Shetty10, she was travelling from Bangalore to Bombay.
Upon arrival at Bombay airport, she found that neither of her two bags had been received.
Having filed a complaint with the appropriate authorities, they found her and handed her over.
Her bag was missing so many items. The Airlines contended that as the baggage weight in
Bangalore airport was 20kg and in Bombay, it was 25kg, nothing was lost.
Surya Pharmaceutical Limited v Air India Limited11 states that the appellant has sued for
recovery of Rs.4,96,188 from the defendant, Air India Limited, for the loss of 7 drums out of
the shipment of 40 drums of Amoxicillin Compacted BP 98. Air India, the respondent,
transported this consignment from Delhi to Hong Kong by air. According to Air India, their
liability is limited under Section 152 of the Indian Contract Act to $20 per kilogram of lost
luggage. The court came to the opposite conclusion, holding that any separate contract limiting
the liability of a carrier in a manner inconsistent with the provisions of Carriage by Air Act,
1972 would be void since it was against public policy. This resulted in the plaintiff's appeal
being allowed as well as damages being awarded.

8
Hajee Ismail Sait v. Compagnie Des Messageries Maritimes of France, (1905) ILR 28 Mad 400
9
Sec. 106, Indian Evidence Act, 1872.
10
Indian Airlines Ltd. v. Prakrithi Shetty, IV (2007) CPJ 154 NC.
11
Surya Pharmaceutical Limited v Air India Limited, 2008 Indlaw DEL 825.

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Conclusion
In this article, the researcher examines several important aspects regarding the bailee when
parting with possession of goods and his duties in both Indian and Common law are the same,
because the origin of ICA is also Common Law. Researchers have determined that bailees are
always liable for the loss of goods in their custody. A prudent person must take the minimum
level of care expected of a bailee.
If the bailee fails to take care of the goods in a negligent manner, he would be liable under both
Indian Contract Act and Common Law principles regarding bailment. Furthermore, it has been
found that the bailee is not liable for negligence if he has a contract with the bailor under
Section 152 of the ICA. It is also against public policy for bailees to contract to limit their
liability below what is expected from a prudent person. As well, the bailee should be allowed
to select the articles for which the contract of bailment is made because otherwise he would be
considered a common carrier and would not be held responsible for his negligence as bailee.
Bibliography

1. Kartik Mandloi, Commercial Utility of Bailment, 2 International Journal of Trend in

Scientific Research and Development 20, 20-25 (2018)
2. Krish Parashar, Duty of Reasonable Care by the Bailee under Bailment, 3 International
Journal of Law Management and Humanities 10, 10-12 (2020).
3. Parinsha Sharma, Types of Bailments, 5 International Journal of Law Management and
Humanities 5, 4-8 (2014).
4. Raghuveer Meena, A CRITIQUE OF RESPONSIBILITIES OF BAILEE, 1
International Journal for Legal Developments and allied issues 250,240-267 (2015).

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