BAILMENT

S. 148 of Indian Contract Act

 BAILMENT (S. 148)
▪ 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.
▪ Parties:
BAILOR BAILEE

• person • person to
delivering the whom they
goods are delivered
 Examples of Bailment
Delivering a cycle, Watch or any other article for repair

Leaving a cycle or car, etc., at a stand

Depositing luggage or books in a cloakroom

Delivering gold to a gold smith for making ornaments

Delivering garments to a dry-cleaner

 ESSENTIAL FEATURES

Delivery of possession

Delivery should be upon some contract

Delivery should be upon some purpose

 DELIVERY OF POSSESSION

▪ One who has custody without possession, like a

servant, or a guest using his host's goods is not a
bailee.
▪ Hiring of a bank's locker and storing things in it
would not constitute a bailment.
▪ Things kept there are in a way put in a hired
portion of the premises and not entrusted to the
bank
▪ Ultzen v. Nichols, (1894) 1 QB 92: An old customer
went into a restaurant for the purpose of dining there.
When he entered the room a waiter took his coat,
without being asked, and hung it on a hook behind him.
When the customer rose to leave the coat was gone.
What the waiter did might be no more than an act of
voluntary courtesy towards the customer, yet the
restaurant-keeper was held liable as a bailee.
The waiter by taking the coat into his possession had
relieved the plaintiff of its care and had thus assumed the
responsibility of a bailee. It was he who selected the
place where the coat should be put.
Kaliaperumal Pillai v Visalakshtni, AIR 1938 Mad 32: A lady
handed over to a goldsmith certain jewels for the purpose of
being melted and utilized for making new jewels. Every evening
as soon as the goldsmith's work for the day was over, the lady
used to receive half-made jewels from the goldsmith and put
them into a box in the gold smith's room and keep the key in her
possession. The jewels were lost one night.
But the lady's action against the goldsmith failed, the court
saying: "Any bailment that could be gathered from the facts
must be taken to have come to an end as soon as the plaintiff
was put in possession of the melted gold. Delivery is necessary
to constitute bailment. The mere leaving of box in a room in the
defendant's house, when the plaintiff herself took away the key,
cannot certainly amount to delivery within the meaning of the
provision in Section 149."
▪ S. 149. Delivery to bailee how made.—The
delivery to the bailee may be made by doing
anything which has the effect of putting the
goods in the possession of the intended bailee
or of any person authorised to hold them on his
behalf.
▪ Explanation to S. 148: If a person already in
possession of the goods of another contracts 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
▪ Delivery of possession can be actual or constructive
delivery.
▪ When the bailor hands over to the bailee physical
possession of the goods, that is called "actual
delivery".
▪ "Constructive delivery" takes place when there is no
change of physical possession, goods remaining
where they are, but something is done which has
the effect of putting them in the possession of the
bailee.
N.R. Srinivasa Iyer v New India
Assurance Co Ltd, (1983) 3 SCC 458:
AIR 1983 SC 899:
The owner of a car involved in an accident
delivered it under the policy on behalf of
the insurer to the nearest garage for
repairs. This delivery was regarded as
sufficient to constitute the insurance
company as a bailee and the garage as a
sub-bailee. They became responsible for the
loss of the car in a fire on the premises.
 DELIVERY SHOULD BE UPON SOME
CONTRACT
▪ Delivery should be made for some purpose and upon a
contract that when the purpose is accomplished the goods
shall be returned to the bailor.
▪ When a person's goods go into the possession of another
without any contract, there is no bailment within the
meaning of its definition in Section 148.
▪ Allahabad High Court in Ram Gulam v Govt of U.P., AIR 1950
All 206: The plaintiff’s stolen ornaments were recovered by
the police and were stolen again in police custody. The
plaintiff's action against the State for the loss was dismissed.
▪ Ram Gulam v Govt of U.P: Seth J said: "... the
obligation of a bailee is a contractual obligation and
springs only from the contract of bailment. It cannot
arise independently of a contract.
In this case the ornaments were not made over to the
Government under any contract whatsoever. The
Government, therefore, never occupied the position of
bailee and is not liable as such to indemnify the
plaintiffs."
 NON-CONTRACTUAL BAILMENTS

▪ English law recognises bailment without contract.

▪ Supreme Court of India in State of Gujarat v Memon
Mahomed Haji Hasan, AIR 1967 SC 1885:
"Bailment is dealt with by the Contract Act only in cases
where it arises from a contract, but it is not correct to say
that there cannot be a bailment without an enforceable
contract.... Nor is consent indispensable for such a
relationship to arise. A finder of goods of another has been
held to be a bailee in certain circumstances."
DELIVERY SHOULD BE UPON SOME
PURPOSE
▪ Bailment is always made for some purpose and is
subject to the condition that when the purpose is
accomplished the goods will be returned to the bailor or
disposed of according to his mandate.
▪ If the person to whom the goods are delivered is not
bound to restore them to the person delivering them or
to deal with them according to his directions, their
relationship will not be that of bailor and bailee.
 TYPES OF BAILMENT
Gratuitous Bailment: When the provider of service
does it gratuitously i.e. free of charge. Such
bailment would be either for the exclusive benefits
of bailor or bailee.

Non-Gratuitous Bailment: Both the parties get

some benefit i.e. bailment for the benefit of both
bailor & bailee
 DUTIES OF BAILOR
Bailor’s duty to disclose faults in goods bailed [S.150]

Duty to pay necessary expenses [S. 158]

Duty to indemnify the Bailee for premature termination [S. 159]

Bailor’s responsibility to bailee [S. 164]: Indemnify for any loss

sustained by reason of bailor not entitled to make the bailment
 DUTY OF BAILOR FOR REWARD TO DISCLOSE
FAULTS IN GOODS

▪ Reed v Dean, (1949) 1 KB 188:

▪ The plaintiffs hired a motor launch from the defendant for
a holiday on the river Thames. The launch caught fire, and
the plaintiffs were unable to extinguish it, the fire-
fighting equipment being out of order. They were injured
and suffered loss.
▪ The court held that there was an implied undertaking that
the launch was as fit for the purpose for which it was
hired as reasonable care and skill could make it. The
defendant was accordingly held liable.
DUTIES OF BAILEE
Duty of reasonable care (S. 151-152)
Duty not to make unauthorised use (S. 154)
Duty not to mix (S. 155-157)
Duty to return (S. 160-161)
Duty not to set up ‘jus tertii’ (goods belong to a
third person)
Duty to return increase (S. 163)
BAILMENT BY JOINT OWNERS

▪ If several joint owners of goods bail them

the bailee may deliver them back to, or
according to the directions of, one joint
owner without the consent of all, in the
absence of any agreement to the contrary.
(S. 165)
 TERMINATION OF
GRATUITOUS BAILMENT
▪ Where the lending of the goods is gratuitous, the bailor
may at any time require return of the goods even though
he lent them for a specified time or purpose.
▪ But if the bailee has acted on such faith and if the bailee's
loss would be greater than the benefits derived, the
bailor must, indemnify the bailee for the amount in which
the loss occasioned exceeds the benefits derived.
▪ A gratuitous bailment is also terminated by the death
either of the bailor or of the bailee.
FINDER OF GOODS (Ss. 168-169)

▪ A finder of goods is a bailee thereof and as

such bound by the duty of reasonable care.
▪ He does not have the right to sue the owner
for compensation for trouble and expense
voluntarily incurred by him to preserve the
goods and to find out the owner. [S. 168]
 RIGHTS OF FINDER
▪ to retain the goods against the owner until
he receives compensation for trouble and
expense.
▪ Where the owner has offered a specific
reward for the return of the goods lost, to
sue for such reward, and retain the goods
until he receives it.
▪ to sell the goods in certain circumstances: Where
the thing found is commonly the subject of sale and
if the owner cannot be found with reasonable
diligence, or refuses to pay the lawful charges of
the finder, and:
▪ (1) when the thing is in danger of perishing or of
losing greater part of its value, or
▪ (2) when the lawful charges- of the finder, in
respect of the thing found, amount to two-thirds of
its value
RIGHTS OF BAILEE

Right to compensation
[S. 164]

Right to expenses or
remuneration [S. 158]

Right of lien [Ss. 170-

171]

Right to sue
 RIGHT OF LIEN (S. 170-171)
▪ The bailee has the right to retain the goods delivered
to him until the charges due to him are paid by the
bailor.
▪ Liens are of two kinds: particular lien, and general
lien.
▪ As a general rule a bailee is entitled only to
particular lien, which means the right to retain only
that particular property in respect of which the
charge is due.
▪ General lien entitles the bailee to detain any goods bailed
to him for any amount due to him whether in respect of
those goods or any other goods.
▪ For example, two securities are given to a banker but a loan
has been taken only against one of them, the banker may
detain both securities until his dues are paid.
▪ Right of general lien is specially conferred by S. 171 on
certain kinds of bailees only.
▪ They are: (1) Bankers, (2)Factors, (3) Wharfingers, (4)
Attorneys of a High Court, and (5) Policy-brokers.
▪ R.D.Saxena v. Balram Prasad, AIR 2000 SC 2912