Contract of Bailment
Under
Indian Contract Act, 1872
Unit 1
Lecture 6
BBA 201 Business Law Ref: N D Kapoor 30th Edition 1
Outline of Presentation
• Definition for contract of Bailment
• Essentials elements of a bailment
• Kinds/Types of bailment
• Rights and Duties of Bailor
• Rights and Duties of Bailee
• Termination of Bailment
• Lien and its types
BBA 201 Business Law Ref: N D Kapoor 30th Edition 2
Learning Objectives
• Gain an understanding of Principles
Underlying contract of Bailment.
• Know the various parties involved In contract
of Bailment.
• Understand the duties and rights of various
parties to a contract of Bailment.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 3
CONTRACT OF BAILMENT (Sec 148)
• Derived from the French word ‘Bailer’ - to deliver
• Section 148 of Indian contract act 1872
Delivery of goods by one person to another for some
purpose upon a contract, when the purpose is
accomplished, be returned or otherwise disposed of
according to the direction of the person delivering
them.
• Bailor: who gives
• Bailee : who takes
• Bailment: transaction
BBA 201 Business Law Ref: N D Kapoor 30th Edition 4
EXAMPLES
Radha hand over a piece of cloth to , a tailor, for
stitching a suit.
A gives his watch to B, a repairer, for repairing.
A lends his book to D, for copying classwork.
C rents his car to D, on payment of hire charges.
Madan gives his mixer and grinder to Mohan for
repairing.
Rohan Parks his vehicle in authorised metro
station.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 5
ESSENTIALS ELEMENTS OF A BAILMENT
Agreement
Essentials of a valid Contract
Delivery of Goods ( Actual, Constructive)
Movable Property
Definite Purpose
Return of Specific Goods
Ownership not Transferred
BBA 201 Business Law Ref: N D Kapoor 30th Edition 6
KINDS OF BAILMENT
Types of Bailment
On the basis of On the basis of
reward benefits
Bailment for the Bailment for the Bailment for the
Non- Gratuitous
Gratuitous Bailment exclusive benefit of exclusive benefit of mutual benefit of
Bailment
the bailor the bailee bailor and bailee
BBA 201 Business Law Ref: N D Kapoor 30th Edition 7
KINDS OF BAILMENT
Based on reward:
1] Gratuitous bailment: Neither bailor nor bailee is
entitled for remuneration, example: lending a
book to a friend, keeping the pet in neighbours
house while going out of town..
2] Non-gratuitous bailment: Bailment of reward:
either bailee or bailor is entitled to a
remuneration , example: Hiring a bicycle, Giving
cloth to a tailor ,Parking vehicle in authorised
parking.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 8
KINDS OF BAILMENT
Based on benefit: Bailment for the exclusive
benefit of
1] Bailor: Leaving goods in safe custody without
paying.
2] Bailee : A lending of a scooter to a friend for
some time without any charge.
3] Mutual benefit: Contracts for hiring, repair ,etc.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 9
DUTIES OF BAILOR
To Disclose defects [S.151]
To bear extraordinary expenses of bailment
[S.158]
To indemnify the bailee [S.164]
Liability on premature breach of bailment[S.159]
Duty to receive back the goods.
Duty to bear the risk of loss
BBA 201 Business Law Ref: N D Kapoor 30th Edition 10
Example
X Delivered a horse to Y for taking care since he was
going out of town
(a) He spend 500 Rs. for feeding.
(b) He spend 200 Rs. for medical expenses
(c) He spends amount of Rs. 500/- on medical
expenses but the horse dies.
State the Legal Position in case of
(a) Gratuitous Bailment
(b) Non Gratuitous Bailment
BBA 201 Business Law Ref: N D Kapoor 30th Edition 11
RIGHTS OF BAILOR
Right to claim compensation for losses due to
negligence by bailee [S.152]
Right to claim for damage by unauthorised use of
the goods by the bailee [S.154]
Right to claim compensation when the bailee
mixes the goods bailed with own goods [S.155]
To termination the contract of bailment [S.153]
To Demand back goods [S.160]
Right to demand accretion of goods.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 12
DUTIES OF BAILEE
To take reasonable care of goods[S.151]
Not to make unauthorized use of
goods[S.154]
Not to mix goods with his own goods[S.155-
157]
Duty to return goods[S.160&161]
To return any profit to the goods [S.163]
BBA 201 Business Law Ref: N D Kapoor 30th Edition 13
RIGHTS OF BAILEE
Right to compensation for loss on account of
fault in goods bailed[S.150]
Right to receive necessary expenses[S.158]
Right against premature termination of
bailment[S.159]
Right to compensation in case of defective
title[S.164]
Right to deliver goods to one of the joint
owners or bailors [S.165]
BBA 201 Business Law Ref: N D Kapoor 30th Edition 14
TERMINATION OF BAILMENT
Termination of every contract of Bailment (Whether
Gratuitous or not) :
On the expiry of fixed period
On fulfilment of the purpose
Inconsistent use of goods
Destruction of the subject matter of bailment
BBA 201 Business Law Ref: N D Kapoor 30th Edition 15
TERMINATION OF BAILMENT
Termination of Gratuitous Bailment:
Before the expiry of a fixed period
On death of Bailer or Bailee
BBA 201 Business Law Ref: N D Kapoor 30th Edition 16
Lien
Lien means the right of a person having possession
of goods belonging to other to retain those goods
until satisfaction of sum claimed by the person in
possession of the goods.
Ex A rented shop of B to run his business, on non
payment of rent after constant reminders, A has
right to take custody of goods and even sell them if
rent is not paid.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 17
Types of Lien
(a) Particular Lien: A right to retain only those
goods in respect of which some charges are
due.
(b) General Lien: A right to retain all the goods
as security for the general balance of
accounts until full satisfaction. The claim can
be for those goods or other goods.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 18
Specific Lien Examples
Example 1: A delivers a rough diamond to B, a
jeweler, to be cut and polished, which is
accordingly done. B is entitled to retain the stone
till he is paid for the services he has rendered.
Example 2: A gives cloth to B, a tailor, to make into
a coat. B promises A to deliver the coat as soon as it
is finished, and to give a three months’ credit for
the price. B is not entitled to retain the coat until he
is paid.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 19
General Lien Examples
Bankers, factors, wharfingers, attorneys of a
High Court and policy brokers may, in the
absence of a contract to the contrary, retain, as
a security for a general balance of account any
goods bailed to them; but no other persons
have a right to retain, as a security for such
balance, goods bailed to them, unless there is
an express contract to the effect.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 20
Finder of Goods
Finder of goods is the person who finds some
goods which do not belong to him.
Example : Ravi finds a wallet on street ,which
does not belong to him, he will be called the
finder of lost goods.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 21
Lets Recapitulate
True or False (with Justification)
1. In bailment delivery of goods must be actual.
2. In case of non gratuitous bailment no
consideration is involved.
3. Jewellery deposited in bank is a contract of
bailment.
4. Bailee has the right to use goods.
5. A bailment is terminated by the death of either
bailor or bailee.
BBA 201 Business Law Ref: N D Kapoor 30th Edition 22
BBA 201 Business Law Ref: N D Kapoor 30th Edition 23
Reference: N.D Kapoor Business Law. 30th
Edition (page 175-190)
BBA 201 Ref: N.D. Kapoor 30th edition 24
