Contract of bailment by Bhumica M @lexcliq

Contract of bailment 


By Bhumica M


REVA University, Bangalore 


Bailment  refers to the indication of personal property of one person going to another person temporarily. Property may be goods, money or articles and later that property must be delivered to the real owner after sometime.  section 148 of the Indian Contract Act of 1872 states that bailment is the delivery of the goods from one person to another for some purpose once the purpose is completed the goods must be returned to the owner of the goods.  The owner of the goods is called Bailor and to whom the goods are delivered is known as Bailee. 


Essential features of bailment are: exchange  in the possession  must be for some purpose.  the right of the owner of the goods defer that of the right of the bailee.  Mere custody of goods is different from the possession of the property.  delivery must be upon contract. 


Section 150 gives out duties of bailor. bailor is under a duty to disclose faults in the goods of which he is aware and which materially  interfere with the use of them or expose the Bailee to extraordinary risks, if he fails to do so he is responsible for damage to the bailee which arise directly due to such faults.The bailor is bound to accept the goods upon being returned by the bailee in accordance with the terms of the agreement. If he refuses to accept it at a proper time, without any reasonable ground then he will be liable for any loss which may happen to the goods. 


Lien is basically a right in one person to retain the property which is in his possession, belonging to another, until certain demands are satisfied. It includes those things where the bailee, in accordance with the purpose of bailment, rendered any service involving the exercise of labor or skill in respect of the goods bailed.

Illustration: If A gives a piece of cloth to tailor for stitching a suit. Then Taylor is entitled to keep the suit with him until A pays him for the cost of stitching.


The bailee is bound to take as much care of goods bailed to him as a man of ordinary prudence would have under similar circumstances and therefore he will not be liable for any loss, destruction or deterioration of the thing bailed if he has taken care. In the case of Calcutta Credit Corporation Ltd v. Prince Peter of Greece, it was held by the Calcutta high court that the defendant had not taken reasonable care to prevent the plaintiff’s car from burning. 

Bailee is under the duty to return or deliver goods according to the bailor’s direction as soon as the time for which goods were bailed has expired.In the absence of any agreement, bailee is bound to deliver to the bailor any increase in profit or any benefit which may have accrued from the goods bailed ( Section 161). In the case of Standard Chartered Bank v. Custodian, it was held by the Supreme court that if Shares and debentures are pledged, bonus shares and dividend are also regarded as Part of it. 


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