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Presentation on

presented by : Indu & Rohini

BAILMENT
SEC 148 -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. The person who delivers the goods is called the bailor, the person to whom they are delivered is called bailee

ESSENTIALS OF BAILMENT
1. Delivery of goods. eg. Kaliperumai v. Visalakasmi A.I.R.
A lady employed a goldsmith for making new ornaments out of old jewellery. Every evening she received the unfinished jewellery and put it into a box kept at the goldsmiths shop. She kept the key of that box with herself. One night the jewellery was stolen from the box. It was held that there was no bailment as the goldsmith had re delivered to the lady(bailor) the jewellery bailed with him.

Contd
2. Delivery of goods must be of some purpose. 3. Bailment is based upon the contract between the parties.

a minor cannot enter into a contract ,he cannot be held liable as a bailee if he misuses the goods or incurs losses. a bailment can also be arise even if there is no contract between the parties. It may arise by operation of law as in the case of a finder of lost goods or persons to whom goods have been sent wrongly or in excess of the quantity ordered.

Contd
4. The bailment can only be of movable goods. Money is not included in movable
good.

5. Bailment of goods is always for some purpose and when the purpose is achieved the goods will be returned to bailor or disposed of acc. To the directions. It may be returned either in
orginal or altered form.

KINDS OF BAILMENT
1.Voluntary and Involuntary bailment. 2. Gratuitous and Non Gratuitous bailment. 3. Bailment may also be classified in accordance with the benefit derived by parties.

contd
Voluntary bailment is the outcome of an express contract between the parties. Whereas involuntary bailment arises by the operation of law. Eg. Of involuntary bailment are in case of finder of goods , person to whom goods have been sent wrongly or in excess of the quantity ordered or bailees heirs in case of bailees death.

Contd
Gratuitous bailment where the bailee keeps the goods for the bailor without reward. Non Gratuitous bailment where some consideration passes between the parties it is a non gratuitous or bailment for reward. Eg. A motar car let out for hire , goods given to a carrier for carriage at a price; articles given to a person for being repaired for remuneration etc.

Contd
3. (a) Bailment for the exclusive benefit of the bailor. (b) Bailment for the exclusive benefit of the bailee. (c) Bailment for mutual benefit.

RIGHTS OF BAILOR
1. Enforcement of bailees duties. (a) Right to claim compensation for loss caused to the goods by negligence of the bailee. (b) Right to claim compensation for unauthorised mixing of bailed goods with the bailees own goods. (c) Right to claim damages for unauthorised use of goods. (d) Right to demand goods back after the expiry of purpose or period. (e) Right to claim any natural accretion to the goods bailed. As a matter of fact, duties of the bailee are rights of the bailor.

Contd
2. Right of termination. A contract 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.
Eg. A lets to B for hire a horse for his own riding. B drives the horse in his carriage. A can terminate the bailment.

Contd
3. Restoration of goods lent gratuitously. When goods are lent gratuitously the bailor can demand their return whenever he pleases, even though he lents it for a specific time or purpose. (but if the return of goods before

stipulated time would cause loss greater than the benefit which bailee has received, the bailor mus indemnify him for the loss if he compels immediate return)

Contd
4. Right to file a suit against any wrong-doer. If a third party does some wrongful act and deprives the bailee from the use of goods bailed or does some injury to the goodsbailed, the bailor has a right to file a suit against the wrong doer and claim compensation from him. Eg. A deliverad 100 bags of sugar to B, A godowns keeper for safe custody. C , by fraud, prepared a fake delivery order for 10 bags of sugar and claimed the delivery from B, which he delivered to him in good faith. A may file a suit for the recovery of damages.

DUTIES OF BAILOR
1.Duty to disclose known defects.
Sec 150 makes a distinction between a gratuitous bailor and a bailor for reward. A gratuitous bailor is bound to disclose to the bailee all those defects of which he is aware and which expose the bailee to extraordinary risk. Eg. A lends a horse, which he knows to be vicious to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and injured . A is responsible to B for damages sustained.

Contd
The duty for reward is much greater. Sec 150. clearly lays down that if the goods are bailed for hire, the bailor is responsible for damage, whether he was or was not aware of the existence of such faults in the goods bailed. Eg. A hire a carriage of B. The carriage is unsafe though B is not aware of it and A IS Injured. B is responsible to A for the injury.

Contd
2. Duty to bear extraordinary expenses of bailment. 3. Duty to indemnify bailee. Under sec 164, a bailor is responsible to the bailee for any loss due to his imperfect title in the goods bailed. eg. A gives Bs motorcycle to C for use without Bs knowledge or permission. B sues C and receives compensation. C is entitled to recover his losses from A.

Contd
4. Duty to receive back the goods. 5. Duty to bear normal risk.

RIGHTS OF BAILEE 1.The bailee can, by suit enforce the duties of the bailor. 2. Bailment by several joint owner. Sec 165 if several joint owner of goods bail them, the bailee may deliver them back to, or acc. To directions of, one joint owner, with out the consent of all, in the absence of an agreement to the contrary.

Contd
3. Right to compensation. Sec 164 if the bailor has no right to bail the goods or to receive back or to give direction regarding them, the bailee is exposed to some loss, the bailor is responsible for the same. sec 166 if the bailor has no title to the goods and the bailee, in good faith delivers them back acc. To the directions, the bailee shall not be responsible to the owner in respect of such delivery.

Contd
4. Right to remuneration. The goods are bailed and work is to be carried on them by the bailee, the bailee is entitled to claim the necessary expenses only in case where bailee is to receive no remuneration.(gratuitous bailee) 5. Right of third person claiming goods bailed. If a person other than the bailor claims goods bailed the bailee may apply to the court to stop delivery of goods to the bailor and to decide the title to the goods.

Contd
6. Right to claim damages. 7. Right to sue. Bailee can sue any person who has wrongfully deprived him of use or possession of the goods bailed or has done any injury to them. eg. A delivered certain goods to the railway for the purpose of carrying them from chd. to delhi. When the goods reached Delhi, B, a third party prepared forged and induced the railway to deliver goods to him. The railway(bailee) can file a suit against B for recovery of goods from him. 8. Right of lien. The right to retain the property until the charges due in respect of the property are paid is called the right to lien.

BAILEES LIEN
Lien signifies the right of a person, who has possession of the goods, of another, to retain such possession until a debt due to him has been satisfied. This right is sometimes known as possessory lien eg. X delivers his watch to Y for repair and agrees to pay Rs. 300 for it. After that he does not turn up for three years. Neither Y tries to trace him. After three years (a debt becomes time barred after three years) X comes to Y and demands back his watch without paying Rs. 300 to him.Y can retain possession of XS watch until his charges are paid.

Kinds of bailees lien


1. Particular lien
2. General lien

Contd
Particular lien is a right of the bailee to retain the goods in his custody until he receives due remuneration for the services rendered in respect of them. Eg. A bailor sends his car to the bailee for repair, the bailee has a lien on the car for the cost of the repairs. Bailee has to fulfill certain conditions before exercise of his right of particular lien.

Contd
1. The bailee must have rendered some services involving the exercise of labour in respect of the goods bailed. Eg. A delivers a rough diamond to B a jewellar to be cut and polishedwhich is accordingly done. B is entitled to retain the stone till he is paid for the services he has rendered. 2. The labour or skill must have been exercised in accordance with the purpose of the bailment. 3. A bailee under a particular lien can retain only those goods on which he exercised trouble and expenses. 4. The right of lien does not accrue until the services have been performed and the remuneration has become due. 5. Possession of goods by the bailee is essential to constitute a lien. Once possession is lost , lien disapears. 6. The bailee can exercise the lien provided there is no contract to the contrary.

Contd
General lien is a right to retain the goods of another as a security for a general balance of account. Sec 171 refers to the general lien which bankers, factors, wharfingers, attorneys and policy brokers may only claim on the goods bailed as security for the general balance of account. eg. Kunhan v. Bank of madras.

Distinction between particular lien and general lien


Particular lien 1. It can be exercised only against the goods On which bailee has rendered services. 2. Particular lien can be exercised only for amount due on account Of labour or skill employed or work done upon the goods retained. General lien 1. It can be exercised against any goods or property of another in possession of the person exercising the right. 2. General lien can be exercised for a general balance of account due.

3. It can be exercised by all Baliees.

3. It can be exercised only by Bankers,factors,wharfingers, attorneys and policy brokers.

Duties of Bailee
1. Duty of reasonable care (bailee cannot be held answerable for any act of God, eg. Fire, war, flood, etc.) Eg. Silver was entrusted to a goldsmith for making ornaments. He kept it locked in an almirah and employed a watchman for the night. Inspite of these precautions the silver was stolen. The goldsmith had taken reasonable care of the goods and was not liable for the loss.

Contd
2. Duty not to make unauthorised use of goods. Eg. A lends a horse to B for his own riding only. B allows C, a number of his family to ride the horse. C rides with care, but the horse accidently falls and is injured. B is liable to make compensation to A for the injury done to the horse.

Contd
3. Duty not to mix bailors good with his own goods (if he mixes up his goods with those of the bailor, following rules shall apply) (a) Sec 155 provides that if the bailee, with the consent of the bailor mixes the goods of the bailor with his own goods, the bailor and the bailee shall have an interest in proportion to their respective shares in the mixtures thus produced. (b) Sec 156 provides that where goods are mixed without the consent of the bailor, and if the goods can be separated or divided, the property in the goods will remain in the parties respectively. The bailee is bound to bear the expenses of separation or division and also any damage arising from such unauthorised mixing.

Contd
(c ) Where the goods mixed cannot be separated sec 157 becomes applicable. In such a case the bailor is entitled to be compensated by the bailee for the loss of the goods . 4. The bailee is estopped from challenging the right of the bailor to receive the goods back. 5. Sec 163 provides that the bailor is entitled to the profit accuring from the goods bailed unless there is a contract to the contrary. 6. Duty to return the goods. Eg. Shaw and co. V. symmons & sons. P deliverd certain books to D , a book binder who promised to bind and return them within a reasonable time. D could not complete the job within a reasonable time. The books were subsequently burnt in an accidental fire in DS premises. D was held liable in damage for the loss of the books, and the plea that the fire was accidental or an act of god was of no avail.

Contd
A bailee is excused from returning goods to the bailor in the following cases : 1. When the goods are not fit for the purpose for which they are bailed. 2. When the goods are seized by government or by the authority of law. Rights of bailor and bailee against third parties If a third person wrongfully causes injury to the goods bailed or deprives the bailee of the possession of them, the bailee is entitled to file a suit against the wrong doer.

TERMINATION OF BAILMENT
A contract of bailment terminate in the following cases : 1. If the contract of bailment is for a specified period, the bailment terminates as soon as the specified period expires. 2. If the contract of bailment is for a specific purpose, the bailment terminates as soon as the purpose is achieved. 3. Where a bailee does something which is consistent with the terms of the contract, the bailment is terminated. 4. Where the bailment is gratuitous, the bailor may terminate the bailment even before the specific time or before the purpose is fulfilled. 5. The death of bailor or bailee terminates a gratuitous bailment.

Finder of lost goods


sec 71 of the contract act provides that a person who finds goods belonging to another goods, is bound to exercise reasonable care in preserving the goods found. Sec 168 & 169 of the contract act protect the interest of a finder of goods. 1. He can retain the gods until compensation for trouble and expense incurred by him in preserving the goods and finding out the true owner is paid to him. This right is known as the finders lien on the goods. 2. In case the owner has offered any specific reward for the return of goods, the finder may sue reward and he may retain the goods until such reward is paid. sec 169 permits the finder to sell the goods in certain cases : 1. They are about to perish or lose the greater part of their value; 2. The lawful charges of the finder amount to two-third of their value.

pledge
Pledge is a special kind of bailment. It is a tranfer or bailment of goods as a security for the payment of a debt or performance of a promise. The bailor in this case is called the pledger or pawnor and the bailee is called the pledge or the pawnee. eg. A being in need of money, raises money from a money lender on the security of his furniture, the transaction is one of pledge.

ESSENTIAL OF PLEDGE
1. Delivery of possession. A pledge involves a tranfer of possession of goods pledged and not of title. eg. Revenue Authority v. sunder sanam pictures AIR 1968 X a producer of a film borrowed a sum of money from y, a money lender. X agreed to deliver as a security the final prints of the film when they are ready, but they were never delivered. The court held that it was not a valid pledge as there was only an agreement to deliver the possession of final prints of the film, and not the actual or constructive transfer of possession. 2. The delivery of goods should be by way of security. 3. The security being for the payment of a debt or performance of a promise.

Rights & Duties of the pawnee


1.Right of retainer 2. A pawnee cannot retain the goods for any debt other than for which the pledge was made. 3. Right to extraordinary expenses. 4. Right in case of defalt of the pawner File a suit against the pawner Sell the goods The following point may be noted in this regard: 1. A notice of sale is required to be given to the pawner. 2. In case the sale proceed are less than the amount due, the pawner continues to be liable to pay the balance; if the sale proceeds are greater than the amount due, the surplus shall be given be to the pawner.

Rights & Duties of the pawnor


1. Where a pawner defaults in payment of the pledge amount within the stipulated time, he can yet pay it before the actual sale is held. 2. The pawner has the right to take back the goods with increase, if any that the goods have undergone during the period of pledge.

Pledge by non owners


1. The pledge by a mercantile agent. (a) The mercantile agent is in possession of goods or documents of title to the goods. (b) Such possession is with the consent of the owner. (c) The mercantile agent acts in the ordinary course of business while making the pledge (d) The pawnee acts in good faith (e) The pawnee has no notice of the pawners defective title. A pledge by a servant or by a person entrusted with goods for specific purpose or by a wife is not valid.

Contd
2. Pledge by a person under voidable contract. A pledge made by a person who has obtained goods by fraud, misrepresentation, undue influence and coercion would be valid provided the following conditions are satisfied. (a) The contract under which the pawner obtained possession of the goods has not been rescinded at the time of the pledge. (b) the pawnee acts in good faith (c) the pawnee has no notice of the pawners defective title. Eg. A gets an ornament by inducing the owner to sell it to him by undue influence. Before the contract is rescinded by the owner, he pawns it to B. B will get a good title to the ornament provided he actsed in good faith and was unaware of As defective title. 3. Pledge where pawner has only a limited interest. Eg. A finds a watch on the road and repairs it spending Rs. 20. He pledges the watch to B for Rs. 40. The true owner C can recover the watch only on paying Rs. 20 to the pledge.

Contd
4. Pledge by a co owner in possession. where there are several joint owner of goods and goods are in the sole possession of one of the co owners with the consent of other co-owners, such a co-owner may create a valid pledge of goods.

DIFFERENCE BETWEEN PLEDGE AND BAILMENT


1.In a pledge the Bailment is made as A security for the Due discharge of a legal obligation. 1. In ordinary bailment this is not so.

2.It is not bound 2. In case of gratuitous bailment the to return the goods bailee is bound to return the goods Delivered as security on demand of the bailor. On demand by the Pledger unless & Until the debt is Repaid or promise Is performed. 3. The pledgee obtains 3. On a bailment of goods what passes to the bailee a special property in the is a right of the possession of the goods bailed. Goods pledged.

Contd
Pledge 4. A pledgee has a right to sale the Goods under Certain circumStances. 5. The pawnee has no right of using the goods. Bailment 4. A bailee has a right of lien on the goods bailed but no right of sale. 5. The bailee may use the goods bailed as Per the terms .

lien

pledge

1. Lien is a right 1. pledge gives a Of the creditors special property To retain a property in the things Of the debtor. Pledged. 2. Except in the 2. a pledgee has a power Bankers lien, the to sell. Lien holder has no Right to sell the Property in his Possession. 3. Right of lien is 3. pledge may not be extinguished Lost with the loss of with the loss of possession of the Possession of goods. Goods.

Lien
4. Lien holder Cannot sue to Enforce his claim. It is merely a Passive &possessory Right. 5.Lien is created by law , expressed or implied.

pledge
4. A pawnee has the right to Sue to enforce his claim against pawner . 5. A pledge is always created by a contract.