Bailment
Section 148. Bailment, Bailor and Bailee defined.
Bailment is the delivery of goods by one person to another for a specific purpose.
Bailment is usually done under a contract.
Once the purpose is completed, the goods will be returned or disposed of as per the bailor’s directions.
The person delivering the goods is the bailor.
The person receiving the goods for that purpose is the bailee.
Explanation:
A person who already has someone’s goods can still become a bailee if they agree to hold those goods under a bailment arrangement.
In such a case, the owner becomes the bailor, even though the goods were not physically handed over again.
What matters is the change in the capacity in which the goods are held, not actual physical delivery.
Example:
(a).
A leaves his watch with B for repair.
After repairing it, B decides to keep the watch safely until A picks it up next week.
B already had the watch in his possession, but now he agrees to hold it on A’s behalf under a bailment.
This makes B a bailee and A a bailor, even though no new physical delivery happened.
Section 149. Delivery to bailee how made.
Delivery to a bailee can be made in any way that actually gives the bailee possession of the goods.
Delivery is also valid if the goods are handed to someone who is authorized to receive them for the bailee.
What matters is that the bailee (or their authorized person) gets control of the goods.
Section 150. Bailor’s duty to disclose faults in goods bailed.
The bailor must disclose to the bailee any faults in the goods that:
The bailor is aware of.
The defaults which materially interfere with the use of the goods.
If these defaults expose the bailee to extraordinary risks.
If the bailor fails to disclose such faults, the bailor is liable for any damage caused to the bailee as a direct result.
If the goods are bailed for hire, the bailor is responsible for damage caused by such faults even if the bailor was not aware of them.
Illustrations:
(a).
A lends B a horse that A knows is vicious, but A does not disclose this.
The horse runs away and injures B.
A is liable.
(b).
A hires a carriage from B.
The carriage is unsafe, though B is unaware.
A is injured.
B is liable.
Section 151. Care to be taken by bailee.
A bailee must take the same level of care of the bailed goods as an ordinarily careful person would take of their own goods.
The standard of care depends on the nature, bulk, quality, and value of the goods.
So essentially , the bailee must protect the goods as a reasonable person would protect their own similar property
Section 152. Bailee when not liable for loss, etc., of thing bailed.
A bailee is not liable for the loss, destruction, or deterioration of the goods bailed if:
There is no special contract imposing a higher responsibility, and
The bailee has taken the reasonable care required under Section 151.
(The same care that a person of ordinary prudence would take of their own goods under similar circumstances).
If the bailee has exercised this level of care, he is not responsible for any loss or damage to the goods.
Section 153. Termination of bailment by bailee’s act inconsistent with conditions.
The bailor can end the bailment if the bailee does something with the goods that goes against the agreed terms.
This includes any act inconsistent with the purpose for which the goods were given.
Once such an act occurs, the bailor may choose to terminate the bailment immediately.
Illustration:
A gives B a horse for hire specifically for riding.
Instead of riding it, B uses the horse to pull his carriage.
Since this act is inconsistent with the agreed purpose, A may treat the bailment as terminated.
Section 154. Liability of bailee making unauthorized use of goods bailed.
If the bailee uses the goods in a way that was not allowed under the bailment agreement, the use becomes unauthorized.
If any damage happens because of or during this unauthorized use, the bailee must compensate the bailor.
The bailee is fully responsible for all loss arising from such misuse.
Illustrations:
(a).
A lends B a horse only for B’s personal riding.
B lets C (a family member) ride it.
Even though C rides carefully, the horse accidentally falls and is injured.
B must compensate A, because the use was unauthorized.
(b).
A hires a horse from B in Calcutta, expressly to ride to Benares
A instead rides to Cuttack (though with due care).
The horse falls and is injured.
A must compensate B, because using the horse on a different route is unauthorized.
Section 155. Effect of mixture, with bailor’s consent, of his goods with bailee’s.
If the bailee mixes the bailor’s goods with his own with the bailor’s consent, the mixture is allowed.
After mixing, both the bailor and the bailee become co-owners of the combined goods.
Each person’s share in the mixed goods is based on the proportion of their contribution.
156. Mixture of goods without bailor’s consent (goods can still be separated)
If the bailee mixes the bailor’s goods with his own without the bailor’s consent, but the goods can be separated or divided, then:
Each party retains ownership of their own goods.
The bailee must bear the entire cost of separating or dividing the goods.
The bailee must also compensate for any damage caused by the unauthorized mixture.
Illustration:
A bails 100 marked bales of cotton to B.
B without consent mixes them with his own bales, which have a different mark.
A is entitled to get back his exact 100 bales, and B must bear all costs of separation and any incidental damage.
Section 157. Effect of mixture, without bailor’s consent, when the goods cannot be separated.
If the bailee mixes the bailor’s goods with his own without consent, and the mixture is such that the goods cannot be separated or returned in their original form, then:
The bailor loses his goods.
And the bailee must fully compensate the bailor for the value of the goods lost.
The bailee’s unauthorized act destroys the bailor’s ownership in identifiable form, so compensation becomes the only remedy.
Illustration:
A bails a barrel of Cape flour worth Rs. 45 to B.
B mixes it without consent with his own flour worth Rs. 25.
Since the flour cannot be separated, B must compensate A for the full value of A’s flour.
Section 158. Repayment, by bailor, of necessary expenses.
If the bailee is doing the work without any payment (no remuneration), the bailor must cover the necessary expenses.
This applies when the goods are to be kept, carried, or worked on by the bailee.
So , When the bailee is unpaid, the bailor must reimburse all necessary costs related to the bailment.
Section 159. Restoration of goods lent gratuitously.
If something is lent for free (a gratuitous loan), the lender can ask for it back at any time, even if a time or purpose was agreed.
But if the borrower has relied on the agreed time or purpose and returning it early would cause the borrower more loss than the benefit they got from using it:
Then the lender must compensate (indemnify) the borrower for the extra loss caused by the early return.
The lender can demand it back anytime in a free loan, but must pay the borrower if taking it back early causes significant loss.
Section 160. Return of goods bailed on expiration of time or accomplishment of purpose.
The bailee must return the goods to the bailor (or deliver them as the bailor directs) without waiting for a demand.
This must be done as soon as the time fixed for the bailment ends, or
When the purpose of the bailment is completed.
Once the agreed time or purpose is over, the bailee must return the goods automatically.
Section 161. Bailee’s responsibility when goods are not duly returned.
If the bailee fails to return or deliver the goods at the proper time, it is considered the bailee’s default.
From that moment onward, the bailee is responsible for any loss, damage, or destruction that happens to the goods.
The liability starts from the time the goods should have been returned.
Section 162. Termination of gratuitous bailment by death.
In a gratuitous bailment (where no payment is involved), the arrangement ends automatically if either the bailor or the bailee dies.
No further obligations continue after the death of either party.
Section 163. Bailor entitled to increase or profit from goods bailed.
Unless there is an agreement saying otherwise, the bailee must return any increase or profit earned from the bailed goods.
This must be given to the bailor or delivered according to the bailor’s directions.
The bailee cannot keep any such increase for himself.
Illustration:
A gives B a cow to take care of.
While with B, the cow gives birth to a calf.
B must return both the cow and the calf to A.
Section 164. Bailor’s responsibility to bailee.
The bailor must compensate the bailee if the bailor was not legally entitled to bail the goods.
This includes situations where the bailor was not entitled to:
Give the goods in bailment.
Take them back.
Give instructions about them.
Any loss the bailee suffers because of this lack of entitlement must be borne by the bailor.
Section 165. Bailment by several joint owners.
When several people jointly own goods and they bail those goods together, the bailee can return the goods to any one of the joint owners.
The bailee does not need the consent of all joint owners to return the goods.
This applies unless there is an agreement saying the goods must be returned in some other specific way.
Section 166. Bailee not responsible on re-delivery to bailor without title.
If the bailor does not actually own the goods, but the bailee does not know this & the bailee in good faith returns the goods to the bailor (or follows the bailor’s directions) then:
The bailee is not liable to the true owner for returning the goods wrongly.
If the bailee honestly believes the bailor is the real owner, he is protected.
Section 167. Right of third person claiming goods bailed.
If someone else (not the bailor) claims that the bailed goods actually belong to them,
That person can ask the Court to stop the bailee from returning the goods to the bailor, And the Court will then decide who the real owner of the goods is.
Section 168. Right of finder of goods. May sue for specific reward offered.
A finder of lost goods cannot sue the owner for trouble or expenses spent to preserve or locate the goods if done voluntarily.
However, the finder can keep the goods until the owner repays any expenses reasonably incurred.
If the owner has offered a specific reward for returning the lost goods, the finder can claim that reward.
The finder may also retain the goods until the promised reward is received.
Section 169. When finder of thing commonly on sale may sell it.
If a lost item is commonly sold and the owner cannot be found, or refuses to pay the finder’s lawful charges, the finder may sell the item.
The finder can sell the item in two situations:
If the item is in danger of perishing or losing most of its value.
If the finder’s lawful charges equal two-thirds or more of the item’s value.
Section 170. Bailee’s particular lien.
If a bailee provides services involving skill or labor on the bailed goods, they have the right to keep the goods until paid, unless there’s an agreement stating otherwise.
Illustration:
(a).
A gives a rough diamond to B, a jeweller, to cut and polish.
B can keep the diamond until payment for the work is made.
(b).
A gives cloth to B, a tailor, to make a coat.
B promises to deliver the coat and give three months’ credit.
B cannot keep the coat until payment because of the credit agreement.
Section 171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers.
Certain professionals like bankers, factors, wharfingers, High Court attorneys, and policy-brokers can keep goods bailed to them as security for a general balance of account, even without a specific contract.
Other persons cannot retain goods as security for a balance unless there is an express agreement allowing it.
Only these specified categories have an implied right to retain goods as security.
