Contract- II: Bailment

Contracts of Bailment are a special class of contract. These are dealt within Chap. IX from S.148 to 181 of the Indian Contract Act, 1872. Bailment implies a sort of one person temporarily goes into the possession of another. The circumstance in which this happens are numerous. Delivering a cycle, watch or any other article for repair, delivering gold to a goldsmith for making ornaments, delivering garments to a drycleaner, delivering goods for carriage, etc. are all familiar situations which create the relationship of ‘Bailment’.

2) Definition:-
a) Bailment:-
Section 148 defines ‘Bailment’ as “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 off according to the directions of the person delivering them”.

b) Bailor:- The person delivering the goods is called ‘Bailor’.
c) Bailee:- The person to whom they (goods) are delivered is ‘Bailee’.

3) Duties of Bailor:-
According to Section 150, which deals with the duties of Bailor. Bailor are of two kinds viz;
1) Gratuitous Bailor
2) Bailor for reward

1) Gratuitous Bailor:-
A person, who lends his articles or goods without any charge, is called a “Gratuitous Bailor”. His duty is naturally much less than that of a Bailor for hire or consideration.

* Duty of Gratuitous Bailor:-
a) To disclose Known faults:- It is the first and foremost duty of the Bailor to disclose the known faults about the goods bailed to the Bailee. If he does not make such disclosure, he is responsible for any damage caused to the Bailee directly from such faults.
i. E.g. ‘A’ lends a horse, which he knows to be vicious, to ‘B’. He does not disclose that the horse is vicious. The horse runs away and ‘B’ is thrown and injured. ‘A’ is responsible to ‘B’ for damage sustained.
ii. ‘A’ hires a carriage of ‘B’. The carriage is unsafe though ‘B’ is not aware of it, and is injured. ‘B’ is responsible to ‘A’ for the injury. In Gratuitous Bailment, however, the Bailor is responsible only for those faults which are known to him and which are not disclosed.

b) To indemnify bailee for loss in case of premature termination of Gratuitous Bailment:-
A Gratuitous Bailment can be terminated by the bailor at any time even though the bailment was for a specified time or purpose. But in such a case, the loss accuring to the bailee from such premature termination should not exceed the benefit he has derived out of the bailment. If the loss exceeds the benefit, the bailor shall have to indemnify the bailee. For example, ‘A’ lends an old discarded bicycle to ‘B’ gratuitously for three months, ‘B’ incurs Rs. 120/- on its repairs. If ‘A’ asks for the return of bicycle after one month, he will have to compensate ‘B’ for expenses incurred by ‘B’ in excess of the benefit derived by him.

2) Bailor for reward:-
The duty of a bailor for consideration is much greater. He is making profit from his profession and, therefore, it is his duty to see that the goods which he delivers are reasonably safe for the purpose of the bailment. It is no defence for him to say that he was not aware of the defect. Section 150 clearly says that “if the goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of such faults in the goods bailed.” He has to examine the goods and remove such defects as reasonable examination would have disclosed.

* Duty of Bailor for reward:-
c) To bear extraordinary expenses of Bailment:-
The Bailee is bound to bear ordinary and reasonable expenses of bailment but for any extraordinary expenses the bailor is responsible. E.g., ‘A’ lends his horse to ‘B’, a friend, for two days. The feeding charges are to be paid by ‘B’. But if the horse meets with an accident ‘A’ will have to repay ‘B’ medical expenses incurred by ‘B’.

d) To receive back the goods:-
It is the duty of the Bailor to receive back the goods when the Bailee returns them after the expiry of the term of the Bailment or when the purpose for which Bailment was created has been accomplished. If the Bailor refuses to receive back the goods, the entitled to receive compensation from the Bailor for the necessary expenses of custody.

e) To indemnify the Bailee:-
Where the title of the Bilor to the goods is defective and the Bailee suffers as a consequence, the Bailor is responsible to the Bailee may sustain by reason that the Bailor was not entitled to make Bailment, or to receive back the goods, or to give directions respecting them.

4) Case Law:-
1) Hyman & Wife V/S Nye & Sons (1881) 6 QBD 685.
The plaintiff hired from the defendant for a specific journey of a carriage, a pair of horses and a driver. During the journey a bolt in the under-part of the carriage broke, the splinter bar became displaced, the carriage was upset and the plaintiff injured. Holding the defendant liable, justice Lindley said: “ A person who lets out carriages is not responsible for all defects discoverable or not; he is not an insurer against all the defects which care and skill guard against. His duty is to supply a carriage as fit for the purpose for which it is hired as care and skill can render it”.

2) Reed V/S Dean (1949) 1 KB 188.
The plaintiff 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.

3) Lyell V/S Ganga Das, ILRC (1875) 1 AII 60.
Goods consigned without disclosing that they were combustible. Where a bailor delivers goods to another for carriage or for some other purpose, and if the goods are of dangerous nature, the fact should be disclosed to the bailee.

5) Conclusion:-
From the above discussion it can be seen that bailment is a contract whereby a delivery of possession is given of specific goods to another for some purpose with the direction that the goods shall be return or dispose off on fulfillment of the purpose. Bailment is different from licence and sale. There are five important duties of bailor as we have discussed above. A contract of bailment may be terminated by act of parties or by operation of Law.

With the Reference of Book:
Law Of Contract and Specific Relief - Dr. Avtar Singh B.com., LL.M., LL.D., (Luck.)

The  author can be reached at: nazneenfkr@legalserviceindia.com