Bailment under the Indian Contract Act, 1872

A bailment is a contract that is concerned only with a moveable property. Bailment means the delivery of goods from one person to another for some purpose. In fulfilment of the purpose, the other person has to either return the goods or otherwise dispose of them in the manner agreed upon between the parties to such contract. A contract of bailment involves two parties- bailor and bailee.

Bailor means a person who delivers the goods whereas bailee means a person to whom the goods are delivered. (For instance, giving one’s own bike or car for repairs and maintenance can be said to be a contract of bailment.)

Essentials of the Contract of Bailment:

1) Delivery of the goods for a certain purpose:

Such delivery of goods may be actual/ symbolic/ constructive.

Actual delivery means goods being delivered literally by one person to another.

Symbolic delivery means doing any act which ensures delivery of goods to the other person (e.g giving the keys of the warehouse where the goods are stored)

Constructive delivery means possession of goods remains with the same person but now he holds those goods in a different capacity. (e.g buyer tells the seller to keep the goods in his warehouse till he returns back to collect the goods from some other place. Here the seller though sells his goods but still keeps it in his possession on the directions of the buyer)

2) Returning goods once the purpose is fulfilled

Under a contract of bailment, the same goods shall be returned by the other person in the same or altered form as agreed between the two persons (i.e bailor and bailee)

It must however be noted that goods delivered for cost without the intention to take them back shall be deemed to be a sale.

Further, we shall discuss the duties and rights of the bailee and bailor

(1) Duties of the Bailee:

(i) Duty to take sufficient and reasonable care of the goods bailed:

Bailee must take as much care of the goods bailed to him as a man of ordinary prudence would.

(ii) Duty to not make unauthorized use of the goods bailed:

Bailor can withdraw himself from the contract if the bailee does any such actions with regard to the goods bailed which is inconsistent with the conditions of bailment. If the bailee makes unauthorized use of the goods bailed to him i.e inconsistent with the conditions of bailment, then the bailee will be liable to compensate the bailor for the same.

(iii) Duty to not mix the goods bailed with his own goods:

 If the bailee mixes the goods with the bailor’s consent, then he shall be entitled to only such interest which is in the proportion of his respective share in the mixture produced.

If without the bailor’s consent, the bailee mixes the goods, and if the mixture can be separated, then such separation shall be made.

If the bailee mixes the good without the consent of the bailor and if the mixture cannot be separated then the bailee will have to compensate the bailor.

(iv) Duty to return the goods to the bailor on fulfilment of the purpose of the bailment contract.

(v) Duty to deliver to the bailor any increase or profit earned on the goods so bailed.  

(2) Rights of the bailee

(i) Right to recover from the bailor all the necessary expenses incurred.

Especially in the case of non-gratuitous bailment which involves payment of money to the bailee for looking after the goods so bailed, the bailee can recover the expenses from the bailor.

In the case of gratuitous bailment, since no consideration is involved, the bailee cannot recover expenses from the bailor

(ii) Right to recover from the bailor, compensation for the losses incurred:

When the bailor was not authorized or had no right to deliver the goods on bailment, any loss caused to the bailee shall be thus compensated by the bailor.

(iii) Right to file suit against the wrongdoer for taking the goods wrongfully from the bailee’s possession. Here even the bailor can file a suit against the wrong-doer.

(iv) Right to create lien (i.e holding back the goods bailed) for default of the bailor to make the agreed payment. Such lien can either be a general lien or specific/particular lien.

(3) Duties of the bailor:

(i) Duty to disclose any defect in the goods so bailed to the bailee. On failure to do so, the bailor shall be liable to compensate the bailee for the losses incurred.

(ii) Apart from this, all those points covered under the rights of the bailee shall accordingly be the duties of the bailor.

(4) Rights of the bailor:

All those points covered under the duties of the bailee shall be the rights of the bailor.  

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.