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Discuss the essentials of a contract of bailment and state the rights and duties of a bailee.

Discuss the essentials of a contract of bailment and state the rights and duties of a bailee.

Owlgen
Course: B.Com

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According to Section 148 of the Indian Contract Act, A bailment is 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 essentials of a valid contract are as follows:

Agreement:

It is the basic requirement for creating a bailment, that is, an agreement between the bailor and the bailee must exist. Bailor is the person who bails the goods and the bailee is the person to whom the goods are bailed. The agreement between the two may either be express or implied.

Delivery of Goods:

The essence of bailment is that there is delivery of the goods from the bailor to the bailee. It is only the bailment of movable goods which is allowed. Also the fact that the transfer of the goods is done voluntarily, and in accordance with the contract. It also states that the delivery of the possession may be actual or constructive.

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Purpose:

The goods are delivered for some purpose in bailment, which is in contemplation of both the bailor and the bailee.

Return of Goods:

The goods which form the subject matter of the bailment should be returned to the bailor or disposed of according to the directions from the bailor, that is, after the accomplishment of purpose or after the expiry of the bailment period the goods must be returned. The bailee is entitled to perform the following duties, namely:

Duty to take reasonable care of the goods bailed: According to Section 151 of the Indian Contracts Act, states the degree of care which a bailee is required to take with respect of the goods bailed by him. The law sates that it is the duty of the bailee who is bound to take care of the goods bailed by him as a man in ordinary circumstances would take care of his own goods of the same bulk, quality and value as the goods bailed. Section 153 of the Act states the standard care of ordinary prudent man may be increased by entering into a contract, between the bailor and the bailee.

Not to make any unauthorized use of goods: The bailed goods need to be used in accordance with the terms of the bailment and it is thus the duty of the bailee to ensure the terms are met. In case the terms are not met then the contract is voidable at the option of the bailor. And the bailee would also be responsible for compensating the bailor for any damage caused to the goods by such inconsistent use of the bailed goods.

Duty not to mix bailor’s goods with his own goods: Sections 155 to 157 have laid down this duty as follows:
  • The bailee and the bailor’s interest would be in proportion to their respective shares in case where the bailee with the consent of the bailor mixes the goods of the bailor with his own goods.
  • If the bailee without the consent of the bailor mixes the goods of the bailor with his own goods, but the goods can be separated or divided, though the property in the goods remains in the parties but the bailee is bound to bear the expense of such division or separation.
  • In case where the goods of the bailor are mixed by the bailee, without his consent which are impossible to separate, then the bailor is bound to be compensated by the bailee for the loss of the goods.

Duty not to set up adverse title: It is the duty of the bailee to not to do any act which is inconsistent with the title of the bailor, that is, his own title or the title of a third party must not be set up on the goods bailed by him.

Duty to return the goods: The bailee is duty bound to return or deliver the goods back to the bailor on his directions, without any demand, on the expiration of the time fixed by the bailor. Otherwise, the bailee is responsible for any loss, destruction or deterioration of the goods from that time to the bailor.

Duty to return accretions to the goods: In case of absence of the contrary contract, the bailee must deliver any increase or profit which have accrued from the goods bailed to the bailor.

Rights of the Bailee:

As the duties of the bailor are the rights of the bailee, thus, the bailee has the right to sue the bailor in case of any default. The bailee has . the following rights:

Right to claim damages: According to Section 150, in case where the bailor had bailed the goods without disclosing any defect in the goods to the bailee, and because of which the bailee has suffered some loss. Then the bailee has the right to sue the bailor for damages. For example: A hires a carriage of B. The carriage is unsafe, though B is not aware of it, and A is injured. Thus, B is responsible to A for the injury.

Right to claim reimbursement: According to Section 158, the bailee has the right to recover all the necessary expenses from the bailor, which the bailee had incurred for the purpose of bailment in case of a non-gratuitous bailment. Where as, in- case of a gratuitous bailment, the bailor is responsible for the payment of extraordinary expenses to the bailee which is borne by him for the purpose of the bailment.

Right to recover losses: According to Section 164, the bailee has the right to recover all losses suffered by him due the fact that the bailor was not entitled to make the bailment of the goods or to receive back the goods, or to give directions regarding them, from the bailor.

Right to deliver goods to any one of the joint bailors: According to Section 165, in the absence of a contrary contiact the bailee has the right to deliver the goods to any one of the joint owners or may deliver the goods back according to the directions of one joint owner without the consent of all, in case where the goods are owned and bailed by more than one person.

Right to deliver the goods to bailor even if his title is defective: According to Section 166, if the title of the bailor is defective and the bailee in good faith returns the goods to the bailor, the bailee is not liable to the true owner with respect to such delivery.

Right to lien: According to Section 170, if the bailee in accordance with the purpose renders any service involving the exercise of labor or skill to the goods bailed, and the bailor does not make the lawful payments to him then the bailee has the right to retain the goods unless there exists a contrary contract.

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September 11, 2019
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