Bailment

Bailment and Its Types

Definition

According to Section 148 of the Indian Contract Act, 1872, bailment is the delivery of goods from one person (the bailor) to another person (the bailee) for a specific purpose. Upon fulfilling that purpose, the bailee must return the goods or otherwise dispose of them as per the bailor’s instructions.

• Bailor: The person who delivers the goods.
• Bailee: The person to whom the goods are delivered.

Types of Bailment

• Gratuitous Bailment
  • Definition: A bailment where neither the bailor nor the bailee receives any remuneration.
  • Characteristics:
    • It can be for the exclusive benefit of either the bailor or the bailee.
    • Terminates on the death of either party.
    • As per Section 159, the bailor can demand the return of the goods at any time, even before the expiration of the lending period or the fulfillment of the purpose.
    • The bailor must indemnify the bailee for any loss or damages incurred due to the early termination.
• Bailment for Reward
  • Definition: A bailment for the mutual benefit of both parties.
  • Example: A hands over goods to B for transporting to Delhi; A benefits from the transportation, and B receives transportation charges.

Specific Types of Bailment

• Bailment Benefiting Both Bailor and Bailee
  • Example: Parking a car in a paid parking lot.
  • Liability: The bailee is liable for damages to the bailed items if they were negligent.
• Bailment Benefiting Only the Bailor (Gratuitous Bailment)
  • Example: Free valet service.
  • Liability: The bailee is liable for damages if they have been grossly negligent or acted in bad faith.
• Bailment Benefiting Only the Bailee
  • Example: Checking out a book from a library.
  • Liability: The bailee is liable for any damage to the bailed item, requiring the highest standard of care.

Termination of Bailment

• Purpose Fulfilled:
  • The bailment ends when the purpose for which the goods were bailed is accomplished.
  • Example: Removing your parked car from the parking lot.
• End of Fixed Term:
  • If the bailment is for a specific period, it terminates when the time frame ends.
• Destruction of Bailed Property:
  • The bailment ends if the bailed property is destroyed.
• Notice of Termination:
  • Either party can terminate the bailment by giving notice if the bailment is for an indefinite period.

Unclaimed Items by Bailor

• If the bailment period is over and the bailor hasn’t reclaimed the item, the bailee can claim it as abandoned property.
• The bailee must make a good faith effort not to conceal the property or deceive the bailor.

Additional Important Points

• Consideration in Bailment:
  • Consideration is not always necessary for bailment. Gratuitous bailment does not involve any consideration, while bailment for reward involves mutual benefit.
• Duties of Bailee:
  • The bailee must take care of the goods as a reasonable person would take care of their own goods.
  • The bailee must not use the goods in an unauthorized manner.
• Rights of Bailee:
  • The bailee has a right to claim expenses incurred for the bailment.
  • The bailee can retain the goods until any charges due to them are paid.
• Duties of Bailor:
  • The bailor must disclose any faults in the goods bailed.
  • The bailor must bear extraordinary expenses incurred by the bailee.

Understanding these aspects of bailment helps in differentiating it from other similar contracts, such as pledges, and in ensuring that the rights and duties of both the bailor and the bailee are clearly defined and protected under the law.