Bailment and Pledge

Definition of bailment
 According to section 148 of the 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 person delivering the goods is called bailor. The
person to whom they are delivered is called bailee
 The transaction is called bailment
Essential features
1. Delivery of movable goods: Sec 149 Explains the mode
of delivery. It can be
i. Actual : when the bailor hand over physical
possession of the goods
ii. Contractual : when effect of putting the goods in
possession of bailee e.g. goods stored in godown can
be delivered by giving keys to bailee.
2. Delivered for some purpose
3. Based upon a condition that when the purpose is
fulfilled goods are to be returned or disposed off
according to the direction of bailor.
Kinds of bailment
It may be classified on the basis of:
1. Benefit
i. Bailment for the exclusive benefit of the bailor e.g. bailor
leaves goods in safe custody without any compensation
ii. Bailment for the exclusive benefit of the bailee e.g. loan
of some article.
iii. Bailment for the mutual benefit of the bailor and bailee :
contracts for repair, hire etc.
2. Reward
i. Gratuitous bailment : neither bailor nor bailee entitled to
any remuneration
ii. Non-gratuitous bailment: either bailor or bailee entitled
to any remuneration e.g. motor car let out for hire.
Difference
 Between sale and bailment
- Ownership
Duties of a bailee
1. Duty to take reasonable care of goods delivered to
him
2. Duty not to make unauthorized use of goods
entrusted to him.
3. Duty not to mix goods bailed with his own goods
4. Duty to return the goods
5. Duty to deliver any accretion to the goods: deliver to
bailor any increase or profit accruing from the goods
bailed.
Duties of a bailor
1. Duty to disclose faults in goods bailed :
 Gratuitous bailor has to declare all the fault & if he fails
then has to pay bailee. Gratuitous bailor not liable if he is
ignorant about defects.
 Non Gratuitous bailor responsible for all defects whether
he is aware or not.
2. Duty to repay necessary expenses in case of gratuitous
bailment e.g. where horse bailed without reward bailor has
to reimburse the bailee for usual feed & medical exp.
3. Duty to repay any ‘ extraordinary’ expenses in case of non-
gratuitous bailment : in this case bailor will pay medical exp.
Not feeding exp.
4. Duty to indemnify bailee if title of the goods were defective
5. Duty to receive back the goods & If bailor refuse to take back
delivery then bailee can claim exp.
Rights of a bailee
1. Enforcement of bailor’s duties :the duties of bailor are
the rights of bailee
- Right to claim damages
- Right to claim re-imbursements for extraordinary exp.
- Right to indemnity for any loss suffered for defective title
- Right to claim compensation
2. Right to deliver goods to one of the several joint bailors
3. Right to deliver goods, in good faith, to bailor without title
4. Right of lien: sec 170
 bailee’s particular lien
- Must have rendered some service against which remuneration
is due
- Service must involve skill which enhanced the value of article
- Service must have been performed in full
- There must be no agreement to perform the service on credit
- Possession must be with the bailee
- Must not be a contract to contrary
 Bailee’s general lien
- Bankers
- Factors
- Wharfinger
- Attorneys of high court
- Policy brokers
- Any other person
Rights of a bailor
1. Enforcement of bailee’s duties : duties of bailee are
the rights of bailor
2. Right to terminate bailment if the bailee uses the
goods wrongfully
3. Right to demand return of goods at any time in case
of gratuitous bailment
Termination of bailment
 Specified period
 Specific purpose
 Inconsistent with terms
 Gratuitous bailment can be terminated at any time
 By death
Finder of lost goods
 A finder of lost goods is under no obligation to take
charge of the goods when he comes across.
 But if he takes charge of goods , he becomes
responsible for goods like bailee.
Duties of finder
 Duty to find the true owner
 Duty to take reasonable care of the goods as a bailee
Rights of finder
 Right to retain the possession of goods until true
owner is found
 Right of lien over the goods for expenses
 Right to sue for reward
 Right of sale
Pledge
 “ the bailment of goods as security for payment of a
debt or performance of a promise”
 The bailor in this case is called pawnor
 The bailee is called pawnee
Distinction between bailment and
pledge
 As to the purpose
 As to the right of sale
 As to the right of using the goods
Rights of pawnee
 Right of retainer
 Right of retainer for subsequent advances
 Right of extra ordinary expenses
 Right to sue the pawnor or sell the goods on default of
the pawnor
Duties of pawnee
 To take reasonable care
 Not to make any unauthorised use
 Not to mix the goods pledged with his own goods
 Not to do any act in violation of the contract
 To return the goods on the receipt of full dues
 To deliver any accretion to the goods pledged
Rights of pawnor
 Enforcement of pawnee’s duties
 Defaulting pawnor’s right to redeem
DUTIES OF PAWNOR
 To compensate the extra ordinary expenses
 To meet his obligations on the stipulated date
Pledge by non owners
 Mercantile agents
 Person in possession under voidable contract
 Pledgor having limited interest
 Seller in possession of goods after sale
 Buyer in possession of goods under an agreement to
sell
 Co-owners in possession

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Definition of bailment

 According to section 148 of the contract act- “a

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