BAILMENT AND PLEDGE: ITS FEATURES AND DISTINCTIVENESS

INTRODUCTION: BAILMENT:

The term bailment in the actual sense refers to “A change of possession of goods and not the
change of ownership”. The person delivering the goods is called the Bailor and the person to
whom they are delivered is called the Bailee. Bailment as defined under S.148 of the Indian
Contract Act, 1872 is the delivery of goods from one person to another (Bailee) 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 (Bailor).1 Few
examples of a Contract of Bailment are sending TV to a service centre for repairing or
delivering old jewellery to goldsmith for polishing or hiring taxi for tour purposes.
With respect to the definition of Bailment as per S.148 of the Indian Contracts Act, 1872, the
transfer of possession of the goods is of great essence. It is pertinent to note that transfer of
possession in concrete sense is not particularly necessary as the delivery of possession could
either be actual or constructive. Once the possession of the goods is handed over to the Bailee,
a contract of bailment arises regardless of the manner it was entered into. Therefore, it could
be said that the transfer of delivery is of two kinds i.e. (i) Actual Delivery & (ii) Constructive
Delivery.
(i) Actual Delivery: when there is a physical transfer of possession of the goods, it is
actual delivery. For example, when A and B who are classmates decide to exchange
their notebooks to compare notes, they exchange the physical possession of the
notebooks hence creating a contract of bailment.
(ii) Constructive Delivery: here there is no physical transfer of possession, but
something is done which has the effect of putting them in possession of the bailee.
For example, when X goes out of town, he requests his neighbor Z to keep an eye
on his car and hands him the keys. Though Z does not actually hold the car in his
premises, the act of handing over of the keys constitutes delivery of possession of
the goods from X to Z hence creating a relationship of bailor and bailee.
There are different kinds of Bailment viz:
(i) Gratuitous Bailment: It is made without exchange of any consideration. Safe
custody: Bailee is to simply keep the goods for the bailor. Services: Bailee is to do
something without reward with the goods. It is one in which neither the bailor nor
the bailee is entitled to any remuneration for e.g. loan of a book to a friend.

1 S.148, Indian Contracts Act, 1872

 (ii) Non-Gratuitous Bailment (Bailment for hire): It is also called a “bailment for
reward”. Here either the bailor or the bailee is entitled to a remuneration for e.g.
motor car let out for hire
(iii) Pledge: Pledge is a Bailment of goods as security for payment of a debt or
performance of a promise.

Essentials of Bailment: 1) Transfer of Possession (Delivery of goods): The delivery to the

Bailee may be made by doing anything which has the effect of putting the goods in the
possession of the intended Bailee or of any person authorized to hold them on his behalf. -
Actual delivery: When the bailor hands over to the bailee physical possession of goods -
Constructive Delivery: does not involve handing over the physical possession, but something
done which has the effect of putting the goods in the possession of bailee. For e.g. goods in
transit can be delivered by handing over bill of lading. 2) Purpose: When the goods are
delivered by mistake without any purpose, there is no bailment within the meaning of its
definition. Goods should be delivered for some purpose. 3) Condition: The goods are delivered
subject to the condition that when the purpose is accomplished the goods are to be returned in
specie or disposed of according to the direction of the bailor, either in their original form or in
an altered form.