Introduction

Bailment means a relationship in which one person’s personal property is temporarily held by
another person. The ownership of the products or items is with one person and the possession
is with another person. There are several circumstances in which this takes place.
Bailment is explained under Section – 148 of Indian Contract Act, 1872
“A bailment is a 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 the bailor. The person to whom they are delivered is called the bailee.”1

The duty of reasonable care

The duty of reasonable care by bailee is mentioned under Section – 151 of Indian Contract
Act, 1872.
It says “In all cases of bailment the bailee is bound to take as much care of the goods bailed
to him as a man of ordinary prudence would, under similar circumstances take, of his own
goods of the same bulk, quality and value as the goods bailed.”2
The duty of a bailee for reward in English law is "to exercise the same degree of care towards
the preservation of the goods entrusted to him from injury which might reasonably be
expected from a skilled storekeeper, acquainted with the risk to be apprehended either from
the character of the storehouse itself, or of its locality.”

Section- 152 of Indian Contract Act,1872 states that Bailee when not liable for loss, etc., of
thing bailed.— “The bailee, in the absence of any special contract, is not responsible for the
loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it
described in section 151.”

Standard duty of care

The level of care or diligence required of a bailee under this section is the same as that
required of an ordinary prudent individual in the same circumstances for his own
commodities of equal bulk and value; however, the extent of care required of a bailee would
be determined by the facts of each case. It would, for example, be defined by the type and
quality of the things. Even if he contracted himself out of responsibility due to his own
negligence, the bailee must show that he took as much care of the pledged goods as an
ordinary careful man.
1

2
A gratuitous bailee is only liable for goods loss or damage if he acts with undue
negligence.

Case

Shipping Corpn of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd3

“Liability of a carrier under the Hague Rules incorporated under an Australian statute. Goods
on the ship were damaged due to heavy weather on the high seas. It was found that the heavy
weather, though unusual, was not unforeseeable; and had the goods been properly stowed,
damage would not have occurred. Heavy weather and improper stowage were concurrent
causes of the damage, and as a matter of strict construction, the carrier could not rely on the
exception to the liability available to him under The Hague Rules, under which he would not
have been responsible for loss or damage arising from perils of sea. The fact that many others
would have acted in the same way cannot bring the "care" taken by the bailee within the
standard required under this section. Thus, where the director of a co-operative society
entrusted with the society's cash, locked and kept the cash according to the usual informal
and conventional arrangement, the fact that he followed the usual practice was no answer to
his negligence, because the practice was insecure and risky, and he was legally bound to take
all such, precautions as a reasonable man would take in similar circumstances. Merely
posting adequate number of security guards at the storage area by itself would not sufficiently
show that due care and caution were exercised.”4

Case:

Joseph Travers & Sons Ltd v Cooper5

It is one of the leading judgement which set guidelines for establishing the concept of
standard of care. In this case, the defendant bailee who was in the possession of salmon fish
lost the goods on account of him being absent for a long time and finding good at the final
stage of submersion on the banks of Thames river. The defendant, although being clearly
negligent claimed that they should not be held liable as the firstly, plaintiff failed to establish
any casual connection between default of plaintiff and sinking of barge. Secondly, they said

5
that the barge was sunk when it became mud-sucked while resting on the river bed which
couldn’t be rectified even by human efforts.6 Although, it is clear that defendants filed to take
reasonable care when the goods were bailed to them but it is also established that defendants
cannot be held liable for something which is not foreseeable. Furthermore, it is also clear
from the facts that even proper care from the bailee would not have prevented the damage
which was clearly held by the judge correctly.

Other duties
When the bailment time finishes, the bailee's duties do not stop. If the bailee does not want to
keep the goods after the bailment period has expired, he must notify the bailor to take the
goods away within a certain time frame, and if the goods are not taken away within that
timeframe, the bailee may dispose of them after giving the bailor proper notice of intended
sale. The bailee cannot dispute his duty for the safety of the bailed goods as long as they are
in his possession.
A bailee also has an obligation to not convert the commodities, even if they are stolen by a
third party, or to do anything with the items that is incompatible with the bailor's claim of
property in them.

Liability for negligence of servants and liability in English Law

A bailee's liability extends to damage caused by his servants' negligence in the use or custody
of the thing bailed, as well as their acts of fraud or wrongful acts, if those acts were
committed within the apparent scope of their authority, either in the supposed interest of their
principal or master, or in the course of their employment. If a servant is dishonest or
negligent, and the master is the bailee, the master must be held liable if the servant's
negligence is proved, and the master can be shown to have hired dishonest servants or failed
to supervise their behaviour.

Case:

Chesire v. Bailey7
6

7
(1905)1 KB 237 (CA)
“A silversmith hired a coach and coachman from the defendants in order to show his wares to
customers around London. But the coachman entered into a conspiracy with others to steal
the silver. Held The Court dismissed the claim for damages against the defendant who
grounded himself on the basis that the coachman’s activities had constituted a crime which is
clearly outside the scope of his employment. The judgment said: ‘It is a crime committed by
a person who in committing it severed his connection with his master, and became a stranger;
and, as the circumstances under which it was committed are known, it raises no presumption
of negligence in the defendant.

Liability under English Law

Damage caused by a bailee's servants' negligence in the use or custody of the thing bailed; or
their acts of fraud or wrongful acts, provided that those acts were committed by them within
the apparent scope of their authority, either in the supposed interest of their principal or
master or in the course of their employment; but it does not extend to damage caused by third
parties' acts or defaults.

 Bailee not liable

If commodities are damaged by a rioting crowd, the bailee is not responsible for their loss. As
a consequence, a grain bailee was ruled not liable for flood damage that was described as
"unknown and unprecedented in Agra's history."

 Extent of duty

The responsibility of a bailee includes not only the need to make all reasonable efforts to
prevent risks, but also the obligation to take all required steps to protect the goods if such
risks occur.

 Insurance by bailee

A bailee can insure the items bonded to him up to their full value and reclaim the whole
amount, but he must account to the owner of the goods and act as a trustee for the owner,
keeping just what he needs to suit his own interests and acting as trustee for the rest. It has
been decided that the consignor can sue the carrier who got the insurance proceeds as a result
of the latter's insurance influence. After the bailee has received insurance money from the
goods insurer in respect of products committed to him by a client, an exemption provision,
whether entire or partial, may not be used. The pawnor is not freed of obligation because the
pawnee neglected to get insurance for the pledged items, despite the fact that the agreement
allowed the pawnee bank to do so.

Carriers

Common carrier
Common carriers and innkeepers, were held responsible as goods insurers under common
law, which meant they were liable for any damage to the goods caused by any means, with

the exception of acts of God and the King's enemies.

As a result, the mere lack of evidence of goods delivery and damage to them, whether caused
by an act of God or the King's enemies, was enough to entitle the plaintiff to compensation
without proof of the defendant's negligence.