CHAPTER THIRTEEN

BAILMENT AND
CONTRACT OF
PLEDGE

Introduction

person to another for som

A bailment' is the delivery of g0ods by one E5
When thepurpose IS accomplished
purpose upon a contract that they shall,
acording_to the directions of the persor
be returned or disposed of IS called the "bailor
delivering them. The person deivering
the
goods
a r e delivered is called the bailee
and the person to whom the goods
contract of bailment are: delivering a watch, radio or
The examples of a

a car or scooter at parking stand

a
T.V. to a mechanic for repair; leaving
to goldsmith for making
leaving luggage in a cloak room; delivering gold
a

ornaments; leaving garments with

a
dry cleaner and so on. The essence ct
remains with the
bailment is the transfer of possession. The ownership
owner. There cannot be a bailment of immovable property.

A pledge is a bailment of goods wherein the goods are delivered

asecurity for payment of a debt or performance of a promise.1he bailer
is çalled the 'pledgor or 'pawnor and the bailee is called the pledgee o
can be maae
pawnee, Thus, pledge is a special kind of bailment. Pledge valha "

ony of movable properties. In order to make the pledge legally

is
essentialthatthe pledgor has the legal right or title to retain the goo
Meaning of Bailment
The term bailment is derived from a French word "Bailer" which meal
deliver or handing over of goods under the contract.
lhver"

According to Section148 of the Contract Act"A bailmentis the de

of goods by one
person to another for
they shall, when the purpose is accomplished, be returnea
some
purpose, upor herwis
otherw
disposed of
according to the direction of the person delivering u em"

r e q u i r e d wher
Section 148 lays down that the
a
delivery of goods is notre
person already in possession of the
goods contracts to hoi
 Bailment and Pledge 151
Contract of

In such a case, he becomes the bailee and the owner becomes the
bailee.

of goods. The person delivering the goods is called the "bailor

to whom the goods are delivered is called the 'bailee' and the
U The person
transacti
saction between the two is called the "bailment'. A bailment is thus a
delivery of goods on condition that the recipient shall ultimately restore
them to the bailor or dispose of them according to the direction of the
bailor. Common example of bailment are hiring of goods, furniture or a
cycle, delivering of cloth to a tailor for making a suit, delivery of watch,
a machine tor
LCDor laptop to repairing.
Essential Features of Bailment

e, A bailment has the

lollowing features:
a) Contract between the parties: It may arise due to the contract
between twO parties, but somehmes may arise without a contract,
e.g., finder of goods. A contract of bailment may be express or
implied. A hires Innova car for his personal trip from Delhi to
Agra. This is an express contract of bailment. It may be noted that
the relationship of bailor and bailee
may arise even without an
enforceable contract. For instance, where the
goods are seized,
there can be a bailment between the
concerned department of the
government and the owner of the
goods.
b) Delivery of Possession of Goods:
1he possession of thegoods
must be delivered by the bailor to bailee. That menas
only the
possession is transterred and not the
ownership. In order to
constitute a bailment, a
change of possession of goods is a must.
Mere custody of
goods must be
distinguished from possession
of
goods. One who has
custody of
goods without
like a servant
possession,
or a
guest using his master's or hose's
goods does
not become a bailee. Thus, if there is no
goods, there is no bailment.
delivery of
possession of
)The goods are delivered for some
purpose: Ihe purpose may be
lending. giving or
depositing the goods for safe custody, security
tor a
debt, tor
repair, for conversion of form etc..
or
to Sec.
148, the contract of bailment Acording
must be delivered for some
purposes such as safe custody,
security for the debt,
lending,
Cieaning, repairing, change of torm, carriage etc.
 152 Business Lau
Return of goods or Disposal of Goods: The goods which
the subject matter of a bailment nmust be returned to the bail lorm
otherwise disposed of according to the directions of the
atter the accomplishment of purpose or after the expiry of perioy
bailoy
ot bailment. The relationship does not arise where goods
delivered by mistake. Generally the delivery of goods is the re
of a contract. But sometimes bailment may be inferred from th
the circumstances of the case.
act of the parties or
No change of Ownership:-The bailment does not result in han
of ownership. In bailment, bailor continues to be the owner

goods even if the goods may be in the possession of the bailee.

Kinds of Bailment
Bailment may be classified from the point of view ot (i) benefit, and (u

reward to the parties.

From 'benefit' point of view, bailments may be grouped into three
A)
classes:

Bailment for the exclusive benefit of the bailor, eg. bai

leaves goods in the safe custody of the bailee without anu
compensation to be paid.
Bailment for the exclusive benefit of the bailee, e.g, a loan

of some article. Thus where A borrows B's pen to use in he

te
examination hall, the bailment is for the sole benefit of A,
bailee.
tne
3. Bailment for the mutual benefit of the bailor and
bailee. It is the most common type of bailment. Conta
for repair, hire, etc., fall within this class, where the bal
benetit
receives the benefit of service and the bailee receives be
the by the receipt of the agreed charges.
B) On the basis of 'reward' Bailment may also be classified in
bailr
1.Cratuitous bailment. It is one in which neither the
otMoti
m hnnor the bailee is entitled to any remuneration, e.g lendin
custod
ND a book to a friend,depositing of goods for sate c to
Without any charge. For example, A lends his ca
friend B for personal use.
 a n d Pledge
Baiment
.atnled
of 153
The tollowing are the main elements of gratuitous bailment:

a) No consideration moves between the bailor and bailee.

e
The bailment may be for the
benefit of eitherbailor or bailee.
aThe bailor is responsible for damages suffered by the bailee
due to known defects in the goods bailed.

ilor is under obligation to

repay Bailee's necessary
expenses incurred tor the purpose of bailment.

Bailor is entitled to terminate bailment before the

nche ex of

oWDE the specified period or

accomplishment of purpose.
bale d It is terminatecd by the death of either ot the bailee or of the
bailor.
Non-gratuitous bailniCnt: lt is also called as a "bailment for
reward. Here, either the bailor_or the bailee is entitled to
remuneration, e.g, motor car let out for hire, cloth given for
into tf stiching. For example, A hands over his car to B at service station
tor repair.

The following are the main elements of the Non-gratuitous

thout bailment.
a).Considerationmoves between the bailor and bailee.
b) The bailment is for
use in L the mutual benefit of both parties.
)The
tof A,.f bailor is responsible for the damages suffered by the
bailee due
to known or unknown defects in the goods bailed.
and i bailor under no
is
obligation to repay Bailee's necessary
ontra expenses incurred for the
purpose of bailment. The same are
heba borne by the bailee.
S tener
Dailor is
not entitled to terminate the bailment before the
plry of the
specified period accomplishment of purpose.
or
inlo
n0Lterminated by the death of either of the bailor or of
heha the bailee.
Jendu erence
Cust In the Between
Detween 'Sale'
'Sale' and
and 'Bailment
o
1S undera sale'
no
the
ownership is transferred to the
buyer an he

obligation
Ogation to return the goods, but in the case
o
a
154 Business La Contr

bailment' the ownership in goods is not lransferred to the bailee and

and .
is bound to return the goods to the bailor. The explanation to Section 1
points out that 'if a person already in possession or the goods of anoth
othe;
contracts to hold them as a bailee, lie thereby becomes the bailee
the owner becomes lthe bailor although such goods may not have
De
delivered by way of bailment. Thus, where A sells a laptop to Bbu
leaves it in A's possession till he completes his other shopping, A becom
a bailee although originally he was the owner

Duties of Bailee (HeLel h Og goods

The duties of Bailee are discussed below:

Duty to take reasonable care of goods delivered to him-Sectic

a 151 states that "in all cases of bailment the bailee is bound to take
as much care of the goods bailed to him as a man of ordinar
similar circumstances, take of his
prudence would, under owz

the goods bailed".

goods of the same bulk, quality and value
as

otherwords the bailee must take reasonable care of the goods the
means the care which an average prudent man can be expected t:
take care of his own g0ods in similar circumstances.
Houghland vs. RR Low ( Luxury Coaches) Ltd. (1962), B was
owner of luxury coaches. A, was a passenger in one his luxun
coaches. A placed his suitcase in the boot of the coach from where
o
it was stolen. A brought an action against B for the breach
contract of bailment. Held, since B was negligent in taking care et
the goods, which the circumstances of the case required, theretol
he was held liable to pay damages for the loss of goods. d
Duty not to make unauthorised use of goods entrusted to ni
b
(Sec.154): It is the duty of the bailee to use the goods stn
n accordance with the terms of the bailment If he makes
unauthorized use of the goads,he is liable to make compensl
ring
to the bailorfor any damage arising to the goods from or
.if te
Such useof them.This liability is absolute. It arises even
bailee is not guilty of any negligence, or the damage is tne
of an act of God or inevitable accident. For example, A
horse for the purpose of
On te
riding to the Exhibition ground.
Exhibition ground the horse was frightened by the crowa a
 and Pledge
55

injurecd ilself. The bailee (1.e., A) ol

J ditch and the horse was

1ued for accident. FHe 1s not liable tor the injury to the

horse

Duty
not t0 mix goods bailed with his own goods (Sec.155: It
the duty of bailee that he should not mix his own good
Without bailers's.consent. If the goods are
with those of the bailor, of the
with the consent bailor, there is no breach of duty
t h e bailor and the bailee shall have an interest, in proportion
their respective shares, in the mixture thus produced. But if the
hailee, without the consent of the bailor mixes up his own goods

with those of
the bailor, bailee is liable to compensate for any loss
For example, A bails 100 bales of cotton
incurred by the bailor.
mark to B. B, without A's consent, mixes
marked with a particular
the 100 bales with other bales of his own, bearing a different mark.
A is entitled to have his 100 bales returned, and B is bound to bear
all the expenses incurred in the separation of the bales, and any

other incidental damage.

Where the bailee mizes bailer's goods with his own goods without
the bailers comsent and the goods are separable(Sec 156), in such a
case the property in the goods remains in the parties respectively,
but the bailee must bear the cost of separation and any damages
arising from separation of mixture.
Where the nmixture is not separable (Sec 157): in such a case, the
bailor is entitled to be compensated by the bailee for the loss of the
goods.
Daty to return the goods (Sec.160): It is the duty of the bailee to

u n or deliver, according to the bailor's direcions the goods

eLIthoutdemand,as soon as the timefor which theywere
nas expired, or the purpose for which they Were bailec
Complished. If bailee fails to return the goods at the proper
Decomes responsible to the bailor for any loss incurred by
the ba
For example, A hires a horse from B for one week but A
In returning the horse on the due dafe. The horse dies one

the
on A's expiry of the periód of bailment without any fat
dama part.
A Witn
1s liable for the price of the horse to B, along
dies
e
delay. On the other hand, if the horse witni
156

of the period of bailment wit

one week, i.e.,
before the expiry witho,
not liable for
the price.
A's negligence, A is

Jugilal Kamlapat OilMills vs. lUnion

ofIndia (1976), A ofKanp,
tor transmission to
oil to Kkailways
sent a consignment of
reached the Kolkata, A
Kolkata. After the consignment
nstruct
But in the meantime
to them back to Kanpur.
bring
railways the food inspector of Kol
consignment of
oil was seized by
the
Kolka
adulterated. Subsequently, consigntne
who found it to be
under the order of the High Court. I
of oil was destroyed
not liable for returning the goods as
as a bailee were
railways
taken away from
them by the authority of law.
were

to return
accretions to the goods (Sec. 163): Itis the du
e Duty
natural increase or pro
ofthe bailee to deliver to the bailor
any
unless there is.a contract to th
accruing from- the goeds-bailed,
A leaves a c o w in the custody of B to t.
contrary. For example,
taken care of. The cow has a to deliver the
calf. B is bound calf
well as the cow to A.

adverse title against the bailor (Sec. 117,

Duty not to set up any
)
debarred fror
The Indian Evidence Act states that the bailee is
denying the bailer's authority to bail the goods and to recei
and the baile
back. Where the bailor has not title to the goods liable to th:
faith, he shall not be
returns the goods to him ingood other
such delivery (Sec 166). Where person
a
OWner in respect of
than the bailor claims the goods bailed, the bailee may apply
to the bailor and
the court to stop the delivery of the goods b
decided the title of the goods ( Sec. 167).

Duties of Bailor
Bailor is the person who delivers the goods to the bailee. The duues

bailor are as follows:

dow?

Duty to disclose faults in goods bailed: Section 150 lays

a) itous
this duty. The Section makes a distinction between a gra

bailor anda "bailor for reward' and provides as follows

ballee
Agratuitous bailor is bound to dísclóse to the an re
those faults in the goods bailed, of which he 1s a
 Baliluent and Pledge 157
Contract of

which materially intertere with the use of them, or expose

the bailee to extraordinary risks, and if he fails to do so, he
will be liable to pay such damages to the bailee as may have
resulted directly Irom the faults. A gratuitous bailor will not
be liable for damages arising to the bailee from defects of
which he was ignorant (Sec. 150). A lends a horse, which he
knows to be vicious, to B. He does not disclose the fact that
the horse is vicious. The horse runs away. B is thrown and
injured. A is responsible to B for darmage sustained.
(2) A bailor for r rd is responsible for all defects in the goods
bailed whetherheis aware of the defects ornot,if he does
not disclose them to the bailee. Unlike a gratuitous bailor,
ignorance ot the defects is no defense for him. (Sec.150). For
example, A hires a carriage of B, and the carriage is unsafe
though Bis not aware of it, and A is injured. B is responsible
to A for the injury. On the other hand, if the carriage were lent
gratuitously, B would not be liable under the circumstances.
Similarly, had B told the fault to A, and then also he would
not be liable.
Reed vs. Dean (1949): R (the plaintift) hired a motor launch
from D (defendant) for a holiday on river Thames. The
launch caught fire and R failed extinguish it the
to as
fire
extinguishing equipment was non-operational. As such
R sulfered personal injuries and lost all his belongings on
board. Held, D was liable to indemnity R for damages.
D1Duty to repay necessary expenses in case of gratuitous bailment
Sec. 158): Where, by the conditions of the bailment, the goods are

to be kept or to be carried or to have work done upon them by the

ailee for the bailor,. and the bailce is to receive no remuneralign,
Is the duty of the bailor to repay all the necessarexpenses
mcurred bv the-bailee-tor the purpose of the bailment. Thus where
a norse isbailed without reward for safe
custody, it is the duty of
ne bailor to reimburse the bailee for usual
feeding expenses
ot
the horse well
as as for the medical expenses, il any.
)
uty to
repay any 'extraordinary' expenses in case ot
non
sauitous bailment: Where under the terms of the bailment, dhe
 158
Business I. CO
bailee is to receive remuneration ior his services,it is the
he
of the bailor to bear extraordinary expenses, it any, incurred
the bailee in relation to the thing bailed. In such a ment t.
bailor is not to bear the ordinary or usual expenses. Thus
w
horse is bailed for safe custody and the bailee is to receive
80 per day as custody charge; the bailor is not liable to repa
,
epay t.
bailee the ordinary expenses of feeding the horse. But if
duri
the bailee's custody the horse falls ill without any
negligence
his part, the bailor must repay the bailee the medical
expense
incurred in connection with the treatment of the
horse, these
being extraordinary expenses.
d) Duty to indemnify bailee (Sec. 164): A bailor is also bound t
indemnify the bailee for any loss suftered by the bailee, by reasen
of the fact that the bailor was not entitled to bail the goods because
ofthe defective title. For example, A gives his neighbour's scooter
to B for use without the
neighbour's permission. The neighbouw
sues B and receives compensation. A is bound to
indemnify Bf:
his losses.

e) Duty to receive back the goods: It is the duty of the bailor t:

receive back the goods when the bailee returns them after th:
time of bailment has expired or the purpose of bailment has.been
accomplished, If the bailor refuses to take delivery of goodswhen
itis oftered at the proper time, the bailee can claim compensate
for all necessary expenses of, and incidental to the safe custgd"
For example, A left his car in the government parking lot tor
days and paid the charges to the he
did not collect
parking lot attendant. but
his for 5
car
days. A is liable to pay to B custou
charges for the delay.

Rights of Bailee
The duties, which the bailor is ts of the
bound to perform, are the
bailee. Thus, the duties rignl
of the bailor are the rights of the bailee. Assuch
the bailee can, by suit, enforce abore
the duties of the bailor
The bailee has the enumera
following rights against the bailor.
1. Right to claim
damages for loss
arising from the
the undischose
faults in the goods bailed (Sec. uns
150): Bailee can sue the Dan
 ALINA 159
and Pledge
Bailnent
dof
sufered by him due to non-disclosure
ocOver the damages
known or
unknown to the bailor depending upon the
of faults bailment.
or non-gratuitous
gratuitous
claim
reimbursement extraordinary expenses
tor
Rieht to
goods bailed (Sec. 158);: Bailee
can sue
the
in relation to
incurred
for the
reimbursement of necessary expenses in case

the bailor
bailment and for extraordinary expenses where the
of gratuitous
bailment is non-gratuitous
indemnification in case of gratuitous bailment (Sec
Right of
of
the premature termination gratuitous
159): If the loss caused by
the benefits derived, bailee can claim
bailment is more than
indemnification..
for any loss suffered by him by reason
of
Right to indemnity
bailed (Sec. 164): If the
defective title of the bailor to the goods
to the defective title of the bailor, he
sutters any lossdue
bailee
from the bailor
can recover the loss
5, Right to deliver goods to one of several joint Bailers (Sec. 165):

Where goodshave been bailed by several joint owners, the bailee

ot,
has aright to deliver them to, or according to the directions
of
one joint owner without the consent of all, in the absence any
agreement to the contrary..
6. Right to deliver goods, in good faith, to bailor without title (Sec.

166): The bailee has a right to deliver the goods, in good faith, to
he bailor 1without title, wilhout incurring any liability towards

the frue.oWner.
*

aght to interplead (Sec 167): Ifa person other than the bailor
claims goods bailed, the bailee may apply to the court to stop the
aelivery of the goods to the bailor and to decide the title to the
g0ods.
ght to claim
compensation for expenses incurred for the sare
cUstody of the goods if the bailor has wrongfully refused to take
delivery of them after the term of bailment is
over
ight of Lien (Sec 170): The bailee is also entitlcd to the right ot
t o r recovery of his dues.
Right of lien is the right to retain the
SIR
 Business Lau Co
160
until the charges due in resperh
ect
to another
goods belonging
goods are paid.
If a wrongdoer deprivee
to sue a wrongdoer (Sec 180):
10. Right of goods bailed or causes tho
bailee of the u s e of possession

to s u e the wrong
doer a n d r e c o v e r damaee
harm, he is entitled
him. Whatever is
obtained by way
of relief
or compensation
from between the bailor
in any such suit
shall be apportioned and
interests.
their respective
bailee according to

Rights of Bailor

to enforce
Bailee's duties: The duties of the bailee are the
1 Right suit all the duties
The bailor can enforce by of

rights of the bailor. following rights against

The bailor has the
the bailee as his rights.
the bailee. Rig
for loss caused to the goods bailed
(i) Right to claim damages ne
151).
by Bailee's negligence (Sec. ano"

for anydamage arising from or rie

(ii) Right to claim compensation
during unauthorized use of the goods bailed (Sec. 154).
for any loss caused by the untyp
to claim compensation
Right
(ii) authorized mixing of goods bailed with his own goods (Sec eta

155-156). or
all
soon as the time
(iv) Right to demand return ofgoods as
this
bailed has expired, or the purpose tor
which they were
160).
Jal

bailed has been accomplished (Sec.

which they were

(V) Right to claim any natural accretion

to the goods bailed (5e
163).
to terminate bailment if the bailee uses go
the
ught the

wrongfully (Sec. 153): The bailor has a right to terminate

baileu,
bailment, if the bailee does, with regard to the goods
lthoug"
act which is inconsistent with the terms of the bailnent, a
bailmen
bf
the term of bailment has not expired o r the purpose o Ba

has not been accomplished. For e x a m p l e , A gives on i

horse for his own riding. B drives the horse in his carriag
contract of bailment is voidable at the option of A.
ess Baiment
and Pledge
Contract of
6
icht to demand return of goods at any time in case of
gratuitous
ailment (Sec. 159): When the goods are lent without reward
oratuitously), the bailor can demand their return whenever(i.e.,
he
s wishes even though he lent them tor a specified purpose or time
and the bailee is not guilty ot
wrongtul use. But if the premature
return of goods causes the bailee loss in excess of
benefit actually
derived by him trom the use ol such goods, the bailor must
indemniy the bailee the amount ot loss which exceeds the benefit
derived.

R i g h t to file a suit against wrongdoer (Sec 180): Where a

wrongdoer deprives the bailee of the of

possession of goods
use

bailed or causes them harm, the bailor is entitled to

sue him and
claim damages.

Right of Lien
The right to retain possession or the property or goods belonging, to
another until some debt or claim is paid, is called the right of lien. This

right depends on poSsession and is lost as soon as

possession of the goods
is lost. As such it is also called as possessory lien. Liens may be of two
types such as particular and general, Particular lien means the right to
retain only that
particular property in respect of which the charge is due.
"General lien' the
means
right to retain all the goods ot the other
party until
all the claims of the holder against the party are satisfied. In other words,
this is a
right to retain the goods of another as a
security tor a
general
balance of account.

A) Bailee's particular lien: Section 170 confers the right of particular

en bailee and
upon a
provides that "where the bailee has, in
accordance with the
purpose of the bailment, rendered any
Service involving the exercise of labour or skill in respect of the
g0ods bailed, he has, in the absence ot a contract to the contrary, a
"gnt to retain such goods until he receives due remuneration tor
te
services he has rendered in of them".
respect
Londitions for Exercise of Lien:
Par iar n can be exercised subject to the following conditions:
162 Business Lau Co
rendered s o m e service in relation
The bailee must have to
(1)
thing bailedand must be entitled
to s o m e remuneration

paid.
neration lor i0an
which must not have been
be
one involvi.
must

(i) The service rendered by the bailee

exercise of labour or skill in respect of the goods bailed. so as
confer an additional value on the article. For example- A, del
a rough diamond to B, a jeweller, to be cut and polished . vhict
is accordingly done. B is entitled to retain the stone till he is pai
for the services he has rendered. (Jeweler s labour and skill
mus
have enhanced the value of the diamond). It is to be emphasi
that there is no lien if the labour and skill exercised by the baile
does not improve the value of the goods bailed. Thus a perso
who takes a horse for feeding and keeping at his stable has no lie
for his charges because no additional value has been added to th
horse by his labour.

The services must have been pertormed in full in accordance wih

(iii)
he directions of the bailor, within the agreed time or a reasonabie

time.
to the service on credit
(1V) There must not be an agreement perform
is lost
(v)The goods must be in possession of the bailee. If possession
the lien is also lost.

(V)ihere must not be a contract to the contrary. If all the abo

mentioned conditions are satisfied, the bailee can exercise l

right of particular lien until he is paid for his services.

ailees
The following points must also be noted in connection with the oau
particular lien:
chars
The bailee retaining the article to enforce his lien
(a)
cano
for keeping it.

(b) The bailee cannot exercise his lien for the nonpay"iled
thething baie
extraordinary expenses incurred in relation to
He should sue for them.
refrigera
Eduljee vs. Café
John Bros(1944), A purchased old an

from B. B agreed to
o the re
repair it of fixed charges. After
work B delivered the cariyibase mo m o n e "

refrigerator to A. But a of
part theP
 and Pledge
Baihneni
iness La ef 163

rges was
still unpaid. After.few days, the
harge
taken to B for repair. Bclaimed lien
refrigerator broke
On dN ndit was on the
refrigerator
tor n d l i e r unpaid repair charges are paid. Held, the
of the
out the repair resulted
at afer carryinE termination of lien, in

ving t hich Bhad for earlier unpaid charges. Due to break in the continuity
s S E S S I O N

of
SO as
not entitled to exercise
right of lien. On
regaining the
deliver, lar goods, right ot lien c a n n o t be revi
whih
e is pai: Bailee's
General Lien; A genera lien is a
right which entitles the
B)
baile to retain all the goods and
properties of another until all his
claims are satisfied.
hasised
171 of the Act states that general lien is available to
Dailee bankers,
Person swharfinger, and attorneys ot
Fiigh Court and policy brokers. In the
no lien nre
bseni of contract to the contrary, these
persons are
entitled to retain the
to bailed
thesse5sion of goods to them as
security until their claims are
fully
satistied.
ce with lowever, any other person other than afore
mentioned
sonableeconferred the right of lien provided there is express contractpersons may
to the effect.
general lien is a right to retain the goods of another as
A
credit. a
general balance of account. In simple words, this
a
security for
is lost, tretain right entitles a person
possession of any goods belonging to another for
him whether in any amount due
wo loans
respect of those
goods any other goods. For
or
above have been taken example,
against
securities from a banker and the
two
e hisorrower repays one of
these loans, the banker
hus other loan is repaid. may detain both securiies
According to Section 171, bailee has a general
Wn the following categories'
ailees contrary: in the absence of a
contract o t e
narge Dankers: A banker has a
general lien on all goods, cash,
Securities deposited with him by cheques
i m as a banker. Thus, where customer, for any mone
t of a

iled customer has credit a a

one account of the bank and at the
money Dank on c same time he owes
ntit another account, the banker's
at reruse general lien

pa the customer to the account in

operate
ne
bank ids a
credit balance till he clears the debt due to the
a
auables and Kumar Vs
Chaudhary Gulab Singh). But where
securities
euribes are
deposite for specific purpose, CE"
deposited a
164
Business 1
for safe custody, the banker has no general lien on tho.
them
acceptance of the gods for a special purpOse implied.4

general lien (Cuthbert

Vs Robarts).
mpliedly exclut.
(ii) Factors: A factor is an agent entrusted with the posco
goods in the ordinary course of his business for the ssession
sale. He has a general lien on the goods of his princina poSe
al, if
money is due to him by his principal whether for advanco
ces
or for remuneration.

(ii) Whafinger: A wharfinger has a general lien on the ds

regards charges due for the use of whart against the owner of Pe

goods The
(iv) Attorneys of High Court: An attorney or solicitor of a HighC hap
e
has a general lien on all papers and documents
belonging to h100
client which are in his possession in his professional capacity unt bail
the fee for his professional service and other cost incurred
by hu
are paid. But if the solicitor refuses to act any more for the client de-
he is not entitled to any lien.
loa
(v) Policy brokers: They can retain the policy of fire or marir: inv
insurance for their brokerage. ren
inte
(vi) Any other person: If there is an express contract to that effect
anc

a
Termination of Bailment:
nc
A contract of bailment terminates under the
following circumstances rec
1. If the bailment is for a 'specified period, the bailment tertinats
Di
as soon as the stipulated period expires. It the
means on
expiry
the specified period of time.
2 Tf the bailment is for a
'specific purpose,"the bailment termina
500n as the purpose is fulfilled. A contract of bailment terminae
the
on
accomplishment of specified objective.
3. t the bailee does any act with
regard to the goods baie , wh
1S inconsistent with the terms of bailment, the may
terminated by the bailor even balu
term of bailmer
not
though the
expired or the purpose of bailment has not been
(Sec. 153)
accou
 bameut a u d
Pledge 165
ef

Agratuitous
yntact

itous bailnment
bailmentocan be terminated by the bailor at any time,
before the purpose is
before
the specified time or
achieved,
venDE eve

the
limitation t here such termination causes loss
to
s u b j e c t

of by the bailee, the bailor must

benefit actually
derived
excess the bailee for the amount in which the loss occasioned
in
the bailee
f
indemnify
benefit derived (Sec. 159).
the
PxCeeds
bous bailment is terminated by the death either of the
gratu

of the bailee (Sec. 162).

bailor or

Pledgeo rP a w n

o f goods as security for payment of a debt or performance of

e is called 'pledge. The bailor in this case is called the 'pawnor.
promise i:

the (Sec. 172). For example, A borrows Ks

e hailee is called pawnee
m Band keeps his watch as security for payment of the debt. The

kasilment of
watch is called a pledge.
Thus a pledge is only a special kind of bailment. Here goods are
iposited with a lender or promisee as security for the repayment of a
lan or performance of a promise. Otherwise, like bailment, a pledge also
itinvolvesonly a transfer of possession of goods pledged. The ownership
rmains with the pledgor. The pledgee or Pawnee has only a special
interest in the goods pledged. The
general interest remains in the pawnor
and seholly reverts to him on
discharge of the debt. Further, like bailment,
a
pedge concerned with only movable goods. The movable goods
is
ude
any kind of goods, valuables and documents of title,
e-g, railway
raxeipt. bill of lading, etc.
Uistinction Between Bailment and Pledge
1.
As to purpose: Pledge is the bailment of goods for a speciic
POSE,1.e., to provide a security for a loan or for the fulfilment
Dligation,_whereas there is no such purpose in case or
ent. A
bailment is for a purpose other than the aDovE
or repairs, safe custody, etc.
ght of sale: In case of pledge, the pledgee has
e fof the
goods
a
ignto
ger but there pledged) on default after giving notice to the
is no Such
bailmer ne
s right of sale to the bailee in case
bailee may either retain the
or
goods or sue the Da
non-payment of his dues.
166 Business Lau
As to right of using the goods: In case of pledge, the pledgee
.
no right of using the goods pledged, while no such restric hay
tion
exists for a bailee in case of bailment if the nature of transactio
n s

requires.
Rights of Pawnee
Right of retainer (Sec. 173). The pawnee has the right to retai.
1.
the goods pledged until his dues are paid. He has the right
retain the goods pledged, not only for payment of the debt o
performance of the promise, but for the interest due on the deb
and all necessary expenses incurred by him in respect of the

possession or for the preservation of the goods pledged. Thus thi

right may be termed as pawnee's right of particular lien.

2. Right of retainer for subsequent advances (Sec. 174). When the

pawnee lends money to the same debtor after the date oft
pledge without any further security, it shall be presumed thet
the right of retainer over the pledged goods extends even
subsequent advances, This presumption can be rebutted only br
a contract to the contrary. It is to be noted that although a pawnee
has a 'particular lien' only, but this Section allows him to track his
subsequent advances to the original debt in the absence of any
agreement to the contrary.
3 Right to extraordinary expenses (Sec. 175). The pawnee alse
has the right to recover from the pawnor extraordinary
Incurred by him for the preservation of the goods pledged. Du
expense
he cannot retain the goods, if such expenses are not paid. Hehas

Ony a
right to sue the pawnor for recovery of such extraordin
expenses.
4. Right to sue the pawnor or sell the ods on default of the
pawnor. (Sec. 176). Where a makes default in
pawnor
payment of the debt or pawnee

performance of the promise, tu

may exercise either of the
following rights: Pcoveryo
(a) He may
bring a suit
the amount
against the pawnor ror u d a
due to him and retain the goods Pa
collateral security; or
 ,10 B a r m e n lu n d edg* 167

inmself sell the goods pledged, after giving the

notice ot his intention to sell
reasonable
nor a
he alternative right of sale, the following points
with

00 a
t i o n

mn
Iit
h
"reasonable notice is a statutory obligation
ot a i
equirement
agreement. A sale without notice is
be waived by
The

c a n n o t

ithstanding any
contract to the contrary.
n o t w i t h

vd,
the to himself and if he does
t h e pawnee cannot
ee cannot sell goods so

is vvoid as against the pawnor and the pawnor can

then
uh a
such a
sale is
sale

on paying the amount due.

recover
the goods
ot such sale are i n s u t i c i e n t to meet the full claim
l the proceeds
he may r e c o v e r the balance from the pawnor, but
of thepawnee,
he must pay it over to the pawnor.
if there is surplus,

Duties of Pawnee

adgebeing a special kind of bailment, the duties of a pawnee are just like
duties may be enumerated as follows:
alee. Thus pawnee's a

To
take reasonable care of the goods pledged.
Not to make any unauthorised of the
use goods pledged.
Not to mix the goods pledged with his own goods.

Not to do any act in violation of the terms of the contract of plecdge

and ot the provisions of the Contract Act. For example, he should
not sell the
goods pledged without a reasonable notice to the
pawnor.
Teturn the
goods pledged on
receipt of his full dues.
de
any accretion to the goods pledged, e.g., bonus shares
t also be delivered where shares form the
accretion remains the
sbject-ma
ght's of Pawnor property of the
pawnor

Or pawnee's duties: The duties of the pawnee are

Suit all H PaWnor. The pawnor can, therefore, entorce

if the pawT the duties of the pawnee as his rights. For example,
makes an
unauthorized sale (without givng
168 Business L
notice as required under Section 176), the pawnor can f

for redemption of goods, treating

the sale as void (of cou
aft
depositing with the
Court the full due), or for
amount da
of conversion. Similarly, the pawnor has a right to eceive th

with accretion, if any, on

pledged goods back along I
naking t.
date, and so forth.
payment on stipulated
Defaulting pawnor's right to redeem (Sec. 177). A pawnorwh
2.
defaults in payment of the debt amount at the stipulated dat
has a right to redeem the debt at any subsequent time before
t
actual sale of goods pledged.. Ihus an agreement that the pled
should become irredeemable, if it is not redeemed within a certae
time, would be invalid. Ofcourse, the pawnor redeeming after t
expiry of the specified time must pay to the pawnee, in addition

which have arisen from his default.

any expenses

Duties of Pawnor

duties of a pawnor are as follows:

The important
1. To compensate the pawnee for any extraordinary expenss

incurred by him (Sec. 175)

date and comply with the
2. To meet his obligation on
stipulated
terms of contract.

Review Questions
contra"
the term "bailment". What are the essentials ot a
1. Explain
of bailment?
Discuss the rights and responsibilities of a gratuitous bailee. no
2
does a bailment differ from pledge?
3. Explain how a bailment may result without the oWner aactual

delivering the goods to the bailee.

ment"
What are the rights and duties of a bailor and bailee in baila
ro

ng
5. To what extent a bailee is responsible for loss ar

defective title of the bailor?

In n

. Distinguish between general lien and particular lien.

category would you place the bailee's lien? Who are ela

general lien?
f Bailnent and Pledge

istinguish betv 169

ilment and
sharacteristics of bailment. pledge. Explain
briefly the
When does bailment come to an
a

end?
des of termination of
contract of bailment.Explain the different
Defirne pledge. Discuss the
rights and duties of a
Pawnee?
pawnor and
h a t are the circumstance when contract of
terminated? bailment stands
The status of a finder of
goods is
just like a bailee".
Explain.