2nd INTERNAL ASSESSMENT FOR SPECIAL CONTRACTS

I Year B.B.A., LL. B (Div.-C) – Semester-II (2024)

2nd -Internal Assessment – Special Contracts

Topic

CO-RELATIONAL ANALYSIS AND ERRATA IDENTIFICATION WITH REFERENCE

TO SECTIONS 159, 160 AND 161 CONCERNING BAILMENT FROM THE INDIAN

CONTRACT ACT, 1872

NAME : Anushree Sharda

DIVISION: C

PRN : 23010126230

COURSE : BBA LL.B. (H)

BATCH : 2023-2028

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 2nd INTERNAL ASSESSMENT FOR SPECIAL CONTRACTS

INTRODUCTION

Before analyzing the co-relationship between the sections, let us gain an understanding of the
relevant parties involved in the agreement of bailment.

As per section 148 of the Indian Contract Act, 1872, ‘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.1 The person delivering the goods is called the “bailor”. The person to
whom they are delivered is called, the “bailee”.’ Bailment is derived from the French word
‘ballier’ which means to deliver. In simpler words, a contract of bailment would refer to a
situation wherein there is delivery of goods by one person to another person for some purpose
with the understanding that the goods will be returned to the owner; the bailee; or otherwise
disposed of concerning the instructions given by the bailor.

In this write-up, we’ll be analyzing in-depth the relation between sections 159, 160, and 161
to find out their compatibility with each other as well as errata identification for proposing a
model draft.

ESTABLISHMENT OF CO-RELATIONSHIP BETWEEN THE SECTIONS

❖ Section 159 deals with the rights of the bailor as well as the rights of the bailee. It
recognizes the bailor’s authority to demand goods regardless of completion of a
specified time period or purpose for the loan lent gratuitously. However, it also gives
due attention to the right of the bailee to be indemnified when the borrower has relied
on the loan and taken actions that would result in a greater loss than the benefit
derived from it. In this case, bailee can be compensated for excess loss when the
bailor insists on an early return.2 This section establishes a balance between the
bailor’s right to reclaim their property and the protection of expectation of the
borrower that prevents any undue hardships.

1
§ 148, Indian Contract Act, 1872
2
§ 159, Indian Contract Act, 1872

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❖ Section 160 and section 161 on the other hand are mutually beneficial. Section 160
asserts that the bailee is required to return the goods when:
• The purpose of bailment is accomplished
• Or the specified time period has expired
• And without any demand from the bailor
Also, the manner of delivery must be according to the directions of the bailor and if
no directions are present, according to a reasonable man’s conduct.3 In the case
of Chaturgun v Shahzady, the defendant borrowed the ornament for Ram Lila, which
was stolen. The defendant denied its liability to compensate the plaintiff. The court
observed that while borrowing the ornament, the defendant had made an implied
contract to return the borrowed goods to the plaintiff.4

❖ Section 161 talks about the responsibility of the bailee for any loss, destruction, or
deterioration of goods in case the bailee faults in returning the goods on time. Notice
how the word responsibility is used rather than liability as the former terminology is
lighter in term and gives discretion to the court in deciding the matter.5 In the case of
Shaw and Co v Symmons and Sons, the defendant failed to deliver the goods within a
reasonable time, and they were subsequently burnt in an accidental fire on his
premises for which the defendant was held liable.6 For example, if a person borrows a
DVD from his friend for entertainment purposes, he or she is liable to return them as
soon as the purpose is accomplished or the agreed-upon time has elapsed as per
section 160 and if the person still defaults in returning the DVD, they’ll be held
responsible for any damage caused by way of loss, destruction or deterioration of the
DVD as per section 161 of the ICA, 1872.

CO-RELATIONSHIP BETWEEN THE SECTIONS

There is a logical order of obligations that these sections provide which demonstrates
the consistency between them. These sections deal with the duties of the bailee and
portray a binary situation where section 160 restates the bailee’s responsibility to

3
§ 160, Indian Contract Act, 1872
4
Chaturgun v. Shahzady, (1930) SCC OnLine Oudh CC 80
5
§ 161, Indian Contract Act, 1872
6
Shaw & Co. v. Symmons & Sons.,(1917)1 K.B. 799

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return the goods and section 161 deals with the aftermath of the bailee’s failure to
perform his duty stated in section 160. Also, the phrase ‘proper time’ mentioned in
section 161 can be co-related with its explanation in the previous section.

Furthermore, under section 159, the termination of gratuitous bailment is

at the will and demand of the bailor whereas, in the other two following
sections, it depends upon the expiry of a specified time period or
completion of the purpose of bailment.

As a result, it may seem that section 159 exists as a third wheel and is
somewhere disconnected from the triplet to cover the grounds that are not
covered by sections 160 and 161. Nonetheless, all three sections build a
comprehensive framework together to control the restoration and return of
goods in a situation of bailment when taken into account as a whole. A
logical and consecutive series of responsibilities and penalties are laid
down to ensure that the bailee is responsible for the proper return of items
and accountable for any obligations broken.

EVALUATION OF COMPATIBILITY

After doing a rigorous analysis, sections 159, 160, and 161 seem to be completely
compatible with one another. These address the duties and the responsibilities of the
bailee regarding the restoration and return of goods which establishes a cogent and
conclusive framework.

SECTION 159 AND SECTION 160

❖ Section 159 establishes the duty of the bailee to restore goods that have been lent
gratuitously. It sets the foundation by emphasizing that the bailee has the
responsibility to return the commodities at the demand of the bailor even though it
was lent for a specified time or purpose if such a loan was gratuitous. The focus here
is on the restoration of goods provided without compensation, ensuring that the bailee
returns the good in the same condition that it was received thus respecting the rights
of the bailor as well.

❖ Section 160 builds upon section 159 by addressing the return of the goods when
bailment was made for a specified time or purpose. It states that the bailee has the

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duty to return or deliver the goods according to the bailor’s directions when either the
time for which they were lent expires or the purpose for which they were bailed has
been accomplished.

❖ The compatibility between section 159 and section 160 lies in their shared objective
of ensuring the timely and appropriate return of goods depending on specific
circumstances of bailment.

SECTION 159, SECTION 160 AND SECTION 161

❖ Under section 161, bailee’s responsibilities are further enforced by addressing their
liability when goods are not duly returned. It serves as a mechanism to hold the bailee
responsible for their failure to fulfill the duties as mentioned in section 159 and
section 160. It states that if goods are not returned, delivered, or tendered at the proper
time, the bailee is responsible for any loss, destruction, or deterioration of goods from
that time.

❖ The compatibility between this section and the previous section lies in their common
intention to ensure that Bailee upholds their responsibilities and takes necessary
precautions to prevent any harm or loss to the goods. All the 3 sections reveal a strong
commitment to work towards ensuring fairness and clarity for the protection of rights
of both bailor and bailee.

ERRATA IDENTIFICATION AND MODEL DRAFT PROPOSAL

ERRORS IN SECTION 159

1. Conflicts arise in section 159’s definition. Section 159 states that ‘The lender of a
thing for use may at any time require its return, if the loan was gratuitous, even
though he lent it for a specified time or purpose. But if, on the faith of such loan made
for a specified time or purpose, the borrower has acted in such a manner that the
return of the thing lent before the time agreed upon would cause him loss exceeding
the benefit derived by him from the loan, the lender must, if he compels the return,

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indemnify the borrower for the amount in which the loss so occasioned exceeds the
benefit so derived.’

2. The terms in this definition such as ‘THING’, ‘BORROWER’, AND ‘LOAN’ could benefit
from further classification. The meaning of these terms varies, and it would be better
if these terms were defined within the section itself or if they could be replaced by
words like ‘GOODS’, ‘BAILOR’, AND ‘BAILEE’ as the definitions of these words are
already discussed in the act.

3. Furthermore, the words ‘lender’ and ‘loan’ present in the definition are usually used
for providing funds or money to the other party. However, the contract of bailment
talks about delivery of goods from one person to another. This ambiguity in the
terminology puts the learners in a fix. Hence, it can be said that there are a few
drafting errors in general in this section.

4. Chapter V of the Indian Contract Act discusses relationships that resemble that of a
contract namely quasi-contract. Section 70 mentions gratuitous and non-gratuitous
acts where the act’s illustration implies that if the act was intended to be done
gratuitously or voluntarily then the party performing such act has no claim over the
compensation or reward. However, section 159 allows the gratuitous bailor to demand
the return of the goods lent gratuitously at any time even before the expiration of time
period and fulfillment of the purpose of bailment.

ERRORS IN SECTION 160

1. Section 160 states that ‘It is the duty of the bailee to return or deliver according to
the bailor’s directions, the goods bailed, without demand, as soon as the time for
which they were bailed has expired, or the purpose for which they were bailed has
been accomplished.’

2. Under this section, the phrase ‘ACCORDING TO THE BAILOR’S DIRECTIONS’ does not
clarify whether these directions should be provided at the time of bailment or if they
can be provided later. This ambiguity may lead to disputes regarding the applicability
of the bailor’s directions.

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ERRORS IN SECTION 161

1. Section 161 covers only the loss, destruction, and deterioration of goods which
makes the scope of the section narrow. This section should also include the damage
caused due to the absence of goods or their late delivery. In other words, it should also
account for the damage to goods not delivered within the proper time or manner.

2. Section 161 addresses the bailee’s responsibility if goods are not duly returned but it
does not outline the potential legal remedies or actions taken by the bailor in case of
non-compliance by bailee. It would also be advantageous if this section mentions the
bailee’s duty to exercise reasonable care to prevent any damage or loss to the goods
while they are in the possession of the bailee.

3. Adding on, the word ‘fault’ in section 161 can be replaced with the word ‘non-
compliance’ and the reason for this can be understood within an illustration. A
borrowed a motorbike from his friend B and made a promise to return it in a week.
However, a natural calamity hit the place due to which A was not able to return the
motorbike. Here even though there is no ‘fault’ of A, a breach of contract still took
place, and had the word ‘non-compliance’ been used, the rights of the bailor would’ve
been protected further.

MODEL DRAFT PROPOSAL

As the drafting errors are generally more in section 159, I would like to propose this new
provision that provides clear directions for the bailee's obligation to return the articles that
were given away without charge.

“Once the agreed upon time period expires or the purpose for which goods were gratuitously
lent is accomplished, the bailee shall return the commodities promptly to the bailor. The
goods returned back must be in the same condition as they were received and the return must
be made in accordance with the proposed instructions of the bailor.’’