INDIAN INSTITUTE OF LEGAL STUDIES

SILIGURI

Session: 2023-2024

ASSIGNMENT ON CONTRACT - II

Topic – RIGHTS AND DUTIES OF THE BAILOR AND BAILEE IN A BAILMENT

CONTRACT – AN ANALYTICAL STUDY.

Submitted by: Adreeja Bagchi

Roll No.: 103
Course: LLB 3Years
Semester: 2nd
Submitted to: Mrs. Arpita Mitra Roy
 ACKNOWLEDGEMENT

I would like to take this opportunity to thank my teacher Mrs. Arpita Mitra Roy
(Assistant professor of law) for her moral support and guidance in completing
this assignment on “RIGHTS AND DUTIES OF THE BAILOR AND BAILEE IN A
BAILMENT CONTRACT – AN ANALYTICAL STUDY”. Her knowledge and feedback
have helped me a lot in gathering information about this project.
I would also like to thank my fellow mates, for their assistance and guidance
whenever I was in doubt. At last, I would like to thank my family.
I will always be grateful to them for their belief in me and my ability.
Without their help, this assignment would not be complete.
 TABLE OF CONTENTS

TOPICS PAGE NO.

INTRODUCTION

MEANING, NATURE AND SCOPE

ESSENTIAL OF BAILMENT

RIGHTS AND DUTIES OF BAILOR AND BAILEE

RECENT DEVELOPMENTS OF
RESPONSIBILITIES
OF BAILEE

JUDICIAL PRECEDENT IN 18TH AND

19TH CENTURY

JUDICIAL VIEW IN 21ST CENTURY

CRITICAL ANALYSIS

CONCLUSION

BIBLIOGRAPHY
 INTRODUCTION

Bailment is the delivery of goods from one person (the bailor) to another (the
bailee) for a specific purpose, with the understanding that the goods will be
returned or disposed of according to the bailor's instructions once that purpose is
fulfilled. Derived from the French word "bailer," meaning "to hand over or
deliver," bailment involves two parties: the bailor and the bailee. The bailor
delivers the goods, while the bailee receives them for a particular task or
performance. It's a contractual agreement subject to the basic requirements of a
contract. Bailment involves transferring possession of goods, but not ownership,
and applies only to movable property, not immovable assets like buildings or land.

MEANING, NATURE AND SCOPE

Bailment is indeed governed by contract law, as it involves an agreement between

the bailor and bailee. However, even in the absence of a formal contract, a
bailment relationship can exist. This relationship can arise through voluntary
possession of another's property, such as in sub-bailment or when someone finds
an item. In such cases, the person in possession of the goods assumes the
responsibilities of a bailee. Bailment contracts can be either voluntary or
involuntary, depending on the circumstances surrounding the transfer of goods.

ESSENTIAL OF BAILMENT

In a contract of bailment, the owner or bailor, or their authorized agent, must

deliver actual or constructive possession of specific property to the bailee. This
transfer of possession is crucial for the bailee to perform the required acts, with
the obligation to return the property as it was received. Whether a transaction
constitutes a bailment or a sale depends on the intentions of the parties involved.
The essence of bailment lies in the transfer of possession of specific movable
property from the bailor to the bailee, which imposes obligations on the bailee
and grants them certain remedies against third parties or even the bailor if
necessary.
 RIGHTS AND DUTIES OF BAILOR AND BAILEE
It is rightly said that “A bailor’s duty is a bailee’s right and a bailee’s duty is
bailor’s right”.
a) Bailee’s duty (bailor’s rights)
i. Duty to take responsible care of the bailed goods. (s. 151-152) –
• In Calcutta Credit Corporation Ltd v. Prince Peter of Greece
(1963), a car entrusted to an auto repair shop was damaged in a
fire due to inadequate safety measures. Despite the bailee's
claim of awareness, the court held them liable for failing to
exercise due diligence. The case underscores the bailee's
obligation to exercise reasonable care in protecting entrusted
property.
• Sundar Lal v. Ram Swarup, (1950) -- In a case where a wooden
shop was rented under a written agreement stipulating its return
in the same condition, with the hirer being liable for any loss or
damage, the shop was destroyed during a communal riot. The
court ruled that since the destruction was not due to the bailee's
negligence, they could not be held liable.
ii. Duty not to make unauthorized use of the goods bailed. (section
153- 154)
iii. Duty not to mix bailor’s good with his own (S.155-157)
iv. Duty to return goods upon accomplishment of the purpose (S.
160 & 161)
v. Duty to return the bailor the profits or any increase on the
goods bailed (S. 163)

b) Bailee’ rights (Bailor’s duty) The Bailee of the goods has the right to:
i. Right to compensation for necessary costs incurred by the
deposit. (S. 158)
ii. Right to compensation from the bailor. (S.164)
iii. Right of lien on the bailed goods. (S.170-171) –
A lien is a bailee's right to retain the bailor's goods and
refuse to deliver them until consideration or payment has been made.
The law allows him two types of liens.
o special lien
o general Lien
A special lien entitles the bailee to hold goods for services for which
fees are due. We give you the right to reserve.
iv. Duty to disclose relevant facts. (S.150)
 RECENT DEVELOPMENTS OF RESPONSIBILITIES
OF BAILEE

In Indian Airlines Ltd. v. Prakrithi Shetty, the plaintiff's bags were missing items
after a flight. Filed under COPRA, negligence was found on the airline's part,
leading to compensation. This case established that airlines, as aggrieved bailors,
can also seek recourse under the Consumer Protection Act.
Later, in Surya Pharmaceutical Limited v Air India Limited, the court ruled
against Air India's attempt to limit liability, granting damages for lost goods. In
Board of Trustees of the Port of Bombay v Union of India and Others, the port
was deemed liable for pilfered goods under Sections 151 and 152 of the Contracts
Act due to negligence as the bailee.

JUDICIAL PRECEDENT IN 18TH AND 19TH CENTURY

1. In Sundar Lal v. Ram Swarup (1950), concerning a hired wooden shop, the
bailee was held not liable for damage during a communal riot, as destruction
wasn't due to negligence, emphasizing the bailor's responsibility for risks
beyond the bailee's control.
2. In Calcutta Credit Corporation Ltd v. Prince Peter of Greece (1963), a car
damaged in a fire at an auto repair shop led to the bailee's liability due to
negligence, highlighting the bailee's duty to exercise due diligence in
protecting entrusted property.
3. Ultzen v. Nicholas (1894) demonstrated a restaurant owner's liability for a
lost coat, showing the bailee's responsibility for items in their possession, even
if lost by their employees.
4. Union of India v. Udho Ram & Sons (1963) showcased a railway company's
liability for stolen goods due to negligence, emphasizing the bailee's duty to
ensure proper security during transportation.
 JUDICIAL VIEW IN 21ST CENTURY

1. In Amitabha Dasgupta v. Union Bank of India (2021), the bank's negligence

in breaking open a locker without proper notification led to liability for loss
of goods, emphasizing the bank's obligation to secure and maintain lockers.
2. Board of Trustees of the Port of Bombay v Union of India and Others (2009)
established the port's liability for pilfered goods while in their possession,
highlighting the bailee's responsibility under Sections 151 and 152 of the
Contracts Act.
3. Indian Airlines Ltd. v. Prakrithi Shetty (2007) demonstrated airlines'
liability for lost baggage, underlining the option for aggrieved bailors to file
complaints under the Consumer Protection Act.
4. Atul Mehra v. Bank of Maharashtra (2003) clarified that mere hiring of a
locker doesn't constitute bailment unless actual possession is transferred,
establishing the relationship as landlord and hirer rather than bailor and bailee.

CRITICAL ANALYSIS

The delivery of possession is indeed vital for a bailment contract's completion.

However, criticism arises regarding the complexity of determining reasonable
care and the imbalance of vulnerability between bailor and bailee. Recent
Supreme Court rulings highlight the need for adequate protection for both
parties, including bailors' rights under the Consumer Protection Act. Criticism
persists regarding the immunity of bailors from liabilities, even when
negligence occurs, potentially fostering an environment of ambiguity and
disputes. Amendments to the Contracts Act are necessary to address these
concerns and ensure fairness and clarity in the rights and duties of both parties
involved in bailment agreements.
 CONCLUSION

In conclusion, the enforcement of a bailment contract hinges on both parties

fulfilling their duties as outlined in the agreement. Failure to do so renders them
liable to each other. Amendments to the law are necessary to reduce the bailee's
liability, ensuring parity between bailor and bailee. Proper legislation must be
enacted to clarify the rights and duties of both parties, fostering trust and
confidence in bailment contracts. Ultimately, adherence to the terms of the
contract by both parties is essential for its enforceability, with each party's rights
corresponding to the other's duties.
 BIBLIOGRAPHY
WEBSITE –
• https://www.ijlmh.com/wp-content/uploads/Study-
of-Contract-of-Bailment-Rights-and-Duties-of-the-
Parties-Thereto.pdf
• https://testbook.com/ugc-net-commerce/contract-
of-bailment-and-pledge