Shruti Minocha

Bailment And Pledge

Bailment
Section 48 defines Bailment as
Delivery of good by one person to another for

some purpose, upon a contract to return after

use or to dispose off as asked by the person
who delivered the goods.
BAILOR: who Gives
BAILEE: who Takes
BAILMENT : Transaction

Kinds of Bailment
1) On the basis of benefits :
For Exclusive benefit of the Bailor : as delivery of
some valuables to a neighbor to keep it in its safe
custody without giving any fees for the same.
For Exclusive benefit of Bailee : as lending a
cycle to a fiend ,without charge.
For mutual benefit of Bailor and Bailee : In this
consideration passes.
2) On the basis of reward to the parties:
Gratuitous Bailment: In the neither the bailor nor
the bailee is entitles to any remuneration
Non Gratuitous bailment: In this either the bailor
or bailee is entitled to remuneration.

Duties of Bailor
1) To disclose Known faults :
in case of gratuitous bailment it is the duty of
bailor to disclose the know fault in the good to
the bailee and if he fails to do so, he will be
liable to pay such damages to the bailee as
may have directly resulted from the faults.
While he will not be liable for the damages
arising to the bailee fro the defects of which he
was ignorant.
A bailor for reward is responsible for all
defects in the goods bailed whether he is
aware of the defect or not,if he does not
disclose them to the bailee.

Duties of Bailor
2) To bear extraordinary expenses of bailment in
case of non gratuitous bailment: where under the
terms of bailment ,the bailee is to receive
remuneration for his services ,it is the duty of bailor to
bear extraordinary expenses, if any ,incurred by the
bailee in relation to the thing bailed. In such a bailment
the bailor is not to bear ordinary or usual expense.
3) To bear necessary or ordinary expenses in case
of gratuitous bailment: Where ,by the condition of
bailment, the goods are to be kept by bailee for the
bailor, and the bailee is to receive no remuneration, it
is the duty of the baillor to repay all necessary
expenses incurred by bailee for the purpose of
bailment.

Duties of Bailor
4 ) To receive back the goods : It is the duty of bailor
to receive the goods back when the bailee returns
them after the time of bailment has expired . If the
bailor refuses to take delivery of goods offered at the
proper time, the bailee can claim compensation for all
the necessary expenses for safe custody.
5 ) To indemnify the Bailee : a bailor is also bound to
indemnify the bailee for any loss suffered by the
bailee, by the reason of the fact that the bailor was not
entitled to bail the goods because of defective title.
eg: A gives his neighbours scooter to B for use
without the neighbours permission. The neighbour sues
B for compensation. A is bound to indemnify B for his
losses.

Duties of Bailee
1)To take reasonable care of goods Bailed:
reasonable care means he must take care of goods
as a man of ordinary prudence.
Inspite of reasonable care if goods lost ,Bailee
cannot be held liable.
while the liability of bailee can be increased or
decreased.
Even if liabilities are increased to keep the goods
safe from theft or accident ,he will not be held
responsible for the loss caused by an act of god.
It is also to be noted that under the duty of
reasonable care ,where the goods are stolen ,there
he must make a efforts of informing the owner or
police to recover the goods,

Duties of Bailee
2) Not to make any unauthorized use of
goods : It is the duty of bailee to use the
goods strictly in accordance with the terms
of bailment. If he makes an unauthorized
use of the goods ,he is liable to make
compensation to the bailor for any damage
arising to the goods.

Duties of Bailee
3) Not to mix the goods bailed with his

own goods:
If the goods are bailed with the Bailor
Consent,there is no breach of duty and the
bailor and bailee shall have an interest in
respect to their proportionate share.
Without The Bailor consent, the following
rules applies:
where the goods can be separated: the bailee
is to bear the expenses of separation.
b) Where the goods cannot be separated ,the
bailee must compensate the bailor for his loss.
a)

Duties of Bailee
4) To return the goods :
It is the duty of bailee to return the goods
once the time for bailment has expired.
If bailee fails to return the goods at a proper
time, he becomes responsible for any loss
( even if loss occurring without his negligence
i.e by act of god ) to the goods from that time.
5) To return any accretion to the goods : it
is the duty of bailee to deliver to the bailor
any natural increase or profit accruing from
the goods bailed.

Rights of Bailor
Enforcement of Bailees duties: Duties of bailee
are rights of a Bailor. A bailor can thus suit
Bailee for all such.
To claim Damages for loss caused to the goods due
to bailees negligence.
To terminate the contract of Bailment if bailee
has done any act which is inconsistent to terms of
bailment.
To claim Compensation for any damage arising
during unauthorized use of the goods,
To demand Return Of Goods as soon as the
purpose or the period of bailment has expired.
To claim increase or accretion from goods bailed.

Rights Of Bailee
Enforcement of Duties of Bailor
To claim damages for loss arising from undisclosed
faults in the goods bailed.
Right to claim reimbursement for extraordinary
expenses incurred in relation o the things bailed.
To indemnify for any loss suffered by him by reason
of defective title of bailor. To the goods bailed.
To claim compensation for expenses incurred for the
safe custody of goods ,where the bailor has refused
to take the delivery of goods after the terms of
bailment.

Rights Of Bailee
Right to deliver the goods to one of the

several joint bailor: where the goods have

been bailed by several joint owners ,the bailee
has a right to deliver them to the directions of
one joint owner ,without the consent of all , in
absence of agreement to contrary.
Right Of Lien :
General Lien
Particular Lien

Right of lien
This is the right allotted to bailee. It means a right
to retain the possession of goods belonging to
another until some dues or claims in regard to
services rendered is paid.
There are to types of lien;
1. Particular Lien: sec 170 says it is the one
which is available to bailee against only those
goods in respect of which he has rendered some
services involving the exercise of labor or skills.
Eg: A delivers a rough diamond to B a jewlller to be
cut and polished .This is accordingly done.B is
entitled to retain the diamond till he is paid for
his services.

Contd...
There are certain exceptions where bailee
cannot exercise a right of lien:
If the bailee does not complete the work
within the agreed time.
If bailee voluntarily permits the bailor to
regain the possession of goods without
payment of charges.
In case bailee allows credit to bailor for
payment.

Contd
2) General lien: sec 171 is a right that entitles
a person to retain possession of any good
belonging to another for any amount due to
him whether in respect of those goods or any
other goods.
For eg: If two loans have been taken against
two securities from a banker and borrower
repays one of these loans ,the banker may
have a right to retain both goods until his
other loan is paid.
Right of general Lien is available to
following parties: (a) Banker (b) factors (c )
wharfingers (d) Attorney of high court (e )
Policy brokers.

Termination of Bailment
A contract of bailment terminates under the following
circumstances:
1. If bailment is for a specified period the bailment
terminates as soon as the stipulated period expires.
2. If bailment is for specific purpose the bailment
terminates as soon as the purpose fulfilled.
3. if the bailee does not act with regard to the goods
bailed ,which is inconsistent with the terms of
bailment ,the bailment may be terminated by bailor
even though the terms of bailment has not been
expired.
4. A gratuitous bailment can be terminated by death
either of the bailor or bailee.

Pledge Or Pawn
The bailment of goods as security for payment

of a debt or performance of a promise is

called pledge

The bailor is called the pawnor and the bailee

is called the pawnee

Example: A borrows money from B and keeps

his watch as security.

Contd.
Pledge is only a special kind of Bailment
The ownership remains with the pawnor
There is only a transfer of possession of

goods.
The pledgee or pawnee has only special
interest in the goods pledged.
The general interest remains with the
pawnor.

Difference between bailment and pledge

1.

As to purpose : It is for specific purpose like

security for a loan etc, bailment is for purposes
other than this ex. Repair,safe custody etc

2.

As to right of sale : Pledgee has right of sale

on default after giving notice to pledger but
there is no such right in bailment,the bailee
may retain goods or sue the bailor for non
payment of his dues

3.

As to right of using the goods : In case of

pledge the pledgee has no right of using the
goods, while no such restriction exists in case of
bailment if nature of transaction so requires.

Duties of Pawnor
To compensate the pawnee for

extraordinary expenses incurred by him

To meet his obligation on stipulated date

and comply with terms of the contract

Duties of Pawnee
To take reasonable care of goods.
Not to make any unauthorised use of

pledged goods
Not to mix his goods and pledged good
Not to do any violation of contract of
pledge, ex. Should not sell
To return goods on receipt of his full dues.
To deliver any accretion to goods, the
accretion remains the property of the
pawnor.

Right of Pwanor
Enforcement of Pawnees duties : All

the duties listed earlier of the pawnee are

enforceable by law.
Defaulting pwanors right to redeem:
A pawnor who defaults has right to redeem
the debt at any subsequent time before
the actual sale of goods, thus an
agreement that pledge should become
irredeemable, if it is not redeemed within a
certain time would be invalid. Any extra
expenses would have to be paid

Rights of Pawnee
Right To Retainer: He has right to retain
goods until his dues are paid. He has right
to hold goods not only for the payment of
debt but also interest due on debt and
other necessary expenses incurred by him
in respect of goods.
2. Right of subsequent advances : In an
event that further advances are given
without any further security, it is presumed
that right to advances extend even to
subsequent advances.
3. Right of extraordinary expenses :
Pawnee has right to recover extraordinary
expenses incurred, he cannot retain goods if
not paid for but can only sue.
1.

Rights of Pawnee
4) Right to sue the pawnor or sell goods on
default: When pawnor makes a default in
payment of debt ,he may exercise the
following rights:
a) Bring a suit to recover and retain goods as
collateral security
b) He may himself sell after giving due notice,
this is alternative right of sale and following is
to be noted:
- Reasonable notice is essential
-Cannot sell to himself
- if proceeds is insufficient , he may claim for
the rest from the pawnor
and if there is
surplus he must pay it to pawnor.