BAILMENT & PLEDGE

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• Sec 25 of NCA; “A contract relating to bailment
shall be deemed to have been concluded in
case any person delivers any property to
another person on a returnable basis or for
handing it over to any other person or selling it
as ordered by him/her.”
• Provided that, a deed must be execute while
bailing any property worth more then
Rs.5,000.00
 Cont…
• Explanation: For the purpose of this chapter, the
term 'property' includes any movable property
and title to such property.
If we analyze this definition we will find
1. It is temporary transfer of possession of
property.
2. It for some purpose.
3. It should be returned or disposed of according
to the wish of bailor.
 Essential feature of bailment
1. Contract
2. Goods are delivered by a person to another either
for certain purpose or for certain period of time.
3. The goods delivered on bailment should be
movable goods.(but not money deposit in bank)
4. Goods may be bailed either on request of bailor
to bailee or bailee to bailor.
5. Bailee should use the goods only for the purpose
for which goods were bailed.
 Cont..
6. Only possessory rights of the good is
transferred not ownership.
7. After expiry of time or after accomplishment
of purpose of bailment, bailee should return
goods or dispose according to the wish of
bailor.
8. Bailment may be either Gratuitous or non
gratuitous.
 Rights of Bailor
1. Enforcement of duties of Bailee.
a. to demand compensation: in case of damages of
goods through negligence or malfide intention .
exception: in case any bailed property
depreciates or is lost, stolen, damaged,
destroyed, decreased or harmed because of a
natural calamities despite taking care and
arranging for its security the bailee need not
return such Property. (sec 28(2))
 Cont..
b. to demand goods while enforcement of bailee:
unauthorized use of goods or a breach of the terms of a
contract.
c. to demand damage for unauthorized mix of goods:
unauthorized mixing of goods with other goods. If
possible goods must be separated at the time of
delivery, if not separable compensation must be given.
d. to demand to return back goods:
e. to demand natural increment:
 Cont..
2. Right to terminate a contract: In case the
bailee does not keep the bailed property
according to the term and conditions of the
contract, the bailer may get back the bailed
property at any time.
 Duties of Bailor
1. Duty to disclose the known defects of goods.
(sec 27)
2. Duty to bear extraordinary expenses. (sec 33)
3. Duty to indemnify the bailee. (sec 30)
4. Duty to receive back the goods.
 Rights of Bailee
1. Right to the enforcement of bailor’s duties:
a. Right to demand damage: lack of
information about defects of good
b. Right to reimbursement of extra
expenses:
c. Right to indemnity:
d. Right to demand remuneration:
 Cont…
2. Rights to deliver goods to one of the several
(joint) owners: in the absence of any agreement
to the contrary and if the bailment contract is
concluded by several joint owners, the bailee
may deliver the goods back to one of the joint
owners, without the consent of other owners.
3. Right to lien. Lien means keep the goods bailed
in his custody until the bailor doesnot not pay
any necessary charges.
 Duties of Bailee
1. Duty not to make unauthorised use of the
goods bailed
2. Not to mix the bailed goods with other goods
3. Duty to take a reasonable care of the goods
bailed.
4. Duty to return the goods to the bailor in time.
5. To return the goods with their natural profit or
increments
 Cont..
6. To follow the terms of contract and the
instruction of the bailor.
7. Duty to compensate the loss or damage
caused by him.
 Finder of lost goods
Found property may be kept after notifying the
police: (Sec 31 of NCA) In case person finds any
property in any way, he/she may keep it safely with
him/herself until the concerned owner is found out
after notifying the police. The expenses incurred for
finding out the owner of the property and for
keeping the property shall be borne by the
concerned owner, and the person who has found
the property may keep it with him/herself until the
owner pays such expenses.
 Rights of finder
1. Rights of possession: until the true owner is
not found.
2. Right to lien: until the owner does not pay
the expenses incurred in keeping them safe,
in repairing the goods and searching the true
owner
3. Right to sue for reward: if there is public
notice of reward for the finder.
 Cont..
4. Rights to sell the goods:
a. if true owner of the goods is not found even after sufficient
effort is made.
b. If owner is found but doesnot agree to pay necessary
expenses
c. if owner but doesnot pay expenses within reasonable time.
d. if the goods naturally decrease or destroyed within some
time.
e. if the expenses amount is more than 2/3 of the price of
goods or equal to price of goods.
 Duties of finder
1. Give notice to police.
2. To take necessary care of goods.
3. To search real owner of the goods found
4. To return the goods to the real owner after
receiving the necessary expenses.
5. not to make an unauthorized use of the
goods.
 PLEDGE
Pledge means contract by which a person receives
some property from another as security for granting
a loan or as guarantee for performing a job.
Here property means movable or immovable
property as well as document or title to the
property.
A pledge is a bailment of goods by a debtor to his
creditor to be kept by him till the debt be
discharged.
 Cont..
Bailor is, in this case called pledgor or pawnor
Bailee is, in this case called pledge or Pawnee
 Rights of pawner
1. Right to get back the goods pledged.
2. Right to receive accretion to the goods.
3. Right to claim compensation.
4. Right to receive notice before sale.
5. Right to receive surplus. (Eg.lnnfd ubf{ a9L
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 Duties of Pawner
1. Duty to disclose defect
2. Duty to bear extra ordinary expenses
3. Duty to clear debt or perform promise.
4. Duty to re pay inadequate amount.
 Rights of Pawnee
1. Right to sell
2. Right to claim compensation
3. Right to claim additional amount
4. Right to sue
 Duties of pawnee
1. Duty to take care of goods pledge
2. Duty not to make any unauthorised use
3. Duty to return goods
4. Duty to return accretion to the goods.
 Pledge by a Non Owner
The person who has no ownership over the
goods is a non owner. Generally, an owner has
the right to keep some goods in pledge. The
rules is based on the principle that “No man
can pass a better title than he has”
 exception
1. Mercantile agent
2. Pledge by person who has a limited
interest.sec 38(3)
3. Pledge by co owner
4. Pledge by buyer in possession