Tutorial Class 3

Bailment: Introduction, Essentials and Duties

  Bailment implies a contractual relationship in which the personal
property of one person temporarily goes into the possession of
another
Introduction  The ownership of the articles remains with the original party;
however, the possession moves to the other
 The crucial element is delivery, without delivery there cannot be a
contract of bailment. Delivery refers to transfer of possession
  §148: 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. The person delivering
the goods is called the "bailor". The person to whom they are
delivered is called the "bailee".
 Explanation.—If a person already in possession of the goods of
Introduction another contracts to hold them as a bailee, he thereby becomes the
bailee, and the owner becomes the bailor of such goods, although
they may not have been delivered by way of bailment.
 Ultzen v. Nicols: Coat of person was taken by attendant in a
restaurant. The coat was missing later from the hook it was placed
on. There is a contract of bailment, since possession was taken
over by the attendee, if the person himself did put it on the hook,
it would not be a bailment case. The restaurant was liable.
 Delivery of Possession
 Delivery is not the same thing as custody. Merely having custody
Essential without delivery is not bailment. Delivery requires a handing over
to the bailee for whatever is the purpose of the bailment. If this is
Features of a done, then it is a bailment irrespective of the manner in which it
happens.
Contract of  §149: The delivery to the bailee may be made by doing anything
Bailment which has the effect of putting the goods in the possession of the
intended bailee or of any person authorized to hold them on his
behalf.
 Delivery of Possession
 Delivery of possession may be either:
 Actual delivery: When the physical possession of the goods is
Essential handed over by the bailor to the bailee
 Constructive delivery: There is no change in physical possession, the
Features of a goods remain where they are, but something is done which has the
effect of putting the goods in the possession of the bailee.
Contract of  Fazal v. Salamat Ali: When the defendant was holding the
Bailment plaintiff’s mare under the execution of a decree which was
satisfied and the court ordered redelivery of the mare to the
plaintiff, when the defendant still failed to return the mare and it
was stolen, the court held that the relationship of bailor and bailee
was established.
 Delivery Should be Upon a Contract
 The delivery must take place for some purpose, and upon a
Essential contract that when the purpose is accomplished, the goods shall
be returned to the bailor.
Features of a  Ram Gulam v. Gov. of UP (1950): Plaintiff’s ornaments were stolen
Contract of while in police custody after having been recovered after being
stolen. His claim against the government was dismissed as “the
Bailment obligation of a bailee is a contractual obligation and springs only
from a contract of bailment. It cannot arise independently of a
contract.”
 Can there be Non-contractual Bailments?
 English law recognizes bailment without contract. Indian courts
have also moved away from the view in Ram Gulam. Bailment,
therefore, may exist without the creation of a contract between
the parties and may give rise to remedies which in substance may
not be contractual.
 An illustration of this view can be seen in the case of State of
Essential Gujarat v. Memon Mahomed Haji Hasan, where goods seized by
Features of a the State under the Sea Customs Act were uncared for.
 The State contended that there was no contract and therefore no
Contract of obligation to take care of the goods
 The Court rejected this view and held that while it is true that
Bailment bailment is dealt wit under the Contracts Act where it arises from a
contract, it is not true that there cannot be bailment in the absence
of an enforceable contract
 This view has been approved by the Supreme Court in Basava KD
Patil v. State Mysore, where there was a factual scenario identical
to Ram Gulam, and the Court held that the authorities were liable
to take care of goods that they had seized, as possession would be
deemed to be given by law
Essential Delivery should be upon some purpose
 Bailment must always be for some purpose and is subject to the
Features of a condition that when the purpose is accomplished, the goods will
Contract of be returned to the bailor, or disposed according to his mandate. If
this understanding is absent, then their relationship is not that of
Bailment bailor and bailee.
  Deposit of Money
 Not a bailment. Money is not a good as per definition of goods.
Further, the relation between the banks and the person depositing
money is more of a borrower and lender, thus it is not a bailment.
 Bank Lockers
Banks and  If the goods are entrusted to the bank to be kept in the locker then
the contract of bailment exists.
Bailment  The Bank must have exclusive possession of the goods, if there is no
exclusive possession, the Bank would not be a bailee
 This can be distinguished from a case where the bank is merely
hiring out a locker which the bailor uses
 A useful test in such cases is to look at whether the locker-holder has
direct access to his locker and whether he can operate it on his own
or if he can only do so with the assistance of the bank
 §150: Bailor’s duty to disclose faults in goods bailed.—The bailor is
bound to disclose to the bailee faults in the goods bailed, of which the
bailor is aware, and which materially interfere with the use of them, or
expose the bailee to extraordinary risks; and if he does not make such
Duty of the disclosure, he is responsible for damage arising to the bailee directly
Bailor from such faults.
If such goods are bailed for hire, the bailor is responsible for such
damage, whether he was or was not aware of the existence of such
faults in the goods bailed.
  If he has knowledge of the defect and the bailee is not aware of
the same, he is liable to inform the bailee of such defect as would
expose the bailee to extraordinary risk or interfere in the use of
Gratuitous the goods
 If he fails to disclose this, he is liable to the bailee for any damage
Balor suffered by the latter by virtue of the failure to disclose such facts
 Since the bailor is not profiting from the transaction, there is a
lower duty.
  Here the bailor is responsible for any damage caused by faults in
the goods bailed, regardless of whether the bailor was aware of
these facts or not
 The language of the second paragraph of the present section is
Bailor for open to at least three constructions:
 The bailor is under a duty to take reasonable care to make the goods
Reward reasonably safe for the purpose for which he knows they have been
hired;
 The bailor is under a duty to supply goods that are reasonably safe,
the only defence being that the defect is a latent one that could not
be discovered by any care or skill;
 There is an absolute guarantee of fitness
  The common view that has been taken is that is the bailor has the
duty to see that the goods which he delivers are reasonably safe
for the purpose of bailment. He cannot say that he was not aware
of the defect. He has to examine the goods and remove such
defects as reasonable examination would have disclosed.
Bailor for  Hyman & Wife v. Nye & Sons: A person who lets out carriages is not
Reward responsible for all defects discoverable or not; he is not an insurer
against all defects. But he is an insurer against all defects which
care and skill can guard against. His duty is to supply a carriage as
fit for the purpose for which it is hired as care and skill can render
it
  A question arises as to which rule would apply to the case where A
hires a specific carriage from B, not a carriage to be provided by B
at his discretion
 Decisions upon the hiring of particular kinds of property turn
Bailor for rather on questions of implied warranty, or unexpressed terms of
the contract, and must be used with great caution for the
Reward establishment of any general rules
 It does not seem, at all events, that the quite positive language of
the second paragraph of the present section would be qualified
under Contract Act by any such exception
  The principle is that when the bailee depends on his own
assessment of fitness of the good, the warranty does not arise

Bailor for  However, if there is reliance on the bailor’s judgment and

assessment, bailor would be liable
Reward  Where the bailee had the opportunity of inspection of the chattel
and was satisfied with its condition and also had it repaired at his
own expense, the bailor's warranty will not arise.
  Duty to take reasonable care of the goods (the level expected
from an ordinary prudent man with respect to similar goods as if
they are his own)
 Duty not to mane any use of the goods which is not according to
the conditions of the bailment
 Duty not to mix, and to maintain the separate identity of the
bailor’s goods from his own
Duties of the  Duty to return the goods bailed, without demand, as soon as the
time for which they were bailed has expired, or the purpose of the
Bailee bailment has been accomplished
 Duty not to set up jus tertii, or to claim that the goods belong to a
third person, and thus deny the bailor the right to receive the
goods back
 Duty to return increase or profits to the bailor
 Duty not to make a contract inconsistent with the conditions of
bailment