Bailment

 Bailment is defined as 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.
A delivers his car to B, for repair.
 Y lends her cycle to B to be returned after a week
 Bailment without contract
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 When a person finds goods belonging to another,

relationship of bailee and bailor is automatically
created between the finder and the owner
 E’s ornaments having been stolen and recovered by the
police disappeared from police custody. Held, the State was
liable, the contract of bailment having been implied.
[Basavva K.D. Patil v. State of Mysore, (1997)]
 Bailment
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 Requisites for bailment

 Contract
 Delivery of possession
 For some purpose
 Return of specific goods
 Bailment is concerned only with goods

 Classification of Bailment
 Gratuitousbailment
 Non-gratuitous bailment
 Duties of Bailor Duties of Bailee
 Disclose known faults  To take responsible care of
 To bear extraordinary the goods
expenses of bailment  Not to make any
 To indemnify bailee for loss unauthorized use of goods
in case of premature  Not to mix the gods bailed
termination of gratuitous with his own goods
bailment  Not to set up an adverse title
 To receive back the goods  To return any accretion to the
 To indemnify the bailee goods
 To return the goods

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 Rights of Bailor Rights of Bailee
 Enforcement rights  Delivery of goods o one of
 Avoidance of contract several joint bailors of goods
 Return of goods lent  Delivery of goods to bailor
gratuitously without title
 Compensation from wrong-  Right to apply to court to
doer stop delivery
 Right of action against
trespassers
 Bailee’s lien

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 Termination of Bailment
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 On the expiry of the period

 On the achievement of the object
 Inconsistent use of goods
 Destruction of the subject-matter
 Gratuitous bailment
 Death of he bailor or bailee
 Pledge
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 The bailment of goods for payment of debt or

performance of a promise
 Bailor – Pledger/pawnor
 Bailee – Pledgee/pawnee
 L borrows Rs. 2 lakhs from B and keeps his car as security
for payment of the debt, the bailment of car is a pledge.
 Movable property can only be pledged
 Sale of Goods Act, 1930
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 Contract of sale of goods

 A contract of sale of goods is a contract whereby the seller transfers
or agrees to transfer the property to goods to the buyer for a price.

Contract of sale of goods = sale + an agreement to sell

 Sale - Transfer of property in the goods from the seller to

the buyer
 Agreement to sale - Transfer of property in the goods is to
take place in future or subject to some conditions thereafter
to be fulfilled
 Essentials of a contract of sale
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 Two parties – Buyer & Seller

 Movable goods
 Price – must be money; partially money and
partially goods
 Transfer of general property
 Essential elements of valid contract
 Sale Agreement to sell
 Transfer of property: Immediate  Transfer of property: Future
transfer time or subject to certain
conditions
 Type of goods: Existing and  Type of goods: Mostly future
specific goods and contingent goods

 Risk of loss: loss falls on the  Risk of loss: loss falls on the
buyer, even if the goods are in seller, even if the goods are in
possession of the seller possession of the buyer

 Consequences of breach: the  Consequences of breach: the

seller can sue the buyer for seller can only sue the buyer,
price, even if the goods are in for damages even if the goods
possession of the seller are in possession of the buyer
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 Sale
 Right to re-sell: seller cannot
re-sell the goods, if does so,
the subsequent buyer does not
acquire title to the goods
 General and particular
property: creates jus in rem
 Insolvency of buyer: buyer
becomes insolvent before the
payment, in absence of lien
over goods, must return them
to the official receiver or
assignee
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Agreement to sell
 Right to re-sell: the original
buyer can sue the seller for
damages
 General and particular
property: creates jus in
personam
 Insolvency of buyer: buyer
becomes insolvent before the
payment, the seller is not
bound to part with the goods
until he is paid
 Sale
 Insolvency of seller: buyer
being the owner is entitle to
recover the goods from the
official receiver or assignee
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Agreement to sell
 Insolvency of seller: though
the buyer has paid the price,
he can only claim dividend
and not the goods because
there exist no transfer of
property
 Sale and hire-purchase agreement
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B hires a piano from H on an agreement that B should

pay Rs. 1500 a month as rent. The stipulation is that if he
regularly pays the rent for 36 months the piano becomes
his property at the end of 36 months. Further it is
provided that B can return the piano at any time and he
need not pay anymore. This is a hire-purchase agreement.

If, however, it is agreed that 36 months’ rent must be paid

and that he cannot return the piano, the agreement is a
contract of sale.
 Sale of Goods Act, 1930
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Subject-matter of contract
 Goods form the subject-matter of a contract of sale

 Actionable claims and money are not goods

 Sale of Goods Act, 1930
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Classification of goods
 Existing goods

 Specific goods –identified and agreed upon at the time a contract of sale
is made
 Ascertained goods – identified subsequent to the formation of a contract
of sale
 Unascertained goods – not identified and agreed upon at the time a
contract of sale, defined by description and may form part of a lot
 Future goods – seller does not possess at the time of contract
 Contingent goods – the acquisition of which by the seller
depends upon contingency which may or may not happen
 Effect of destruction of goods
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 Goods perishing before making of contract

A agrees to sell a cargo of dates to Y. The dates were
contaminated with sea water so as to be unsaleable as dates.
Both A and B are ignorant of this fact. The agreement is
void
 Goods perishing after the agreement to sell but
before the sale is effected