According to section 148 of the Indian Contract Act of 1872, bailment is the act of delivering commodities to another party for a specified purpose with an agreement that the goods will be returned once the purpose is fulfilled.
One instance of bailment is when someone delivers their car to the service center for repair. The person receiving the goods is referred to as the bailee, while the one delivering them is referred to as the bailor. On the other hand, there is no bailment if the owner keeps custody of the items.
For example
If A gives B, his neighbor, his car for ten days, but B also maintains one key with him and used to take the car throughout that time, then what happens? Since A is maintaining control over the property bailed, this will not be a case of bailment.
- “Bailment”, “bailor” and “bailee” defined.
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 direction 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 other contracts 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.
- Bailee not responsible for loss or damage to thing bailed.
- Termination of bailment by bailee’s act inconsistent with terms.
Absent any specific contract, the bailee is not liable for the thing bailed’s loss, destruction, or degradation, provided he has taken the level of care stated in section 151.
If the bailee takes any action regarding the foods bailed that is not in line with the terms of the bailment, the bailor may choose to terminate the contract.
Example: A rents out a riding horse of his own to B. The horse is driven by B in his carriage. This is a termination of the bailment at A’s discretion.
- Liability of bailee for using bailed items without authorization
If the bailee uses the goods in any way that deviates from the terms of the bailment, he will be responsible for compensating the bailor for any harm the goods may sustain as a result of or during that usage.
Illustration: (a) A lends B a horse so that he can ride it for himself alone. A member of C’s family is permitted to ride the horse by B. The horse is hurt when it unintentionally falls while being carefully ridden by C. Due to the harm done to the horse, B is required to compensate A.
(b) A specifically hires a horse from B in Calcutta in order to march to Varanasi. A rides carefully, but instead marches to Cuttack. Unintentionally falling, the horse sustains injuries. Due to the horse’s injury, A is required to compensate B.
- Gratuitous bailment terminates at death.
The death of either the bailor or the bailee ends a gratuitous bailment.
- Definitions of “Pledge,” “Pawnor,” and “Pawnee.”
A “pledge” is the surrender of goods as collateral for the settlement of a debt or the fulfillment of an agreement. Here, the bailor is referred to as the “pawnor.” “Pawnee” is the name of the bailee.
- A merchant agent’s pledge.
Any pledge made by a mercantile agent while acting in the regular course of his business as a mercantile agent will be valid if he is in possession of goods or the documents proving their ownership with the owner’s consent; this is as long as the pawnee acts in good faith and has not been informed, at the time of the pledge, that the pawnor lacks authority to pledge.
Explanation: The terms “documents of title” and “mercantile agent” in this section shall have the meanings specified in the Indian Sale of Goods Act, 1930.
178A: Pledge made under voidable contract by the person in possession.
The pawnee acquired a goods title to the goods, provided he acts in good faith and without notice of the pawnor’s defect of title, when the pawnor has obtained possession of the other goods pledged by him under a contract voidable under Section 19 or Section 19A and the contract has not been rescinded at the time of the pledge.
- Make a pledge in which the pawnor has a small stake.
A person’s pledge is only valid to the extent that he has a limited interest in the items he is offering.
