Bailment, Bailor And Bailee
Bailment is defined in Section 148 of The Indian Contract Act 1972.As per the definition, bailment is 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. Pledge, a popular form of creation of charge on securities, is a specific form of bailment.
What are the terms associated with bailment?
Bailor: The person who delivers the goods is called the bailor.
Bailee: The person to whom the goods are delivered is called the bailee.
Goods: Goods is not specifically defined under Contract Act. The definition provided under the Sales of Goods Act is adopted for bailment also wherein it is defined as every kind of movable property other than actionable claims and money.
Delivery: Delivery is defined under the Sale of Goods Act as voluntary transfer of possession from one person to another. Under Contract Act also, the term is used in the same sense. The delivery of goods can be actual or constructive.
What are the conditions to be satisfied to constitute a bailment?
In order to constitute a bailment, delivery of goods has to constitute three conditions-
a. There must be a voluntary transfer of goods, actual or constructive, from one person to another
b. They delivery must happen on the basis of a contract and should be for a purpose
c. On fulfillment of the purpose, the goods must be returned or disposed of as per the directions of the bailor.
What are the duties and responsibilities of bailor and bailee under bailment?
a. The bailor is required to disclose defaults in the bailed goods which he is aware. In the absence of such disclosures, he is responsible for damages arising to bailee directly from such faults.
b. The bailee must exercise reasonable care of an average prudent man in handling the bailed goods.
c. If bailee commits any act with regard to the good inconsistent with the conditions of the bailment, the contract is voidable.
d. As soon as the purpose for which the bailment was made is over, the bailee must return the good to the bailor or dispose of according to the bailor’s direction without demand.
e. In case the bailee fails to return the good at proper time, he is liable to the bailor for any loss, destruction or deterioration of goods from that time.
What are the differences between bailment and pledge?
(Refer Pledge, Pledgor, Pledgee And Bank Loans)
a. Bailment is the delivery of goods by one person to another for some purpose. It need not be as a security. Pledge is bailment of goods as a security for the performance of a specific promise or debt.
b. In case of default in bailment, the bailee may either retain the goods or sue the bailor for his charges. The pledgor can either sue the pledgee or sell the pledged good with reasonable notice to pledgee to recover the debt.
c. The bailee may use the goods if the terms of bailment permit. The pledgor has no right to use the goods pledged.
