Introduction

The term which defines Bailor & Bailee legal relationship is “bailment”. The derivation of the word “bailment” is from the French word “ballier”, which means “to deliver”. In general words, Bailment means the transfer of possession of goods, from one person (bailor) to another person (bailee); for safekeeping, for a temporary period.

Contract of Bailment comes under a special class of contract. Sections 148 to 181 of the Indian Contract Act, 1872 deal with it. According to Section 148 of the Indian Contract Act, 1872,

” Bailment means 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 the “bailor”; and the person to whom they are delivered, is called the “bailee”.

Illustrations:

• There is a contract of bailment, when X gives Y, the tailor, a piece of cloth for stitching.
• There is a contract of bailment, when there is giving of goods to friends or relatives, for use, without charging anything.
• There is a contract of bailment, when Z gives a watch or cycle to Y, for repairing, etc.

Essentials of Bailment

The essentials of bailment are:

1. Contract: a contract between bailor and bailee, whether expressed or implied, is necessary.
2. Specific purpose: There shall be some specific purpose, to enter into a contract.
3. Delivery of goods: There must be an actual delivery of goods.
4. No change of ownership: Here, there is only a transfer of possession of goods from bailor to bailee. The ownership of goods remains with the bailor.

Types of Bailment

There are three types of bailment:

1. A mutually beneficial bailment: also known as “constructive bailment “. Here, all the parties benefit from this contract, as the exchange of services between parties in the contract, takes place. Example- X hand over goods for transportation to Y. Here, the contract of bailment is mutually beneficial, as both the parties are getting benefits from it; X’s goods are being transported; on the other hand, Y’s getting remuneration for the same.
2. A bailment that solely benefits the bailor: Here, the bailee acts in good faith. He doesn’t expect anything in return. Example- A leaves his car with B, when he goes out of town. Here, the contract of bailment solely benefits bailor.
3. A bailment that solely benefits the bailee: Here, bailor doesn’t any benefits. Example- Z, a librarian lends a book to Y, a reader. Here, the librarian doesn’t benefit from this contract.

Bailment that benefits only one party, are “gratuitous bailments”. However, this form of bailment gets terminated on the death of either party.

On the contrary, there are various rights and duties, which bailor and bailee have to follow, after they come into the contract of bailment. They are:-

Duties of Bailor

The duties of bailor are:

1. Disclosure of known faults (Section 150 of Indian Contract Act, 1872): It’s a first and foremost duty of a bailor, to disclose every faults related to bailed goods. If the bailor failed to do so, then he’ll be liable to compensate bailee. Example- A failed to tell B, the vicious nature of his horse, at the time of riding. Later on, if B suffers any injury, then A will be liable for concealing A fact, etc.
2. Bear unordinary expenses of bailment (Section 158 of Indian Contract Act, 1872): Here, the bailor bears extra-ordinary expenses the bailee incurs. Because bailee is only bound to bear ordinary expenses. Example- X left his dog in possession of Y, as he went out of town. Later on, the dog became ill, all the expenses (including food) were borne by Y. Here, X is bound to bear expenses incurred on a dog’s health, as they are unordinary expenses. Because the limitation of Y’s responsibility is up to providing food to it.
3. Indemnification of a bailee for incurring a loss when bailment is terminated before it’s term (Section 159 of Indian Contract Act, 1872): When termination of bailment takes place before the expiration of contract or accomplishment of the purpose, bailor is liable to indemnify bailee.
4. Receive back the goods: It’s duty on the bailor to receive back the goods, after expiry of contract or accomplishment of purpose.
5. Indemnification of the bailee (Section 164 of Indian Contract Act, 1872): If the title of the bailor, regarding goods, is defective and as a consequence of it, bailee suffers a loss. Then the bailor has to identify the bailee.

Duties of Bailee

1. Reasonable care of the goods (Section 151 of Indian Contract Act, 1872): It’s the duty on the part of the bailee, to take reasonable care of goods, as a man of ordinary prudence will take.
2. Not use the goods inconsistently with the contract (Section 154 of Indian Contract Act, 1872): It’s on the part of the bailee, to not make unauthorized use of goods, mentioned in the contract.
3. Not to mix the goods bailed with his goods (Sections 155 & 156 of Indian Contract Act, 1872): It’s the duty of the bailee to not mix his goods, with the bailed goods, otherwise bailee holds liability for damages. It consists of two:
   • When the goods are separable- the bailee bears the cost of separation and division.
   • When the goods aren’t separable- the bailee indemnifies damages the bailor incurs.
4. Return accretion to the goods (Section 163 of Indian Contract Act, 1872): Bailee had to return increase or profit incurred on the bailed goods, along with it, after expiration of contract or completion of purpose. Example- a cow is in possession of bailee and it gives birth to a calf, here, the bailee must give calf, along with cow to the bailor.
5. Not to set up an adverse title (Section 117 of the Indian Contract Act, 1872): Bailee must not set an adverse title.
6. Return the goods (Section 161 of the Indian Contract Act, 1872): It’s bailee’s duty to return the goods after the expiration of the contract of bailment or after the accomplishment of purpose. The goods must be returned in original form or modified form, as per directions of the bailor.

Rights of Bailor

1. Enforcement of rights:
   Bailor can enforce rights by suing bailee for enforcement of duties and rights.
2. Avoidance of contract (Section 153 of the Indian Contract Act, 1872):
   The bailor has the right to terminate the contract if bailee acts inconsistent with the provisions of the contract.
3. Return of goods (Section 159 of Indian Contract Act, 1872):
   Bailor has the right to receive back goods after the expiration of contract or accomplishment of purpose.
4. Compensation from wrongdoer (Section 180 of the Indian Contract Act, 1872):
   Bailor has the right to demand compensation from the third person, who deprived him of the usage of goods.

Rights of Bailee

1. Delivery to one of several joint bailors of the goods bailed (Section 165 of Indian Contract Act, 1872): Bailee has the right to return goods to one of the joint bailor without taking consent from others.
2. Delivery of goods to bailor without title (Section 166 of the Indian Contract Act, 1872): Bailee has the right to not give goods to bailor, who’s not having the title on it.
3. Right to take action against trespassers (Section 180 of Indian Contract Act, 1872): Bailee has the right to take action against outsiders, who detains him/her from the usage of goods, as mentioned in the contract.
4. Bailee’s lien: Bailee has the right to retain goods with him, until he gets payment from the bailor. Example– X, a tailor can refuse to give a shirt to Y, until he makes the payment for the same.

Conclusion

Based on the above points, Bailor & Bailee should perform according to the provisions of the Indian Contract Act, 1872, and Contract of Bailment.