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Presentation by

SANSKRITI SCHOOL OF

BUSINESS

AICTE APPROVED

BUSINESS LAW

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Section 148 of the Contract Act.

The delivery of goods by one person to

another for some purpose upon a

contract that they shall, when the

purpose is accomplished be returnedor otherwise disposed of according to

the direction of the person who

delivering them .

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Hiring a bicycle

Giving cloth to a tailor

Delivering watch for repair

Keeping valuables in

locker of a bank.

Examples :

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Based on Benefit :Bailment for the exclusive benefit of :

1. Bailor : leaving goods in safecustody

2. Bailee : a loan of some article like apen

3. Mutual benefit : contract for hiring,repair etc.

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Based on Reward:

1. Gratuitous bailment : neither bailor nor

bailee is entitled for remuneration, e.g.lending a book to a friend.

2. Non-gratuitous bailment : bailment of

reward: either bailee or bailor is entitledto remuneration, example : hire, tailor etc.

Kinds of Bailment:

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Take reasonable care of goods [S.151]

Not to make an unauthorized use of

goods [S.154]

Not to mix Bailors goods with his own

goods.

Not to set up an adverse title.

Duty to return goods [S.160] Duty to return any any increase or

profit from the goods. {cow + calf}

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Rights of a Bailee

Right to receive necessary expensesincurred.[s.157]

Right to receive compensation in case of

premature termination of bailment bybailor.[s.159]

Right to receive compensation in case ofthe goods bailed by non owner.[s164]

Right to return the goods according theorders of any co-bailor.[s.165]

Right to retain the goods.[s.170]

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Disclose faults in goods bailed.

Repay necessary expenses in case ofgratuitous bailment.. Feeding expenses

for the horse kept in safe custody. Re-pay extraordinary expenses in case

non gratuitous bailment If the horse fallsill during the bailment period thenexpenses to be borne by the bailor.[s.158]

Duty to indemnify bailee.[s.164] If A giveshis neighbor's scooter to B

Duty to receive back the goods.

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Rights of a Bailor

Right of termination of bailment.

Return of goods.

Compensation from wrong-doer.

Entitled to increase or profit from goods bailed. [s.163]

Enforcement of rights. {Bailor can enforce by suit all theliabilities or duties of the bailee, as his rights.}

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Sec.172 of the Contract Act.

The Bailment of goods as security for

payment of a debt or performance of a

promise

Bailor = Pawnor Bailee = Pawnee

Pledge

Example:

A borrows Rs.100 from B & keeps his

watch as security : pledge

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Essentials of a valid Pledge:

Transfer of possession is necessary.

Bailment of pledged goods must be in the formof surity.

No transfer of ownership but the possession ,pledgee is said to have special property.

Pledge can be made of moveable property only.

{N.B. it becomes a mortgage if the propertytransferred is immoveable.}

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Rights of Pawnee:

Right of retainer.

Rights of retainer for subsequentadvances.

Entitled to receive from the pawnorextraordinary expenses incurred by himfor the preservation of goods.

Rights where pawnor makes default.

Rights against true owner when pawnorstitle is defective.

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Rights of Pawnor

Right to get back back goods.

Right to redeem debt

Preservation and maintenance of goods Rights of an ordinary debtor

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Exception (Pledge by Non-Owner)

Pledge by mercantile agent

Pledge by seller or buyer in possessionafter sale

Pledge when pawnor has limited interest

Pledge by co-owner in possession

Pledge by person to possession under avoidable contract

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Bailment & Pledge :

a comparison

In the case of a bailment the bailee hasno right in respect of things bailed; butis merely to hold possession for certainpurpose, and when that purpose isaccomplished, to return the thingbailed in accordance with the directionof the bailor.

In case of a pledge the debts forsecuring which the pledge is made,gives the pawnee right over the thingspledged and to retain it until the debtis paid, and to sell it on certain

conditions for recovery of the debt

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PURPOSE : to provide security for a

debt? Or the performance of a promise;

{to repairs or safe custody etc}?

RIGHT OF SALE : sale on default? ; no

right to sale?

RIGHT OF USING THE GOODS : no

right?

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Ownership transferred ? If so , its sale under T.P. ACT.

Ownership not transferred?

Bailment

Buyers under no obligationto return /re-deliver thegoods.

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Conclusion

BAILMENT is a technical term of commonlaw. Though it might mean any kind ofhanding over, it involves change ofpossession.

One who has custody without possession ,like a servant or guest using his hosts goods,is not a bailee .

On the whole , a bailment might be describedas a delivery on condition to which it usuallyattaches an obligation to re-deliver the goodsor otherwise deal with them as directed,when condition is satisfied.