Introduction
Bailment refers to the process where one party (the bailor) transfers the ownership of goods to another party (the bailee) for a specific purpose, with the understanding that the goods will be returned after achieving the objective. This transfer is temporary and doesn’t involve a transfer of ownership, only possession.
Duties of Bailor
1. Duty of Gratuitous Bailor
Section 150 of the Indian Contract Act, 1872, imposes specific duties on a gratuitous bailor, who lends goods without any charge. The primary duty is to disclose any known faults in the goods that could interfere with their use or expose the bailee to extraordinary risks.
Illustration
A lends a horse, known to be vicious, to B without disclosing this fact. The horse runs away, and B gets injured. A is responsible for B’s injuries.
A hires a carriage from B. The carriage, unknown to B, is unsafe, and A gets injured. B is responsible for A’s injuries.
2. Duty of Bailor for Reward
For a bailor who bails goods for reward, the duty extends further. The bailor must ensure the goods are safe for the intended purpose, regardless of whether they are aware of any faults. This includes examining the goods to identify and rectify any defects.
Case Law:
Hyman & Wife vs. Nye & Sons: The plaintiffs hired a defective carriage from the defendant, resulting in an injury. The defendant was held liable for the injury due to the defect.
Duties of Bailee
1. Duty of Reasonable Care (Sections 151-152)
According to Section 151, the bailee must take as much care of the bailed goods as a prudent person would take of their goods under similar circumstances.
Case Law:
Houghland vs. R.R. Low (Luxury Coaches) Ltd: A plaintiff’s suitcase was lost from the defendant’s coach. It was held that the standard of care, even for gratuitous bailment, must be reasonable.
Martin vs. London County Council: The plaintiff’s valuables were stolen from a hospital’s custody. The hospital, as a bailee for reward, was held liable for not exercising adequate care.
2. Duty Not to Make Unauthorized Use (Section 154)
If the bailee uses the goods in a manner not authorized by the bailor, they must compensate for any resulting damage.
Illustration:
A lends a horse to B for personal use. B allows C to ride the horse, and it gets injured. B is liable for the injury.
3. Duty Not to Mix (Sections 155-157)
The bailee must not mix the bailor’s goods with their own without consent. If mixing occurs without consent and the goods can’t be separated, the bailee must compensate for the loss.
Illustration:
A bails 100 bales of cotton to B. B mixes them with his own without A’s consent. B must bear the cost of separation and any damage incurred.
4. Duty to Return (Sections 160-161)
The bailee must return the goods once the bailment period or purpose is completed. Failure to do so makes the bailee liable for any loss or damage.
Case Law:
Shaw & Co. vs. Symmons & Sons: The defendant failed to return the plaintiff’s books on time, and they were destroyed in a fire. The defendant was held liable for the loss.
5. Duty Not to Set Up “Jus Tertii” (Section 166)
A bailee cannot deny the bailor’s right to bail the goods by claiming that they belong to a third person. However, if the bailee, in good faith, returns the goods to the bailor, they are not liable to the true owner.
6. Duty to Return Increase (Section 163)
The bailee must return any increase or profit from the goods during bailment to the bailor unless agreed otherwise.
Illustration
A leaves a cow with B. The cow has a calf. B must return both the cow and the calf to A.
Rights of Bailee
1. Right to Compensation (Section 164)
If the bailor has no right to bail the goods or to receive them back and the bailee suffers a loss, the bailor is responsible for compensating the bailee.
2. Right to Expenses or Remuneration (Section 158)
A bailee can recover agreed charges or necessary expenses incurred for the bailment purpose if no reward was pre-agreed.
3. Right of Lien (Sections 170-171)
The bailee can retain the goods until the bailor pays the lawful charges. Liens can be specific (pertaining to the specific goods bailed) or general (holding any goods bailed for a general balance of account).
Case Law
Hutton vs. Car Maintenance Co.: The company could not claim a lien on a car for maintenance as it did not improve the car but merely maintained it.
4. Right to Sue (Section 180)
The bailee can sue any person who wrongfully deprives them of the use or possession of the goods or causes any injury to them. The bailee’s right to sue is equivalent to that of the owner.
Rights of Bailor
1. Right to Claim Damages
The bailor can claim damages from the bailee for any loss, destruction, or deterioration of the goods if the bailee fails to take reasonable care.
Case Law
Shaw & Co. vs. Symmons & Sons: The plaintiff was able to claim damages as the defendant failed to return the books within a reasonable time, leading to their destruction.
2. Right to Terminate Bailment
The bailor can terminate the bailment if the bailee uses the goods inconsistently with the terms of the bailment.
3. Right to Demand Return
The bailor has the right to demand the return of the goods once the bailment purpose is accomplished or the bailment period has expired.
4. Right to Claim Any Increase
The bailor can claim any increase or profit from the goods during the bailment period, as stipulated in Section 163.
Illustration
A leaves a cow in the custody of B, and the cow has a calf. B must return both the cow and the calf to A.
Conclusion
Understanding the rights and duties of the bailor and bailee ensures that both parties fulfil their obligations and protect their interests. Whether you’re lending or taking possession of goods, being aware of these legal responsibilities helps in maintaining trust and avoiding disputes.
FAQ on Rights and Duties of Bailor and Bailee
1. What are the duties of a bailor?
Duty of Gratuitous Bailor: Disclose known faults in the goods to prevent any harm to the bailee.
Duty of Bailor for Reward: Ensure the goods are safe for the intended purpose and free from defects, whether known or unknown to the bailor.
2. What are the rights of a bailor?
Right to Claim Damages: Claim damages for any loss or damage caused by the bailee’s failure to take reasonable care of the goods.
Right to Terminate Bailment: Terminate the bailment if the bailee uses the goods inconsistently with the terms agreed upon in the bailment contract.
The Right to Demand Return: Demand the return of goods once the purpose of the bailment is fulfilled or the time period has expired.
3. What are the rights of a bailee?
Right to Compensation: Claim compensation from the bailor if they suffer a loss due to the bailor’s lack of rights over the goods.
Right to Expenses or Remuneration: Recover agreed charges or necessary expenses incurred for the bailment.
The Right of Lien: Retain the goods until lawful charges are paid by the bailor.
Also Read: What is Bailment | Meaning & Nature
Reference: slideshare.net
