Contract of Bailment

Presentation on
Contract of Bailment
Prepared by-
Sandip Satbhai
Assistant Professor
NBT Law College, Nashik-05
NEW LAW GURUJI WLCOMES YOU
/sandip satbhai @sandipsatbhai #new_law_guruji /New law Guruji
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Meaning and Definition
Bailment
• Meaning:
• The term 'Bailment' is derived from a French word ' baillier
• which means to give or to deliver'.
• In Common Law, it means any kind of handing over of
certain property, particularly goods, for a certain period.
• Bailment may be called as delivery of goods.
• Generally it might mean any kind of handing over, but It
involves change of possession with a condition to redeliver
the goods.

Bailment Definition
• According to Pollock and Wright, "any person is to be
considered a Bailee who otherwise than as a servant either
receives possession of a thing from another or consents to
receive or hold possession of a thing for another upon an
undertaking with the other person either to keep and return
or to deliver to him the specific thing or to (convey and) apply
the specific thing according to the directions antecedent or
future of the other person."
• According to Tomlin's Law Dictionary, ''Bailment is a delivery
of goods in trust, upon a contract expressed or implied that
the trust shall be faithfully executed on the part of the Bailee
and the goods re delivered as soon as the time or use, for
which they are bailed, shall have elapsed or be performed."

Bailment Definition
• Sir William Jones defines 'Bailment' as "a delivery
of goods on a condition, express or implied, that
they shall be restored by the Bailee to the Bailor
or according to his directions, as soon as the
purpose for which they are bailed shall be
answered."
• Blackstone defines Bailment as "a delivery of
goods in trust a contract, express or implied, that
the trust shall be faithfully executed on the part
of the Bailee.

Bailment ‘Sui generis’
• Bailment is a relationship ‘Sui generis’. It
means of his own kind.
• Every Contract of Bailment is enforceable by
law.
• In all cases it is not necessary to enter into a
contract.
• Consent is not required in case of finder of
goods.

Indian Contract Act, 1872
Section 148
• Chapter IX from Sections 148 to 181 of the Indian
Contract Act deals with Contract of Bailment.
• DEFINITION-
• Section 148:
• "A Bailment is the delivery of goods by one person to
another for some purpose, upon 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 called the Bailor. The
person to whom they are delivered is called the Bailee.

Section 148
• Explanation:
• "If a person is already in possession of the goods of other, contracts
to 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."
• Consideration:
• Delivery is the consideration in a contract of Bailment.
• Examples:
• When a person takes anything on hire, gives anything to repair or
gives a parcel for transportation, posts a letter in post office, it is a
contract of Bailment.

• Bailment also takes place in case if ‘S’ gives
pure gold to Gold Smith for ornamenting like
chain for his wife and ‘T’ a goldsmith makes a
ring and accepts making charges. In this case
‘S’ is the Bailor and ‘T’ is the Bailee.
• ‘’S’ Gives a Car to ‘T’ for the purpose of a two
day tour and ‘T’ returns it after tour is over
and pays charges as agreed on daily basis.
Here ‘S’ is the Bailor and ‘T’ is the Bailee.

Ingredients of Section-148: Bailment:
1. Delivery of goods from one person to another.
2. Upon a contract with a stipulation that when the
purpose is accomplished the goods-
• a. will be returned or
• b. disposed of according to the directions of the
person delivering them.
3. A possessor of goods may enter into a contract
of Bailment.

Classification of Bailment
• According to Story:
– For the benefit of the Bailor.
– For the benefit of the Bailee.
– For the benefit of the third party.
• According to Hulsbury Laws of England:
– Gratuitous- without any reward or consideration
– Non-gratuitous- for any reward or consideration
• According to Indian Law-
– Bailment in general
– Bailment in Pledge

Essential Elements of Bailment
1. There must be delivery of goods by the Bailor:
2. There must be Delivery of Goods:
3. Delivery should be upon a Contract:
4. Delivery should have specific purpose:
5. Delivery is Temporary:
6. Stipulation to return goods:

1. There must be delivery of goods by
the Bailor:
149. Delivery to Bailee how made:
"The delivery to the Bailee may be made by
doing anything which has the effect of putting
the goods in the possession of the intended
Bailee or of any person authorised to hold them
on his behalf. The delivery to the Bailee may be
made by doing anything which has the effect of
putting the goods in the possession of the
intended Bailee or of any person authorised to
hold them on his behalf."

Continued...
149. Delivery to Bailee how made:
Chitty On Contracts:
• Transfer of possession of the thing to the Bailee.
• The Bailee is entitled to Possessor remedies
against all.
• Many remedies are available to the Bailee in tort
and crime because of possession.

Continued...
• In Kaliaperumal vs. Visalakshmi, [AIR 1938 Mad. 32).
• A lady employed a goldsmith to melt old jewellery and
prepare new ornaments. Every evening she used to
receive incomplete ornaments from the goldsmith and put
them in a box which was left in the goldsmith's shop.
• Held: That the goldsmith was not liable for the loss of
ornament as the goldsmith cannot be said to have been
the Bailee of the goods as the lady kept the key with her
and there was as such no effective delivery of the contents
of the box to the goldsmith either actually or
constructively.

Modes of Delivery (Section 149)
Anything which has the effect to put goods in the
possession of Bailee.
1. Actual Delivery: Physically handing over the goods to
Bailee is called as Actual Delivery.
In Fazal vs. Salamat Rai (1928) 120 IC 421 the plaintiff failed to
repay his debt and defendant succeeded in getting
attachment order and took possession of plaintiff’s Mare.
After that PF paid full amount and asked to return his Mare,
it was lost from DF.
Held:
The DF to return PF’s Mare or its equivalent value. The Court
held that it was an actual delivery of possession to
defendant.

Modes of Delivery
2. Constructive Delivery:
In Morvi Mercantile Bank vs. Union of India (AIR 1965 SC
1954)
Goods were in the custody of railway- Railway receipt
pledged with the bank.
Held:
Though goods were in the actual possession of the
railway the bankers were real Bailees and Pawnee. In this
case bank has obtained the possession under
constructive delivery.

2. There must be Delivery of Goods:
1. There must be a delivery of movable goods.
2. The chattels and goods can be bailed.
3. Money may be subject of the Bailment but it is
not included in the category of goods.
4. We cannot compel banker to return same coins
or Notes.

3. Delivery should be upon a contract:
• The delivery of goods from Bailor to Bailee is based upon a contract.
• The transaction is called as a Bailment.
• should be by way of contract.
• The obligations arises from a contract only and independently.
In Ram Gulam vs. Govt. of UP (AIR 1950 All 206)
PF’s Jewellery was stolen and he filed complaint with police station.
Goods seized by the police and kept in the custody. A police officer
migrated to Pakistan with seized jewellery. In an action by PF against
Govt. Supreme Court Court held that the Govt was not liable as there
was no contract.
Seth J.. Observed that “The obligation of a Bailee is a contractual
obligation and springs only from the contract of Bailment. ”
This decision further criticised by authors of contract law.

4. Delivery should have specific
purpose:
• The delivery of goods is always for a specific purpose. If no
such purpose is there is no contract of Bailment.
• E.g. Giving-
• A car to garage for repairing, Cloth to tailor for stitching,
Gold for ornamenting, Putting goods in cloak room for
safety.
• In above cases repairing, stitching, ornamenting and
safety are specific purposes and when accomplished
property should be returned to the owner.
• Therefore delivery by mistake is not contract of Bailment.
E.g. If ‘S’ leaves cloth with a tailor without any purpose
there is no contract of Bailment.

5. Delivery is Temporary:
• The delivery is only for temporary purposes.
• For limited time and specific purposes.
• After the specific time is over or a specific
purpose is accomplished the Bailee is under
obligation to return it to the owner.

6. Stipulation to return goods:
the Bailor:
• There should be a stipulation to return the goods.
• If there is no contract to return back there is no contract of
Bailment at all.
• The goods may be returned in the original form or in the altered
form.
• If ‘S’ lends ornaments for a marriage to ‘T’. It should be returned
as it is.
• If ‘X’ gives gold to make ornaments. The pure gold can be returned
in the form of a specific ornament.

Bailment and Sale
Bailment Sale
1. Only Possession is transferred. The
ownership remain unchanged
Not only Possession of goods but also
ownership is transferred
2. It is concerned with only movable
goods.
It is concerned with both movable &
Immovable goods.
3. It may be even gratuitous It must have price.
4. Baillee has to return the goods or may
dispose off acc. to directions of Bailor
Buyer need not to return the goods to
the seller.
5. Bailment is for temporary purpose
Sale is permanent transfer of the goods
to the purchaser.
6. The Bailee cannot appropriate
property bailed
The Purchaser can do anything with the
property
7. In certain cases Bailee can exercise his
right of lien over the goods bailed.
In no case seller can claim right to lien on
goods sold

Bailment and Hire-Purchase
Agreements
• In both the cases the property is transferred.
• A hire-purchase agreement does not create title
in the Bailee.
• In Bailment property is redelivered to the owner,
similarly in HPA also property shall be returned if
purchaser does not opt to purchase.
• Until the payment of last instalment the hire-
purchaser is Bailee.

Thank You All..!
/sandip satbhai
@sandipsatbhai
#new_law_guruji
/New Law Guruji
With reference to a book of Dr S. R. Myneni, Contract-II (Special COntracts), ALH, Hyderabad

Contract of Bailment

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