contract of bailment assignment

Bailment means transferring the possession to another person to fulfill some predetermined agreement that might require the bailee (person to whom possession is given) to do something or vice versa in exchange for some consideration that is not mandatorily required to exist. Generally, the bailor (owner of the asset) does not enjoy the right to use such bailed assets while they have bailee.

Explanation, how does it work, #1 – gratuitous, #2 – non-gratuitous, examples of bailment, essentials of bailment contract, difference between bailment and consignment, recommended articles.

Let us say the person (trader) sometimes sells the shares without possessing the shares Shares Ordinary Shares are the shares that are issued by the company for the purpose of raising the funds from the public and the private sources for its working. Such shares carry voting rights and are shown under owner’s equity in the liability side of the balance sheet of the company. read more . I.e., I.e., short sell the shares to earn short term profits; thereupon, in this example, it could be seen that the seller sells the shares even without having ownership of the shares. In this transfer of the possession of goods, sometimes some liabilities are also transferred to the bailee depending upon the type of bailment. For example, when we park our car in the parking lot, it is the transfer of possession but not ownership, but in case there is some physical damage, then the person who has the person, i.e., bailee, will be responsible for the same.

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Bailment is an agreement that could be oral or written mutually agreed upon between the person giving possession and the person taking possession, which might involve consideration. The bailor transfers the possession to the bailee for any mutually agreed purpose. The bailee fulfills the terms; in the end, the bailee transfers the possession of such bailed assets back to the bailor, and the bailor pays certain consideration if agreed upon.

Types of Bailment Contract

This type does not include any consideration; in other words, the bailment with no consideration is gratuitous. They may either be for the benefits of bailee or bailor or maybe for both, for instance, parking the car at your friend’s house due to lack of space, giving the car to your friend for use, etc.

The term ‘Bailment’ broadly means transferring the possession to another person to fulfill some predetermined agreement, which might require the bailee to do something or vice versa in the exchange of some consideration, which is not mandatorily required to exist. Generally, the bailor does not enjoy the right to use such bailed assets while they have bailee.

This article has been a guide to what bailment is, and its meaning. Here we discuss types and examples of bailment contracts and their features and essentials. You can learn more about finance from the following articles –

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Assignment of Contract

An agreement enforceable by law becomes a contract. A contract involves both rights and obligations because a contract is an agreement enforceable by law. An agreement involves promises from both sides, and thus, there is the creation of both rights and obligations. For instance, X promises to sell his car to Y, and Y promises to pay Rs. 5,00,000 for his car. This constitutes a valid contract between X and Y. Here, the right on the part of X is to get Rs. 5,00,000 as consideration for selling his car, and the obligation for X is to deliver the car to Y as consideration for Rs. 5,00,000 paid to X by Y for selling his car.

Assignment of contract refers to transferring contractual rights and liabilities under the contract to the third party with or without the other party’s concurrence. For instance, X owes Y Rs. 1,000, and Y owes Z the same amount. In this case, Y is under obligation to pay Rs. One thousand to Z and has the right to receive Rs. 1,000 from Z. In this case if Y asks Z to directly pay Rs. 1,000 to X, and if X accepts the same, there will be an assignment of Y’s right to Z. But, if in a similar situation, instead of transferring his ownership, Y would have transferred any of his obligations, then it would amount to novation. Section 37 of the Indian Contract Act, 1872, enables the parties to dispense the performance by way of the contract’s Assignment. Apart from conforming with the Indian Contract Act, 1872, there are exceptional circumstances where the contract assignment must be duly stamped in conformity with the provisions of the Indian Stamp Act, 1899.

The common law system did give effect to three kinds of transactions, viz., acknowledgment, novation, and power of attorney, which to some extent did work of an assignment. Under the Indian Contract Law, any form of contract can be assigned as long as consent is involved in the Assignment. The consent of the ‘promisee’ is necessary for assigning any obligation under the contract. There are three parties involved in contracts of Assignment, namely, the assignor, assignee, and obligor. The working and application of the contract assignment depend on a multiplicity of factors such as the contract’s language, applicability, availability of the assignment clause in the agreement, etc. There are contracts that contain a clause prohibiting Assignment, while other contracts require the consent of the other party to the Assignment.

But if a contract between two parties relies entirely on the’ promisor’s skill or expertise, then such a contract cannot be assigned under any circumstances. This is because the ‘promisee’ has entered into the contract based on the’ promisor’s skill or expertise. The case of Robinson v Davison is important case law in this regard . In this case, the defendant’s wife promised to play piano on a particular at a concert. She was unable to discharge her liability, that is, to play piano at the concert because of her illness. In this case, it was held that the contract was directly dependent on the good health and the personal skill of the defendant’s wife, and the illness of his wife discharged the contract. It was also stated that the defendant could not be made liable to pay compensation for the non-performance of the contract. As the contract was based on the ‘promisor’s skill in the above case law, the wife could not assign her right/obligation to any third party.

Case Study: Kapilaben & Ors. v Ashok Kumar Jayantilal Seth through POA Gopalbhai Manusudhan Case

Kapilaben & Ors. v Ashok Kumar Jayantilal Seth through POA Gopalbhai Manusudhan is a recent judgment delivered by the Supreme Court of India on November 25, 2019, concerning the Assignment of rights and Interests in a contract. In this judgment, the Supreme Court reaffirmed that a party to a contract could not assign its liabilities or obligations without the consent of the other party.

The facts of the case are: The appeals to the Supreme Court resulted from the Gujrat High Court’s decision that had allowed the appeals of the respondent against the trial court’s decision. The dispute, in this case, is related to a property owned by the appellants (Vendor). The appellant has had formulated an agreement to sell in favor of some of the respondents in 1986 regarding the above-mentioned property. The respondents, who were the original vendees, had paid a part of the consideration part. The Original Vendees, in 1987, assigned the former’s rights in favor of Respondent 1 and executed an agreement in favor of Respondent 1. This led to several disputes, and subsequently, Respondent 1 filed suits against the Original Vendees and the vendor demanding specific performance of the agreement executed in 1987. The Respondent’s suits were dismissed by the trial courts stating that the Original Vendees could not have assigned their outstanding obligation of paying Vendor the remaining money to Respondent 1 without the consent of the Vendor. On the other hand, Gujrat High Court reversed the decision of the trial court and declared the Assignment of rights in favor of Respondent 1 as valid.

The Supreme Court in its judgment reaffirmed the view of the trial courts and stated that: “ It is further relevant to note that under the 1987 agreements, payment of the outstanding consideration amount is to be made to the original vendees, not the Appellants, and possession/ownership of the suit property is to be handed over by the original vendees. The 1987 agreements nowhere provide for the discharge of the original vendees’ pending obligations towards the Appellants by Respondent Nos. 1. Hence, we are inclined to accept the Appellants’ argument that the 1987 agreements were not a case of Assignment but appear to be independent/sovereign agreements for sale which were contingent and dependent on the execution and implementation of the 1986 agreement. Therefore, the only way Respondent Nos. 1 can seek specific performance of the 1986 agreement against the Appellants is by proving the Appellants’ knowledge of and consent to transfer the original vendees’ rights and liabilities Respondent Nos. 1.”

From the above discussion, it is clear that the Assignment of contract refers to transferring contractual rights and liabilities under the contract to the third party with or without the other party’s concurrence. Section 37 of the Indian Contract Act, 1872, thatenables the parties to dispense is the performance by way of Assignment of the contract. Under the Indian Contract Law, any form of contract can be assigned as long as consent is involved in the Assignment. The consent of the ‘promisee’ is necessary for assigning any obligation under the contract. The working and application of the contract assignment depend on a multiplicity of factors such as the contract’s language, applicability, availability of the assignment clause in the agreement, etc. There are contracts that contain a clause prohibiting Assignment, while other contracts require the consent of the other party to the Assignment. The Assignment of obligations/liabilities is not possible in the case of contracts solely relying on the personal skill or expertise of the ‘promisor’.

The recent judgment of the Supreme Court in Kapilaben & Ors. v Ashok Kumar Jayantilal Seth, through POA Gopalbhai Manusudhan Case, also reaffirms that in case of transfer/assigning of outstanding obligations under the contract, the consent of the other party is a necessary condition to make the Assignment valid. Even though this judgment reaffirms the point upheld by law, it still suggests the parties to a contract consider the various complexities of contracts, the intent contract, the availability of the assignability clause in the written agreement, etc., before drafting a commercial contract.

References:

What is the Contract of Bailment and Types Involved in it?

Narendra Kumar | Updated: Mar 26, 2019 | Category: Latest News

Bailment mainly referred to as the Transfer of the Personal property to a person for the complete safekeeping purpose only. Normally, the Contract of bailment is a contractual relationship for a specific period of time. The person receiving property would have the possession as well as control on the property.

Further, in this article, we would be focusing more on Contract of Bailment.

What is the Contract of Bailment?

A bailment of the personal property mainly includes the Bailor (party having possession but not ownership) and the bailee (for a kind of particular purpose). Normally, the transfer would be made based on the way of expressing or implement of the contract to the highest extent so that the Property would be conveniently redelivered for bailor to complete purpose.

In fact, during this period of time, the person signed would be responsible for the whole property. However, the original owner for the property would mainly retain the ownership with the interest on time. For exploring these aspects, you could conveniently consider with Bailment to the extent.

Personal property in the bailment would be made in the custody of the person with payment of the money. Based on the custody of the property to the person would be bound with the due care for keeping as well as preserving property that is entrusted to the extent.

What are the Five Sorts of Bailments?

Normally, the Bailment is quite the unique contract that does not include with property for sale so that these contracts mainly include with the seller-financing or with making payment of property to the extent. With higher intent of the contract is to transfer then bailment mainly does not have any kind of transfer of the property bit with the temporary control of the property.

For conveniently enabling the bailment to exist, bailee needs to have the intention for possessing the property as well as actual possession of the property. Bailor mainly intends that your property would be returned within the speculated time or during the end of the time. Bailments are mainly divided into 5 sorts that include

What are the Purposes of Bailment?

Bailment is mainly created without any kind of actual written contract in most of the cases but the low also recognizes that the bailment also exists. The main purpose for the creation of the Bailment is

Mutual benefit for Bailor and Bailee – Easier to exchange of services between the parties so that when bailor leaves the property then bailee is to be repaired. Later bailor needs to repay for any repairs

What Are “Mutual Benefit Bailment” And “Unilateral Benefit Bailment”?

Normally, the bailment would be made by either the party or both the parties. unilateral benefit bailment and mutual benefit bailment are quite different from each other.

What are the Main 3 Elements of A Bailment?

According to the civil lawsuits mainly arise on the failure in bailee for the property of bailor. Bailee mainly has the duty to protect the property of the bailor and it mainly proves that this bailment of property existed. Bailee would be under the obligation for taking the most responsible care of the property that is placed under the possession. In fact, Bailment contracts are quite a common occurrence in modern-day life. Below are some of the most important elements that existed for the bailment:

Property needs to be delivered based on the Bailment with the best care to the bailee so that they may control the property for a few periods of time based on the agreement. Normally, Control of property also does not require the possession of the actual property in most of the cases however, it also mainly gives the complete access for the property like providing the keys for the secure storage unit and many others. Bailor would mainly give the bailee with complete access on taking custody of property to the extent with actual delivery.

Acceptance:

Bailee mainly knows to accept the possession or control of the property so that when no one is mainly unwitting to become the bailee then it is important to include the type of contract, acceptance, and knowledge. With the creation of bailment mainly implied or expresses the possession or control on property enabled by Bailee.

Consideration:

Unlike any other typical contract, both parties also need to receive the value of the property as one party needs to receive something that is mainly enabled with the value in bailment. When one party loans use of his car for a good friend then bailment is created in the process even though bailor mainly receives with nothing of value and this would be the benefit for bailee. With the exchange of something of value that needs to be present when bailment exists. Consideration of the contracts also gives the complete value for the property so that every action on the property would be regarded as the consideration.

What are the Rights And Responsibilities to Be Considered By Bailee?

Written Bailment Contract is made then it also mainly enabled with certain rights and duties mainly suitable for the parties. For some circumstances, if there is no written contracts are made then law mainly recognizes that the Bailee needs to exercise the duty care for protecting property in a more efficient manner. Therefore, it is considered as important purposes for tiered liability system based on the specific duties that mainly vary with varied bailment type.

When the Bailee has the duty to take care of the property then it could result in the use of a property that is agreed for bailment created. Bailee would be responsible for any kind of damages of property arises from any failure to the property to take care.

Termination:

Bailment will be ended when its purpose has been achieved so that both the parties have agreed to terminate the contract or if the property that is bailed is destroyed.

When you like to know more about the Bailment then you could contact the experts at Award-Winning Legal Technology and CPA firm called Enterslice . Therefore, it is more sufficient enough to prove that bailor suffers the loss of control on Bailee if given up value with the immediate right for controlling the property.

Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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Duties of a Bailee in a Contract of Bailment

In this blog post, Sakshi Bhatnagar of National Law University Odisha, Cuttack writes about the duties of bailee in a contract of bailment and the various obligations on bailee in case the goods are not returned.

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Introduction

Bailment is a common law term and involves the change of possession, i.e., delivery of goods or personal property by one person to another, but the ownership remains unchanged. Chapter IX of the Indian Contract Act, 1872 deals with the sections regarding the Contract of Bailment.

Section 148 to Section 171 lays down the definitions, nature of the contract of bailment as well as the rights, duties and liabilities of both the bailor and the bailee. Bailment, as per the Indian Contract Act , puts certain legal obligations on bailee at the time of redelivery or disposing of goods as directed by the bailor.

Different sections of this Chapter IX provide for different duties of bailee about the goods bailed to him. Duties of Bailee also depend on upon the very object of the contract of bailment.The obligations of bailee on the goods bailed to him depend on the terms and conditions mentioned in the contract he has entered into. In other words, his duty towards the goods arises at that time when the purpose for which goods are bailed is completed. Such duties, if are not taken care of, may make the bailee liable (according to the contract). Also, there are certain bailment contracts which exempt the bailee from any obligation or liability.

Duties of Bailee

Duty to take reasonable care [1] :.

The parties under the contract of bailment may insert any special provision increasing the responsibility of the bailee in respect of care to be taken against the goods bailed, but they cannot decrease the standard of care. Section 152 , in this regard clearly states that one has to fulfill the requirement of reasonable care mentioned in Section 151 even if the contract has any special provision. The standard of duty cannot be reduced, as it would be unfair if bailee is not held liable for his negligence of not taking standard care. Even where he has contracted himself out of liability due to his negligence, the bailee has still to show that he took as much care of the pledged goods as an ordinarily prudent man as required by Section 151 . [5]

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In Sheik Mohamed v. the British Indian Steam Navigation Co. Ltd. [6] The case, it was pointed out that a bailee’s liability cannot be reduced by any provision which is under the limit provided in Section 151 ; also it was held that any such contract which results in complete exclusion of bailee from liability in case of his negligent act is not valid.

In certain situations the standard of care of care is increased the i.e., special degree of care is required to be fulfilled. In Pitt Son and Badgery Ltd v Proulefco SA [7] , a wool broker sold wool but retained it in his store. The store was wooden, old and surrounded by a fence with gaps large enough for a person to enter. The wool was destroyed in the fire caused by an intruder who entered through the gaps, and set light to the store from outside. It was held that the broker, as a bailee, was responsible for the loss; he was in breach of duty because the fence was insufficiently secure to keep out intruders.

Duty not to make any unauthorized use:

In a contract of bailment, the bailor transfers the goods to the bailee for some purpose, and the bailee is responsible for using the goods bailed according to the purpose of bailment. Section 154 of Indian Contract Act imposes liability on bailee if goods are not used authoritatively. Using goods beyond the conditions of a contract would make the bailee liable to bailor if due to such unauthorized act the bailor has suffered any loss or if goods are damaged. This implies that the bailee is not entitled to use the goods for personal benefits (unless the bailment for his use) by doing an unauthorized act. Even if the goods bailed are for his personal use, he is not authorized to let the goods be used by another person. Nevertheless, if the situation requires, the bailee may use these goods for preservation. [8] But in the other circumstances, he is required to have express or implied consent of the bailor to use the goods against the conditions of bailment contract.

Duty not to mix or part with the goods:

The bailee has to take certainly reasonable care while dealing with the goods of the bailor. One such responsibility includes his duty not to mix the bailor’s goods with his own or part of the goods. According to Section 155 , if the bailee has mixed the goods with his goods and while doing so he had the prior consent of the bailor, then the bailor will have interest over the goods in proportion to the goods he has bailed. But this section specifically states that the bailee had the consent of bailor.

Section 156 and 157 speaks about the conditions wherein the bailor’s consent was not there while mixing the goods. In those situations wherein the goods are separable, the law imposes liability on the bailee for any loss or damage that the bailor might suffer due to such mixing. But if it is not possible to separate the goods, the bailor is entitled to claim reimbursement for the loss of goods.

Duty to return goods:

One of the essentials of a contract of bailment is that once the purpose for which goods are bailed is accomplished, the bailee has to return the goods back to the bailor or dispose of as per the direction of the bailor. Section 159 states that the bailor may ask for the return of loan at any point of time if the loan is provided gratuitously to him. And the bailee is under obligation to return so. However, he can claim compensation if he has suffered any loss from such act of bailor.

Section 165 says that in the cases involving more than one owner of the goods bailed, the bailee is under obligation to return it to any one of the owner or as per directions were given to him.

Obligations of Bailee if the Goods are not Returned

Duty to deliver increase or profit accrued from bailment:

Section 163 of ICA states that “in the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed.” This section provides that if there is any gain with regards to the goods bailed, then such gain must be handed over to bailor along with the goods and bailee is not entitled to keep it with him. But the bailor cannot claim profit or increase before the completion of the purpose of bailment or before the expiry of time of bailment contract.

The bailee has to perform according to the obligations laid down in the contract of bailment and as per the law of the land. He is being inconsistent or negligent while performing his obligation or duty would make him liable under various provisions of law. In each contract of law, he has a certain uniform or fixed obligations to comply with, and he cannot part with those basic obligations even if a contract does not provide for any such obligations. These obligations are the essence of bailment contract. The obligations might differ depending on the facts but there are certain duties which are implied, and reasonable care is to be taken by the bailee. The bailee’s responsibility towards the goods bailed can be increased by way of providing provisions in that regard but it cannot be lowered down, i.e., he cannot repudiate his responsibility.

[1] Section 151, Indian Contract Act 1872.

[2] Giblin v. McMullen, (1703) 2 Ld Raym 909.

[4] Lakhichand Ramchand v. G.I.P. Rly. Co., (1912) 14 Bom. LR 165.

[5] Central Bank of India v. Grains and Gunny Agencies, AIR 1989 MP 28.

[6] Sheikh Mohamed v. The British Indian Steam Navigation Co. Ltd., (1908) 32 Mad. 95

[7] Indian Airline Corpn. v. Madhuri Chowdhury, AIR 1965 Cal 252.

[8] Fothergill v. Monarch Airlines Ltd [1980] 2 All ER 696, p 702.

[9] Chaturgun v. Shahzady AIR 1930 Oudh 395.

[10] Pollock and Mulla Indian Contract and Specific Relief Acts, Ed. 13 th 2006, Section 160

[11] Isufalli v. Ibrahim, 23 Bom LR 403.

[12] Kush Kanta Barkakati v. Chandra Kanta Kakati AIR 1924 Cal 1056.

[13] GIP Rly v. Firm of Manikchand Premji, AIR 1931 Nag 29.

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CONTRACT OF BAILMENT

Table of Contents

The word ‘Bailment’ is derived from the French word ‘Bailer’ which means to deliver. The etymological meaning of bailment is “handing over” or “change of possession of goods”. In legal sense, it involves change of possession of goods from one person to another for some specific purpose.

Bailment is a delivery of goods on condition that the recipient shall ultimately restore them to the Bailor or dispose of them according to the direction of the Bailor.

ACCORDING TO SECTION 18 OF INDIAN CONTRACT ACT, 1872 “It is 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 called bailor and the person to whom they are delivered is called bailee”.

ACCORDING TO ENGLISH AUTHOR DAVID A.G. SARRE “Bailment is the delivery of goods by one person called the bailor to another, called the bailee on the conditions that same goods shall be redelivered by the bailee to or on the directions of the bailor”.

Thus, the contract of bailment is a contract between two persons under which one person called the bailor delivers some goods for some purpose to another, called the bailee on the condition that the same goods shall be returned by the bailee to the bailor or according to his order on the fulfillment of the stated purpose.

Example: If A gives his car to B his neighbor for 10 days, but at the same time he keeps one key with himself and during this period of 10 days he used to take the car. Now this will not be a case of bailment as A is keeping control over the property bailed.

ESSENTIAL FEATURES OF CONTRACT OF BAILMENT

A contract of bailment has the following essential features:

CONTRACT The first condition is that there must be a contract between the two parties for the delivery of goods. Such contract may be express or implied, written or oral.

DELIVERY OF GOODS This contract is for the delivery of some movable goods from one person (bailor) to another person (bailee) or to his authorized agent. If the goods are immovable the contract will not be a contract of bailment.

CHANGE OF POSSESSION The possession of goods must be affected by such contract. Mere custody without possession is not a contract of bailment.

PURPOSE OF DELIVERY The delivery of the goods is for temporary purposes. It may be for safe-custody, repair, carriage or for gratuitous use by the bailee.

NUMBER OF PARTIES There is two parties tinder such contract e.g., the bailor and bailee. The person delivering the goods is called the bailor and the person to whom the goods are bailed is called the bailee.

RIGHT OF OWNERSHIP In a contract of bailment, the right of ownership remains with an owner (bailor) and is not changed. If the ownership is transferred, the contract will be a contract of sale and is not of bailment.

CHANGE OF FORM If the goods bailed are altered in form by the bailee, such as cloth. is converted into a shirt still, the contract is one of bailment.

GOODS IN POSSESSION OF BAILEE The delivery of the goods is not essential if the goods are already in the possession of the person who enters into the contract as bailee.

REDELIVERY OF GOODS Under such contract, the goods are redelivered to the bailor or according to his directions upon the fulfillment of the purpose by the bailee.

RIGHT OF REWARD In a contract of bailment, both the parties bailor and the bailee can get a reward but it depends on the nature of the transaction.

KINDS OF BAILMENT

A contract of bailment may be of the following kinds:

BAILMENT FOR SAFE-CUSTODY When the bailor delivers his goods to the bailee only for keeping it. in his safe-custody, the bailment is said to be bailment for safe-custody. EXAMPLE: A delivers his camera to B to keep it in his safe-custody for six months. This will be the bailment for safe-custody.

BAILMENT FOR USE If the bailor delivers, the goods to the bailee to use it. The bailment will be the bailment for use. EXAMPLE : A delivers his bicycle to B to use it for two days. This will be the example of bailment for use.

BAILMENT FOR REWARD Where the bailment is for use or for sate-custody and the bailee or bailor can charge for his services, then it will be the case of bailment for EXAMPLE: A delivers his bicycle to B to use it for two days for Rs.50 daily. This will be the bailment for a reward because Bailor (A) will get a reward for the use of a bicycle.

GRATUITOUS BAILMENT Where the bailment is for safe-custody or for use and bailee does not charge anything, the bailment is a bailment for gratuitous. EXAMPLE : A delivers his bicycle to his friend B to use it for two days without reward. It will be the case of gratuitous bailment.

BAILMENT FOR LOST GOODS When a person finds out the lost goods of another has the same responsibilities as the bailee has against the goods the bailor. such implied bailment Will be the case of bailment of lost goods. Under such conditions, the bailee is entitled to retain the goods until he receives compensation for the trouble and expenses he has to bear in order to find but the owner of the lost goods. EXAMPLE: A found the lost horse B and redelivered it to B. It will be the bailment for lost goods.

BAILMENT FOR PLEDGE When any moveable goods are given as security for the debt, to creditor by the debtor, it will be bailment for pledge until the repayment. EXAMPLE: A gets a loan from B and hands over his B as security until the repayment of the loan. It will be the bailment for pledge.

RIGHTS AND DUTIES OF BAILOR AND BAILEE

The person delivering the goods is called the ‘Bailor’. He is a party to the contract of bailment.

DUTIES OF A BAILOR

1) TO PUT BAILEE INTO POSSESSION (SECTION 149) The delivery to be 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.

2) TO DISCLOSE MATERIAL FAULTS (SECTION 150) Section 150 of Indian Contract Act 1872 says that, The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risk; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults. Example: A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and injured. A is responsible to B for damage sustained.

3) TO PAY EXPENSES OF BAILMENT (SECTION.158) Section 158 of the Indian Contract Act says that, where, by the conditions of the bailment, the goods are to be kept or to be carried, or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailors shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment.

4) TO INDEMNIFY THE LOSS (SECTION 159) Indemnity means promise to make good the loss. According to Section 159 of the Indian Contract Act 1872 bailor has a duty to indemnify the loss suffered by the bailee under the contract.

5) TO PAY DAMAGES FOR NON DISCLOSURE (SECTION 150 ) Second part of Section 150 of the said Act says that, …..if bailor does not make disclosure to the bailee faults in the goods bailed, he is responsible for damage arising to the bailee directly from such faults. Example: A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and injured. A is responsible to B for damage sustained.

6) TO PAY DAMAGES FOR DEFECT IN BAILOR’S TITLE (SECTION 164) The bailor is responsible to the bailee for any loss which the bailee may sustain the reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions, respecting them.

RIGHTS OF A BAILOR

As such Indian Contract Act, 1872 does not provide for Rights of a Bailor. But Rights of a Bailor is same as Duties of the Bailee i.e. Rights of Bailor = Duties of Bailee. So the rights of bailor are:

ENFORCEMENT OF BAILEE’S DUTY

Since the bailor delivers goods to the bailee for some specific purpose, the former, especially in case of non-gratuitous bailment , has an elemental right to achieve that purpose or obtain the benefit (i.e., performance) through the latter.

For example , if X delivers a suit length to Y , his tailor, to stitch a suit for him, X (bailor) will see that the tailor does the needful in the desired manner.

RIGHT TO CLAIM DAMAGES (SECTION 151):

In all cases of bailment, the bailor has the right to claim for damages against the loss, if any, caused to the goods bailed due to the bailee’s negligence or misconduct.

RIGHT TO TERMINATION THE CONTRACT (SECTION 153)

If the Bailee does not comply with the terms of the contract and acts in a negligent manner in such case the bailor has the right to rescind the contract.

RIGHT TO CLAIM COMPENSATION

If the Bailee uses the goods for an unauthorized purpose or mixes the goods which cause loss of goods in such case bailor has the right to claim compensation.

A good example for this is this situation, A lets B use his car but with a condition that only B shall drive. B allows C , a member of his family, to drive the car. C rides with care, but the car meets with some accident. Now B is liable to compensate for the damages caused.

RIGHT TO DEMAND THE RETURN OF GOODS

It is the duty of the Bailee to return the goods and the bailor has the right to demand the same.

RIGHT TO DEMAND RETURN OF GOODS ALONG WITH ACCRETION TO, IF ANY

The bailor enjoys the exclusive right to have the goods bailed delivered back to him in safe and sound condition after the time of bailment has expired or the purpose behind the bailment has been achieved. Moreover, in the absence of any contrary term in the contract, the bailor is also entitled to any accretion to the goods bailed if it occurred while the goods were in the study of bailee.

For example, A leaves his brooding hen in the custody of B to be taken care of for a week. The hen has hatched the chicks. A is entitled not only to the hen but also to the chicks.

DUTIES OF BAILEE

Bailee has to fulfil several obligations as per Indian Contract Act, 1872. That is:

DUTY TO TAKE REASONABLE CARE (SECTION 151-152)

It is the duty of the Bailee to take care of goods as his own goods. He shall ensure all safety measures that are necessary to protect the goods. The standard of care should be such as taken care by a prudent man. The goods shall be taken care of equally whether they are gratuitous or non-gratuitous. The Bailee shall be held liable for payment of compensation if he fails to take due care. But if the Bailee has taken due care and instead of that the goods are damaged then in such a situation Bailee will not be liable to pay compensation. The Bailee is not liable for the loss of goods due to destruction by fire.

DUTY NOT TO MAKE UNAUTHORIZED USE OF THE GOODS (SECTION 153-154):

Bailee is duty bound to use the goods for a specific purpose only and not otherwise. If he uses the goods for any other purpose than what is agreed for then the bailor has the right to terminate such bailment or is entitled with compensation for damage caused due to unauthorized use.

DUTY NOT TO MIX BAILOR’S GOODS WITH HIS OWN GOODS (SECTION 155-157):

It is the duty of the Bailee not to mix bailor’s goods with his own. But if he wants to do the same then he shall seek consent from the bailor for mixing of goods. If the bailor agrees for the mixing of the goods then the interest in the mixed goods shall be shared in proportion. In case, Bailee without the consent of bailor mixes the goods with his own then two situations arise: goods can be separated and goods can’t be separated. In the former case the Bailee has to bear the cost of separation and in the latter case since there is the loss of the goods, therefore, bailor shall be entitled with damages of such loss.

DUTY TO RETURN THE GOODS ON THE FULFILMENT OF PURPOSE (SECTION 160-161):

Bailee is duty bound to return the goods once the purpose is achieved or on the expiry of the time period for which the goods were bailed. But if the Bailee makes default in returning the goods on proper time then he will be responsible with the loss, destruction or deterioration of the goods if any.

DUTY TO DELIVER TO THE BAILOR INCREASE OR PROFIT IF ANY ON THE GOODS BAILED (SECTION 163):

The Bailee has a duty to return the goods along with increase or profit subject to contract to the contrary. Accretion that has accrued from the bailed goods is the part of the bailed goods and therefore bailor has the right over such accretions if any. And such accretions shall be handed over to the bailor along with the goods bailed. For instance, A leaves a cow in the custody of B and cow gives birth to the calf. Then B is duty bound to hand over the bailed goods along with accretion to the bailor.

RIGHTS OF A BAILEE

RIGHT TO RECOVER EXPENSES (SECTION 158):

In the contract of Bailment, the Bailee incurs expenses to ensure the safety of goods. The Bailee has the right to recover such expenses from the bailor.

RIGHT TO REMUNERATION:

When the goods are bailed to the Bailee he is entitled to receive certain remuneration for services that he has rendered. But in case of gratuitous bailment, the Bailee is not awarded any remuneration.

RIGHT TO RECOVER COMPENSATION (SECTION 168):

At times a situation arises wherein bailor did not have the capacity to contract for bailment. Such a contract causing loss to the Bailee, therefore the Bailee has the right to recover such compensation from the bailor.

RIGHT TO LIEN (SECTION 170-171):

Bailee has the right over Lien. By this, we mean that if the bailor fails to make payment of remuneration or does not pay the amount due, the Bailee has the right to keep the goods bailed in his possession till the time debtor dues are cleared. Lien is of two types: particular lien and general lien.

In the case of Surya Investment Co. v. S.T.C, the court held that expenses incurred by Bailee during preservation of goods under lien shall be borne by bailor.

RIGHT TO SUIT AGAINST A WRONGDOER (SECTION 180):

After the goods have been bailed and any third party deprives the Bailee of use of such goods, then the Bailee or bailor can bring an action against the third party.

TERMINATION OF BAILMENT

A contract of bailment can be terminated by any of the following;

1. ACCOMPLISHMENT OF PURPOSE When the purpose for which goods were bailed” has been accomplished, the contract of bailment is terminated and goods are returned to the bailor.

2 . EXPIRY OF TIME When the goods are bailed for a fixed time, the contract of bailment is terminated at the expiry of the time fixed.

3. DEATH OF THE PARTY A gratuitous bailment is terminated by the death either of the bailor

4. BAILEE’S INCONSISTENT ACT A contract of bailment ‘is voidable (terminated) at the option of the bailee does any act with regard to the goods bailed’ with the conditions of the bailment.

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CIVIL AND MISDEMEANORS

What is a bailment agreement.

How to Record a Memorandum of Agreement to Property

A bailment agreement is an agreement where one person agrees to take physical possession of another person's property for safekeeping or other purpose, but does not take ownership of it, with the understanding it will be returned at a later date. For example, if you take your watch to a repair shop and leave it there for a few days, the shop takes physical possession of your watch in order to repair it but does not receive ownership.

Bailment Versus Other Agreements

A bailment is different than other similar exchanges, such as sales, leases or security agreements. In a sale, you would transfer physical possession and ownership; in a bailment, you do not transfer ownership. With a security agreement, you don't have to transfer either physical possession – though, in some cases, you can – or ownership, but you do give the secured party an ownership interest in your property.

Finally, in a lease, you often transfer physical possession for a limited period of time, and the lease creates a type of interest, called a leasehold interest, in the leased property. In contrast, the bailment agreement does not transfer any type of ownership or security interest in the property.

Purpose of a Bailment Agreement

In general, the purpose of a bailment agreement is to establish the relationship and responsibilities of the parties, both the person temporarily handing over possession of his property and the person receiving it. This includes why the property is being handed over and when it is to be returned.

What Can the Recipient Do With the Property

When another person takes physical possession of your property, he does not have any ownership rights to it and has no right to sell or trade it. However, sometimes this happens and if it does, you will not be able to reclaim your property. In the watch repair example, if an employee of the store accidentally sells your watch to a customer, the customer has a right to the watch and you cannot reclaim it. You can, however, receive reimbursement for the value of the watch from the store.

Getting Your Property Back

When you give your watch to the watch repair store, you expect to pick up your watch as soon as it is repaired. In fact, the store is legally obligated to return it as soon as it is repaired. If the store refuses to do so, it has stolen the watch.

If it is given or sold to a third party, not only can you collect the value of the property from the store, you may also be entitled to damages from the store for it violating the bailment agreement. This is because the store had a "duty of care," meaning it was required to take care of the watch and return it as soon as the purpose of the bailment agreement was fulfilled – when the watch was repaired.

Put the Agreement in Writing

Although the law protects bailment agreements even if the parties do not sign a written contract, it is often a good idea to put the agreement in writing. That way, you can define the length of the bailment and can include a damages section in case the agreement is violated.

The Constitution Guru has worked as a writer and editor for "BYU Law Review" and "BYU Journal of Public Law." He is an experienced attorney with a law degree and a B.A. degree in history with an emphasis on U.S. Constitutional history, both earned at Brigham Young University.

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Contract of Bailment and Rights and Duties of Bailer and Bailee
Contract of Bailment and Rights and Duties of Bailer and Bailee
Contract of bailment
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Bailment: Definition, How It Works, Types, and When It Ends
Bailments are legal courses of action independent of contract or tort. To create a bailment, the bailee must both intend to possess, and actually physically possess, the bailable chattel. 1 The...
Bailment
A bailment is a form of contractual relationship, even if no contract has been signed. The person receiving the property (the "bailee") has possession and control over the property for a specific period of time, during which he or she is responsible to take reasonable care of the property.
Bailment
Bailment is distinguished from a contract of sale or a gift of property, as it only involves the transfer of possession and not its ownership. To create a bailment, the bailee must both intend to possess, and actually physically possess, the bailable chattel.
Contract II Assignment
Contract II Assignment - Contract of Bailment and Partnership - Read online for free.
Bailment Agreement Sample Clauses
Sample 1. Bailment Agreement. Pledgor and Remington are parties to a Master Bailment Agreement, dated as of June 24, 1999 (the "Bailment Agreement"), pursuant to which Pledgor has agreed to deliver his shares of Common Stock to Remington, as bailee, for safekeeping on the terms and conditions set forth in the Bailment Agreement.
What is the Contract of Bailment?
Bailment as defined in section 148 of the Indian contract act 1872 is the delivery of goods by one person to another for some specific purpose, upon a contract that these goods are to be returned when the specific purpose is complete. For example, A delivering his car for Service at the service center is an example of bailment.
Contract of Bailment Assignment
Contract of Bailment Assignment | PDF | Negligence | Legal Liability 0 ratings 40 views 18 pages Contract of Bailment Assignment Uploaded by Barrister Fahad Sattar Korai Copyright: © All Rights Reserved Flag for inappropriate content of 18 Contract of Bailment & Pledge Submitted to; Sir, Dr. M. Sajjada Shamim Ahmed Submitted by; Fahad Sattar
Bailment
Assignment chapter introduction the concept of bailment has been firmly entrenched in contract law. it has been recorded as early as the seventeenth century in
20+ SAMPLE Bailment Agreement in PDF
The main objective of a bailment agreement is to determine both the person giving over his property temporarily and the individual receiving the property, the relationship and the obligations of the parties. This also includes why and when the property is to be surrendered. Make sure to choose a good template to use.
Contract of Bailment, Rights And Duties of Bailor and Bailee ...
The contracts of bailment come under a special class of contract and are dealt under Sections 148 to 181 of the Indian Contract Act, 1872. Though the Contract Act covers the general principles related to contracts of bailment but it does not deal with all types of bailment.
Assignment of Contract: What Is It? How It Works
An assignment of contract is a legal term that describes the process that occurs when an existing contract assignee wishes to transfer their contractual obligations to another party. When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.
(DOC) Contracts Project
The bailee knowingly accepts the personal property with the understanding that he owes a duty to return the property, or to dispose of it, as directed by the bailor. CREATION OF BAILMENT A bailment is created by an express or implied contract.
Contract of Bailment
Contract of Bailment It is one of the special contracts under the Indian Contract Act, 1872. It is provided under chapter IX starting from section 148 to 181 of the Act. Not only the Indian Contract Act but also some other Indian laws deal with types of Bailment, such as The Carriers Act, 1865, The Carriage Act of Goods by Sea Act, 1925, and the Railways Act, 1890 are few of them.
Bailment
Bailment It occurs when an item or items is transferred to another party to be hold temporarily. It is the act of placing property in the custody and control of another, usually by agreement in which the holder (bailee) is responsible for the safekeeping and return of the property.
The Essentials of a Bailment Agreement [Explained]
Bailment is the process of transferring personal property or assets into the temporary custody of another person. The custodian of the property is referred to as the bailee, and the person transferring the property is known as the bailor. According to the bailment agreement, the bailee is responsible for keeping the property safe but doesn't ...
Bailment (Meaning, Types)
Bailment is an agreement that could be oral or written mutually agreed upon between the person giving possession and the person taking possession, which might involve consideration. The bailor transfers the possession to the bailee for any mutually agreed purpose. The bailee fulfills the terms; in the end, the bailee transfers the possession of ...
Assignment of Contract
There are three parties involved in contracts of Assignment, namely, the assignor, assignee, and obligor. The working and application of the contract assignment depend on a multiplicity of factors such as the contract's language, applicability, availability of the assignment clause in the agreement, etc.
What is the Contract of Bailment and Types Involved in it?
Normally, the Contract of bailment is a contractual relationship for a specific period of time. The person receiving property would have the possession as well as control on the property. Further, in this article, we would be focusing more on Contract of Bailment. What is the Contract of Bailment?
Duties of a Bailee in a Contract of Bailment
In a contract of bailment, the bailor transfers the goods to the bailee for some purpose, and the bailee is responsible for using the goods bailed according to the purpose of bailment. Section 154 of Indian Contract Act imposes liability on bailee if goods are not used authoritatively.
Contract of Bailment
In a contract of bailment, the right of ownership remains with an owner (bailor) and is not changed. If the ownership is transferred, the contract will be a contract of sale and is not of bailment. CHANGE OF FORM If the goods bailed are altered in form by the bailee, such as cloth. is converted into a shirt still, the contract is one of bailment.
What is a Bailment Agreement?
A bailment agreement is an agreement where one person agrees to take physical possession of another person's property for safekeeping or other purpose, but does not take ownership of it, with the understanding it will be returned at a later date. For example, if you take your watch to a repair shop and leave it there for a few days, the shop ...
DOC California State University, Sacramento
College of Business Administration. OBE 118. Bailments. If you borrow your friend's clothes, books, or sports equipment it is a bailment. The law of bailments at some time affects all of us.