Bailment and Pledge - Law

Topics: Contract, Bailment, Possession Pages: 14 (4113 words) Published: January 31, 2013

Submitted by:

Konark Karkar
Ambalika Raha
Hilesha Noronha
Rohit Changrani
IBS Mumbai Batch-2014


Definition of Bailment

“A bailment 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 persons delivering them” Section 14.

The person delivering the goods it called the Bailor. The person to whom they are delivered is called the Bailee. The transaction is called Bailment.

(i) P lends his book to Q.

(ii) P delivers a pen to Q for repair.

(iii) P gives Q his watch as security for a loan.

In all these cases P is the bailor and Q is the bailee.

Requisites of Bailment

1. Delivery: It is delivery of goods by one person to another.

2. Purpose: The goods are delivered for some purpose.

3. Return: It is agreed, that when the purpose is accomplished the goods are to be Returned or otherwise disposed of according to the direction of the bailor.

4. Contract: Bailment arises from express or implied contract. (in case of finder of Goods, bailment arises by implication tit’ law.

5. Ownership: In bailment the bailor continues to be the owner of the goods. Therefore, bailment does not cause any change of ownership.

6. Movable goods: Bailment is concerned with only mov­able goods. Money is not included in the category in movable goods. A deposit of money is not bailment.

Deposit of money in a bank does not .constitute bailment. 1Iir relationship between depositor and the bank is that of borrower and the lender.

7. Possession: A person already in possession of the goods may become a bailee by a subsequent agreement, express. or implied.

Example :
X is a seller of motor can, having several cars in his possession. Y buys a car and leaves the car in the possession of X After the . sale is complete, X becomes a bailee, although originally he was the owner.

Delivery to bailee how made

“The delivery of-goods 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.-Sec. 149.

Different kinds of Bailment

(1) Gratuitous Bailment and

(2) Bailment for Reward.

A gratuitous bailment is one in which neither the bailor, nor the bailee is entitled to any remuneration, e.g., loan of an article gratis ; safe custody without charge, etc.

A bailment for reward is one where either the bailor or the bailee is entitled to a remuneration e.g., a motor car let out for hire ; goods given to a carrier for carriage at a price ; articles given to a person for being repaired for a remuneration ; pawn, etc.

Rights of Bailor

1. Rights of taking back the goods bailed:
The bailor has right to take back the goods bailed as soon as the purpose of bailment is completed. If the bailee defaults in so returning, the bailor has right to receive compensation. 2. Right in case of unauthorized use of goods:

The bailor is entitled to terminate the contract of bailment if the bailee makes the unauthorized use of the goods bailed. 3. Right to goods bailed before stated period:
The bailor may get back his goods before the time stated in the contract of bailment with the consent of the bailee. 4. Right to Dissolution of contract:
The bailor may dissolve the contract if the conditions of bailment are disobeyed by the bailee. 5. Right to Gratuitous goods:
The bailor has right it terminate the contract of gratuitous bailment at any time even before the specified time, subject to the limitation that where such a termination of bailment causes loss in excess of benefit, the bailor...
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