Tax and Legal Aspects of Business

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  • Topic: Trade Practices Act 1974, Bailment, Possession
  • Pages : 16 (4526 words )
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  • Published : March 13, 2011
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The Tax & Legal Aspects of Business
Project on Legal Aspects Of Business

Name :Rimoni Mehta
Roll No. :84
M.M.S:Batch “B”
Part I
Bailment & Pledge
Bailment - Bailment is another type of special contract. Since it is a ‘contract’, naturally all basic requirements of contract are applicable. - - Bailment means act of delivering goods for a specified purpose on trust. The goods are to be returned after the purpose is over. In bailment, possession of goods is transferred, but property i.e. ownership is not transferred. 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 person delivering them. The person delivering the goods is called the “bailor”. The person to whom they are delivered is called the “bailee”. Explanation : If a person already in possession of the goods of another, contracts to hold them as a bailee, he thereby becomes the bailee, and owner becomes the bailor, of such goods, although they may not have been delivered by way of bailment. [section 148].

Essentials and Legal Rules as to Bailment:

Contract: A bailment is usually created by agreement b/w the bailer & baileeDelivery of Goods: In bailment, the possession of goods must be delivered by the bailer to the bailee.

No Transfer of Ownership: In bailment, possession is transferred from one person to another but ownership of goods remains with the bailer.
Delivery of Goods for Some Purpose: The delivery of goods must be for some specific performance.
Return of Specific Goods: Goods are delivered to the bailee with the condition that the same goods will be returned to the bailer after the accomplishment of purpose.
Movable Goods: In bailment, the goods bailed must be movable.
Deposit of Money Into Bank – It is Bailment: Deposit of money into bank by a customer is not a contract of bailment because the money deposited is not returned in identical coins and notes deposits.

Classification of Bailment: On the basis of benefit

On the basis of Rewards:

Gratituous: Where neither the bailer nor the bailee get any remuneration, then, it gratuitous.
Non-Gratituous: When either the bailer or bailee get remuneration, then it is known as non-gratuitous bailment.
Right of Bailer:

Right of Termination: Bailer has right to terminate the contrite of bailment, if the bailee does any inconsistent act with regards to goods.
Right to Demand Return of Goods: Any time in case of gratuitous bailment. The bailer can demand back goods bailed at any time even if he had lend it for a specific goods. Period or for a specified purpose.

Enforcement of Rights: The duties of bailee are the rights of bailer & bailer can enforce those rights by filing a suit against bailee.

Duties of Bailer:

Duty to disclose known defects: A bailer is bound to disclose all the defects relating to goods of which he is known.
Duty to Bear Extraordinary expenses: Where the bailment is gratuitous & the bailee is not to receive any remuneration, the bailer shall pay bailee all the necessary expenses.
Bear Risk for Loss: Bailer is to bear risk of loss or destruction of the thing bailed if the bailee had taken prudent care of the goods.
Rights of Bailee:

Right to Interplead: If the person other than bailer claims the goods, bailee may apply to court to stop the delivery.
Right Against 3rd Party: If a 3rd person wrongfully deprive bailee to use the goods or cause any injury, then bailee is entitled to such remedies which are available to real owner.
Right of Particular Lien: When the bailee has rendered some services or skills on the good he had right of particular lien unless he is paid.
Right of General Lien: Banker, factors, attorney of High Court, policy broker will be...
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