Essentials of Bailment

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Abstract

A bailment is an act which is done by everyone in their day to day lives. This act of bailment can be seen in the case of giving clothes at laundry, service of vehicle and so on. This article explains about the meaning and essential elements of bailment.

Introduction

Every person has an experience of giving their personal property to someone else in order to gain something or to fulfill some specific purpose. For example, A gives his car for service to B and the purpose of giving the car is to check whether the car is in good condition or not. This process is known as Bailment. The term ‘Bailment’ is derived from a French word, i.e., “bailor” which means “to deliver”[1]. The term bailment is defined in Section 148 of Indian Contract Act of 1872 as, “the delivery of goods by one person to another for some specific purpose, upon a contract that these goods to be return when that specific purpose is fulfilled.”[2]  In simple words, it is a legal relationship between two parties where one party transferred the physical possession of his goods to another person in order to fulfill some specific purpose, and when the purpose is fulfilled, the person gives back the property to the real owner. The person who is the real owner of the property and gives the possession of his property to another is known as Bailor. And the person to whom the possession is transferred is known as the Bailee, and the property or goods bailed is known as the Bailed property.  Pointing out the above example, in which A is the bailor who is the real owner of the car and B is the bailee who gets the possession of the car and the car is known as the bailed property.

After understanding the basic concept of bailment, now it is important to understand the elements of bailment.

Elements of Bailment

There are some important elements which need to be followed when it comes to a valid contract of bailment. These elements are discussed below:

  • Contract between the parties
  • Delivery of Possession
  • Specific purpose
  • Ownership not to be transferred to Bailee
  • Bailment can only be done for movable goods
  • Return of the Goods after the purpose gets complete
Contract between the parties

The main element of a bailment is a valid contract. There must be a contract between the bailor and the bailee for the purpose of transfer of goods and its return. The contract can be expressed or implied, but if there is no contract, then there is no bailment. But there are some exceptions like when the goods are lost. If the goods are lost and someone has found it, then that person automatically becomes the bailee without being in any contract. He has all the rights and responsibilities just as a bailee has. In case of R. V. Macdonald,[3] it was observed that the bailment could exist, even without the existence of the contract.

Delivery of possession

Delivery of possession of goods is one of the basic and important element of bailment. It is necessary to give the possession of goods to another person in order to make a valid contract of bailment. It can be said that a bailment involves a change in possession. But there is one more condition that the delivery of goods should be of the temporary period. There can be no bailment if the goods are permanently delivered to the second party.

In the contract of bailment, the possession is of two kinds:

  1. Actual Delivery: When the goods are physically handed over by the bailor to the bailee in order to fulfill a particular purpose. For example, A delivers his car to B’s workshop for repair.
  2. Constructive Delivery: Where the delivery is made, by doing anything that has the effect of putting the goods in the possession of the bailee or any person has an authority to hold these goods on the behalf of bailor. For example, delivery of the key of a car at a workshop for the purpose of repairing of that car.

It is also to be noted that a custody of goods without any possession of the owner, doesn’t create a legal relation between a bailor and a Bailee. For example, if A forgets his diamond ring in a Goldsmith’s shop, then in this case there is no contract of bailment between A and the goldsmith and thus, the goldsmith is not bound to take care of the ring. Similarly, in case of Kaliaperumal Pillai V. Visalakshmi,[4] the petitioner had handed over some of her jewelry to a goldsmith for the purpose of making new jewels, and she used to take back the half-made jewelry every evening in order to keep them safe in her own box. In this case, the contract of bailment got over every evening as soon as she took the half-made jewels and took it in her possession. The Madras High Court held in this case, that she did not have any action against the goldsmith, because the jewels were lost at the time when it was in the possession of the lady and that time, there was no contract between the lady and the goldsmith. Thus, it can be said that bailment involves a change of possession.

Specific Purpose

The contract of bailment is totally based on the purpose, which the bailee needs to fulfill at the given time period. It is the duty of the bailee to fulfill the specific purpose and returned the goods to the bailor. In case of Raman Ezhathass V. V Devassi,[5] it was held that the bailee has no right to return the goods to bailor before the expiry of the time given or before the accomplishment of the specific purpose.

Ownership is not transferred to Bailee

It is a fundamental principle that the goods should temporarily transfer to the bailee. In other words, the ownership should not be transferred to the bailee. The difference between possession and ownership of the bailed goods as the fundamental principle as to why the goods must be returned back to the bailor is explained by Chitty on contracts.[6] He also explained that, “under a contract of bailment, the possession of the goods stands for temporary transfer and not the permanent ownership and therefore, no ownership means that the bailee has no right to keep the goods even after the expiration of the bailment contract.”[7]

Bailment can only be done for movable goods and not for immovable goods

It is to be noted that the contract of bailment is done for the movable goods only and not for immovable goods. It involves all types of movable goods, except money, because money returned by the bailee would not be same identical notes and it is important to deliver the same goods to the bailor.

Return of the goods after the purpose is complete

It is the primary duty of the Bailee the return the goods to the bailor, when the purpose is fulfilled. Section 160 of the Indian Contract Act of 1872[8] defines the duty of a Bailee to return the bailed goods. The liability of the bailee doesn’t exist just to return the goods to the bailor, but also it is the duty of the bailee to return the goods according to the directions of the bailor. And the obligations on the part of the bailee if the goods are not returned on time is defined in Section 161 of the Indian Contract Act.[9] In case of Chaturgun V. Shahzady,[10] the court held that there is an implied contract of bailment to return the articles at a reasonable time after the purpose is accomplished, if no time is mentioned in the contract for return.

Conclusion

After analyzing the basic understanding of bailment and its elements, it can be clearly seen that the concept of bailment involves handing over the goods by one person to another for some specific purpose, and when the purpose gets completed, the goods shall to be returned to the real owner of the goods i.e., to bailor. In other words, it is the change in possession of goods, not the permanent transfer of goods to another person. Some of the important elements of a valid contract of bailment are: Contract between the parties, delivery of possession, contract for movable goods only, specific purpose, return of goods and so on.


[1] https://egyankosh.ac.in/bitstream/123456789/13397/1/unit-10.pdf

[2] Indian Contract Act, 1872, § 148

[3] R. V. Macdonald, 2014 SCC 3

[4] AIR 1938 Mad 32 (India)

[5] AIR 1958 Ker 380 (India)

[6] Chitty on Contracts, Specific Contracts, p. 33-010 (13th Ed.)

[7] Pollock and Mulla, Indian Contract and Specific Relief Acts, Vol. II, p. 1969 (12th Ed.).

[8] Indian Contract Act, 1872, §160

[9] Indian Contract Act, 1872,  § 161

[10] AIR 1930 Oudh 395 (India)

Written By

Chesta Bamel

Law Student, Lloyd Law College

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