This article has been written by Sulagna Talukdar from Shyambazar Law College, University of Calcutta

Bailment

In simple terms, bailment involves the temporary transfer of goods for safekeeping or repair .In legal term referring to the transfer of possession of a good. This kind of transfer generally occurs from the bailor to the bailee. The bailee must return the good after the agreed purpose is fulfilled. During the bailment, the bailee cannot use the good for any other purpose. The risk of loss generally falls upon the bailee.^[1]

The word bailment is derived from the French word ‘baillier’ which means ‘to deliver’. According to Section 148, a “bailment “ is 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 off According to the directions of the person delivering them.

Explanation:

 If a person already in possession of the goods of another contracts to hold them as bailee and the owner becomes the bailor of such goods, although they may have been delivered by the way of Bailment. Hence,

– The person delivering the goods is called the ‘bailor’.

– The person to whom the goods are delivered is called the ‘bailee’.

EXAMPLES OF BAILMENT:

1. Ram is going out of station delivers his dog to shyam for proper care.
2. Amit lends his horse to sunil for his riding only without any charge.
3. Anil hires a motor cycle from rahul for riding.
4. Prateek delivers his TV for repairs to an electronics repairman.
5. Leaving your owned property in someone else’s possession.

Features of Bailment

The following are the essential features of bailment:

•Transfer of Possession: In bailment, there is a transfer of possession of a good from the bailor to the bailee.

•Purpose: The purpose of bailment can be for safekeeping, repair, or use of the good.

•Return of Good: The bailee must return the good after the agreed purpose is fulfilled.

•Limited Use: The bailee cannot use the good for any purpose other than the agreed one.

•Risk of Loss: The risk of loss generally falls on the bailee.

•Two Parties Involved: Bailment involves two parties – the bailor (owner of the good) and the bailee (the one who temporarily possesses the good).

Bailor: The bailor is the person who owns the good and transfers its possession to the bailee. The bailor does this for a specific purpose, such as safekeeping, repair, or use of the good.

Bailee: The bailee is the person who receives the good from the bailor. The bailee holds the good for a specific purpose agreed upon with the bailor. After fulfilling this purpose, the bailee must return the good to the bailor. The bailee cannot use the good for any other purpose and generally bears the risk of loss

Types of Bailment

Bailment can be classified on following 2 basis:

ON THE BASIS OF BENEFIT TO THE PARTIES:

FOR THE EXCLUSIVE OF THE BAILOR:

For eg: Leaving a pet with neighbor when we are out of the town is a bailment for the exclusive benefits of ours that somebody is taking care of our pet

FOR THE EXCLUSIVE OF THE BAILEE:

For eg: Your friend borrow your bike for some specific purpose, this bailment is from your side(as bailor) for the exclusive benefit of your friend (as bailee).

FOR THE MUTUAL BENEFIT OF BOTH:

For eg: Giving a bike for repair to mechanic in which the consideration passes between the bailor and the bailee.

ON THE BASIS OF REMUNERATION:

Bailments may also be classified into:

GRATUITOUS BAILMENT:

It is bailment where no consideration passes between the bailor and the bailee.eg. where you lend your book to a friend free of charge.

NON- GRATUITOUS BAILMENT:

It is bailment where no consideration passes between the bailor and the bailee. Eg: where you run a library by charging a fee. Someone (may be your friend) get issued some books and he will pay the charges.

UNDERSTANDING BAILMENT

The temporary placement of control over, or possession of Personal Property by one person, the bailor, into the hands of another, the bailee, for a designated purpose upon which the parties have agreed.The term bailment is derived from the French bailor, “to deliver.” It is generally considered to be a contractual relationship since the bailor and bailee, either expressly or impliedly, bind themselves to act according to particular terms.

The bailee receives only control or possession of the property while the bailor retains the ownership interests in it. During the specific period a bailment exists, the balee’s interest in the property is superior to that of all others, including the bailor,

Unless the bailee violates some term of the agreement. Once the purpose for which the property has been delivered has been accomplished, the property will be returned to the bailor or otherwise disposed of pursuant to the bailor’s directions.

A BAILMENT IS NOT THE SAME AS A SALE

SALE is an intentional transfer of ownership of personal property in exchange for something of value.

A bailment involves only a transfer of possession or custody, not of ownership. A rental or lease of personal property might be a bailment, depending upon the agreement of the parties. A bailment is created when a parking garage attendant, the bailee, is given the keys to a motor vehicle by its owner, the bailor. The owner, in addition to renting the space, has transferred possession and control of the vehicle by relinquishing its keys to the attendant. If the keys were not made available and the vehicle was locked, the arrangement would be strictly a rental or lease, since there was no transfer of possession

RIGHTS OF BAILOR:-

Enforcement of rights:

The bailor can enforce by suit all the liabilities or duties of the bailee, as his rights.

Avoidance of contract:

The bailor can terminate the bailment if the bailee does, with regard to the goods bailed, any act which is inconsistent with the terms of the bailment (Section 153).

Return of goods lent gratuitously:

When the goods are lent gratuitously. The bailor can demand their return whenever he pleases even though he lent them for a specified time or purpose. But if the bailee suffers any loss exceeding the benefit actually derived by him from the use of such goods because of premature return of goods, the bailor shall have to indemnify the bailee(Section 159).

Compensation from a wrong-doer:

If a third person wrongfully deprives the bailee of the use of possession of the goods bailed, or does

Them any injury, the bailor or the bailee may bring a suit against the third person for such deprivation of injury (Section 180).

RIGHTS OF BAILEE:

The duties of the bailor are the rights of bailee. As such, the bailee can, by suit, enforce the duties of the bailor.

The other rights of the bailee are as follows:

Delivery of Goods to one of Several Joint Bailor’s of Goods:

If several joint owners of goods bail them, the bailee mat deliver them back to, or according to the directions of, one joint owner without the consent of all, in the absence of the agreement to the contrary (Section 165).

Delivery of Goods to Bailor without Title

If the bailor has no title to the goods, and the bailee, in good Faith, delivers them back to, or according to the directions of, the bailor. The bailee is not responsible to the owner is respect of such delivery (Section 166).

Right to Apply to Court to Stop Delivery:

If a person, other than the bailor, claims goods bailed, the bailee may apply to the court to stop the delivery of the goods to the bailor, and to decide the title to the goods (Section 167).

Right of Against Trespassers:

If the third person wrongfully deprives the bailee of the use or the profession of the goods bailed to him, he has the right to bring an action against that party. The bailor can also, bring a suit in respect of the goods bailed (Section 180).

Bailee’s lien:

Where the lawful charges of the bailee in respect of the goods bailed are not paid, he may retain the goods. This right of the bailee to retain the goods is known as ‘particular lien’.

Pledge

Pledge is a legal term that refers to the transfer of a good’s possession to secure a debt. The pledgor gives the good to the pledgee. The pledgee holds the good until the debtor repays the debt. If the debtor fails to repay, the pledgee has the right to sell the good. The pledgor bears the risk of loss. This process involves three parties: the pledgor, the pledgee, and the debtor.

Features of Pledge

A pledge has the following features:

•Transfer of Possession: In a pledge, the pledgor transfers the possession of a good to the pledgee.^[2]

•Purpose: The primary purpose of a pledge is to secure a debt or obligation.

•Return of Good: The pledgee returns the good to the pledgor once the debtor repays the debt.

•Right to Sell: If the debtor fails to repay the debt, the pledgee has the right to sell the good.

•Risk of Loss: Loss risk in a pledge falls on the pledgor.

•Three Parties Involved: A pledge involves three parties – the pledgor, the pledgee and the debtor.

Pledgor: The pledgor is the person who owns the good and transfers its possession to the pledgee. The pledgor uses the good as security for a debt or obligation.

Pledgee: The pledgee is the person who receives the good from the pledgor. The pledgee holds the good until the debtor repays the debt. If the debtor fails to repay, the pledgee has the right to sell the good.

Debtor: The debtor is the person who owes the debt or obligation. The debtor’s repayment of the debt leads to the return of the good from the pledgee to the pledgor. If the debtor fails to repay, the good may be sold by the pledgee.

Types of Pledge

The following are the different types of pledges:

Pawn: This is a type of pledge where the borrower (pawnor) gives an asset to the lender (pawnee) as security for a loan.

Hypothecation: In this type of pledge, the borrower retains possession of the asset but gives the lender the right to sell the asset if the borrower defaults on the loan.

Lien: This is a type of pledge where the lender has the right to retain possession of the asset until the borrower repays the loan.

The Key Differences Between Bailment and Pledge:

•The term ‘Bailment’ is defined under section 148 of the Indian Contract Act, 1872 whereas the word ‘Pledge’ is defined under section 172 of the Indian Contract Act, 1872

•The term Bailment is derived from the French word ‘Bailor’, which means ‘to deliver. It means possession voluntarily from one person to another whereas Pledge is a special kind of bailment. If the goods are bailed as a security for payment of a debt or performance of a promise, it is called Pledge.

•Transfer of goods from one person to another for a specific purpose is known as the bailment on the other hand Transfer of goods from one person to another as security for repayment of debt is known as the pledge

•The person who delivers the bailed goods is known as Bailor and the person receiving such goods is known as Bailee whereas the person who delivers the pledged goods is known as Pledger or Pawnor and the person receiving such goods is known as Pledgee or Pawnee^[3]

•Bailment can be for many reasons ranging for reward to gratuitous but a pledge is bailment done for a specific type of purpose, which is to secure a loan or performance of a promise.

• In Bailment, consideration may or may not be present but consideration is always there in Pledge.

•The bailee only get a right of lien over the goods but a pawnee gets a right of retainer and a special interest in the goods, which is more that just the lien.

•The bailee is not responsible for the loss, destruction, or deterioration if he uses the goods with reasonable care whereas The pawnee is absolutely liable for the upkeep of the goods.

•The Bailee does not get a right to sell the goods but a pawnee has a right to sell the goods in case of default.

Similarities

In both the cases, only movable property is delivered to the Bailee/Pawnee

In both cases, bailee/pawnee is required to return the goods to bailor/pawnor.

In both cases, each party enters into an agreement

Conclusion

We all have no idea, when we enter into these type of contract in our life especially the contract of bailment because all of us has left our car or motorcycles in the service center for repairs, it is bailment.

The pledge has a limited scope as compared to bailment; many businessmen take a loan from the financial institution by pledging their stock as security. In short, we can say that every pledge is a bailment, but every bailment is not a pledge. So, both of them are very important at their places and we must know their differences.

References

1. Adam Hayes, Bailment: Definition, How It Works, Types, and When It End, Investopedia, (13^th Dec, 2023, 9:00pm) ↑
2. P.C. Markanda, The Law of Contract, 3^rd ed., 2013, vol.2, p.1609 ↑
3. LawBhoomi, https://lawbhoomi.com/ , (14^th Dec) ↑