BAILMENT – GRATUTIOUS & NON-GRATUTIOUS BAILMENT
According to section 148 of the act
Bailment is the delivery of products by one individual to another for a particular purpose, with the agreement that when the purpose is fulfilled, the goods will be returned or disposed of according with instructions of the person who delivered them.
The person who is delivering the goods is called the “The Bailor” and to whom the goods are to be delivered or is delivered is called the “The Bailee”
Illustration 1: A entrusted the repair of his washing machine to B, a mechanic. This is a bailment contract between A and B.
Illustration 2: A offers B the use of his car. This is a bailment contract between A and B.
Illustration 3: A offers his book to B with the purpose of reading it over a night.
A bailment contract is also formed when a person gives gold to a goldsmith for the idea of developing ornaments.
Requisites of a Bailment
Contract
Bailment has always been premised onto a contract. A contract, on the other hand, can be "Express" or "Implied."
For example, A provided his car to B, a mechanic, to be repaired. There is an express bailment contract between A and B in this case. It also might arise without a contract in exceptional circumstances, i.e., it may be implied by law.
Delivery of Possession of Goods
In a bailment contract, the delivery of possession of goods is a requirement. There would be no contract of bailment if the bailee does not receive possession of the goods. It could be either true or false. Actual delivery can be accomplished by delivering goods to the bailee. Constructive transfer can be accomplished by doing something that puts the goods in the hands of the intended bailee, or any individual permitted to hold them on his behalf.
Illustration 1: A who'd been carrying goods on behalf of B, appears to agree to hold them on behalf of C, there seems to be constructive transmission of possession.
Particular Purpose
The commodities should be delivered by the bailor to the bailee for some particular purpose, according to Sec. 148 of the Indian Contract Act 1872, which defines the term bailment specifically. As a result, there must be a reason for delivering the goods to the bailee.
Illustration, A delivered his furniture to B, a carpenter, for repair. A and B have a bailment agreement in place.
Return of the Specific Goods
Goods are delivered with the understanding that they will be returned in kind. The bailee is required to return the goods in their original form or dispose of them according to the bailor's instructions once the purpose of the bailment contract has been fulfilled. Goods, on the other hand, can be returned in their original or altered state.
Illustration, delivering a piece of clothing to a tailor to be made into a coat, or delivering furniture to a carpenter to be repaired and polished, are examples of deliveries.
How does the Bailment arise ?
The moot point would be whether bailment emerges mostly out of contract or can be tangential by inference of laws and facts. In the case of Ram Gulam v. Govt. of U.P. the court held that the bailee's responsibility is a binding contract that flows from the Bailment Contract, and it cannot arise without the presence of the Contract. The plaintiff had not transmitted possession of the ornaments to the government, according to the court. As a result. The bailee has no jurisdiction over the government. As a result, the plaintiff is not entitled to any compensation from the government.
In the case of L.M. Co-Operative Bank v. Prabhudas Hathibhai, nevertheless, the court reached a different conclusion. In this case, X has pledged some tobacco packets that are his personal property. The packages, on the other hand, have remained in X's go-down. The plaintiff bank, on the other hand, kept the keys. The tobacco packages were affixed by the Collector due to X's non-payment of some income-tax dues, even though they allowed the packets to be kept within the same go-down. They did, however, hand over the keys to the cops. There were heavy rains, and the go-ceiling down's dripped, causing damage to the packages stored there. The court noted that, while X's belongings were not in the government's possession as per the contract's bailment, the government had ventured into the shoes of the bailee.
Similarly, in State of Gujarat v. Memon Mahomed, the court stated that the state government was in the situation of a bailee, as the state had an obligation to return the respondent's seized belongings in the same condition in which they were seized. “Bailment is dealt with through the Contract Act only in cases where it arises from a contract,” the court continued, “but it is not accurate to say that there could be a bailment without even an enforceable contract.” In Smt. Basavva Kom Dyamangouda vs the State of Mysore And Anr, the apex court held that the state is liable for the damages caused to the Appellant because the property was stolen from their possession and they were unable to show that they took reasonable care.
In “Smt. Basavva Kom Dyamangouda vs the State of Mysore And Anr”, the apex court held that the state is liable for the damages caused to the Appellant because the property was stolen from their custody and they were unable to show that they took reasonable care.
The Law Commission of India looked into this issue because of the disparity in opinions among the courts. In addition, the 13th Law Commission Report made the following recommendation: "In our opinion, the current definition of the bailment should not be changed." However, a separate section should indeed be provided for the case of what has been characterized as a quasi-contract of bailment, stating that the bailor and Bailee in such cases must, to the extent possible, perform the very same duties as if they had been bailors and Bailees under contract express or implied as provided in Section 148.”
Furthermore, the American and English positions are identical to the Law Commission's recommendation. In “R v Macdonald”, Lord Coleridge, C.J. ascertained that bailment could exist even if the contract did not.
CONSIDERATION IN CONTRACT OF BAILMENT
As previously stated, the evaluation in a bailment contract is usually in the form of monetary payment by either the bailor or the bailee. For instance, A gave his television to B, a mechanic, for repair, and A checked his luggage into a cloakroom at the railway station. The bailor is required to pay the cash as consideration for the contract.
On the other side, A takes furniture on hire. The bailee is required to pay monetary compensation in this case.
The harm to the bailor in relinquishing possession of the goods is sufficient consideration to support the bailee's promise to return them. As a result, even in a gratuitous bailment, the bailee is bound to return the goods bailed.
Gratuitous Bailment
Gratuitous bailment is the bailment of assets to a bailee for no incentive, and for the property to be restored upon on the demand to the bailor.
Bailment for the safe - keeping of goods, delivery of the products for work to be done, and procurement of product for a loan are all examples of this. The obligations of a gratuitous bailee begin when the property is delivered. If the property is lost due to the bailee's gross negligence, they are liable for the loss. The standard of care applicable to a gratuitous bailee will depend on the circumstances of the agreement, but the fact that the bailment is gratuitous lowers the standard of care. A gratuitous bailee is not permitted to use the property for his or her own benefit unless the bailor has given express or implied permission. If they do so, and in a way that damages the goods, they are liable for the goods' loss and damage. The bailment will be terminated if the bailee violates the agreement, and the bailor will be able to sue the bailee for conversion.
Non – Gratuitous Bailment
Bailment for valuable consideration occurs when the bailor delivers goods to the bailee for a particular purpose, such as the rental of property. In exchange for a fee, the bailee receives both possession and the right to use the property. The bailee must return the estate to the bailor and pay the cost of attempting to return it when the agreement expires. The bailee will be found responsible if he fails to do so or acts negligently while the property is in his possession.
In “Coggs v. Bernard”, Sir John Holt, Chief Justice of the King's Bench, decided a landmark case for both English property law and contract law. It outlines the responsibilities of a bailee, or someone in possession of someone else's property.
Holt gave this well-known declaration of bailment classifications in the course of his judgement:
Depositum: the gratuitous deposit of a chattel also with bailee, who maintains it for the bailor;
Mandate: the delivery of a chattel to the bailee, who is to do this for the bailee or for carriage without compensation with the goods;
Commodatum: the bailor's free loan of a chattel to the bailee for the bailee's use. The bailment is for the bailee's easiness.
Vadium, pawn, or pledge: the bailor's pawn or pledge of a chattel to the bailee, who is to hold it as security for a loan, debt, or obligation fulfilment;
locatio et conductio: The bailor hires a chattel or provides services to the bailee in exchange for a reward. The "locator" is the lender, and the "conductor" is the borrower.
Case Law
Hyman & Wife V/S Nye & Sons
The plaintiff hired a carriage, two horses, and a driver from the defendant for a specific voyage. A bolt in the carriage's undercarriage broke during the journey, causing the splinter bar to become displaced, the carriage to be thrown around, and the plaintiff to be injured. “I hold the defendant liable,” Justice Lindley said in finding the defendant guilty. “A person who rents carriages is not liable for all defects, whether discovered or not; he is not an insurer against all defects that care, and skill prevent. His responsibility is to provide a carriage that is as fit for the purpose for which it is hired as care and skill will allow.”
Reed v/s Dean
For a holiday on the Thames, the plaintiff rented a motor launch from of the defendant. The launch caught fire, and the plaintiffs were unable to put it out due to faulty fire extinguishers. They were hurt and lost their lives. According to the court, there was an implied promise that the launch would be as fit for the purpose for which it was hired as reasonable care and skill could make it.
Lyell v/s Ganga Das
Consignment of combustible goods that were not disclosed. If a bailor delivers goods to another person for carriage or another purpose, and the goods are dangerous, the fact should be disclosed to the bailee.
CONSIDERATION NOT NESSCARY IN CASE OF BAILMENT
Mutual benefit: In the case of a bailment for the mutually beneficial of the bailor and bailee, both parties are compensated, for example, A gives his watch to B for repair for Rs. 10. The consideration for A is the repair of his watch, while the consideration for B is Rs. 10. However, there is no consideration in the form of something else in return in the case of bailment for the betterment of the bailor or bailee alone.
In such cases, the harm incurred by the bailor in relinquishing possession of the goods is deemed sufficient consideration to endorse the bailee's promise to deliver the goods.
Bear extra-ordinary expense: When the bailment is gratuitous, that is, without a monetary reward, the bailor is responsible for all costs. If the bailment is not gratuitous, the bailor will be responsible for extraordinary costs, while the bailee will be responsible for ordinary costs (Sec. 158).
Illustration 1: While travelling to Hardwar, A leaves his cow in the care of his neighbor B without compensation. A will reimburse the costs of feeding the cow.
Illustration 2: If B is paid Rs. 5 per day for the safe custody of the cow, then B will be responsible for the feeding costs. However, if the cow becomes ill and needs to be admitted to a veterinary hospital, the hospitalization costs will be considered extraordinary and must be covered by the bailor.
Illustration 3: To compensate the bailee for any loss caused by a defect in title – If the bailor has no right to bail the goods and the bailee suffers any injury as a result of the bailment, the bailor must compensate the bailee (Sec. 164).
Bear loss for wrongful refusal: When the purpose of the goods has passed, the bailor is responsible for returning the goods. If he wrongfully refuses to return the goods, he must compensate the bailee for any losses incurred as a result of his refusal.
Illustration 1: A gave his coat for dry-cleaning. One of the conditions printed on the receipt was that the customer should take delivery within 15days of the due date. In the case of any default, he shall pay extra upon the rate of Re.1 week or parts thereto. Nevertheless, if A doesn’t take up the delivery within the time stipulated for delivery, A shall pay extra charges.
Bear loss due to destruction or deterioration of the goods bailed in natural course: Where the goods bailed are destroyed without any fault of the bailee, the bailor shall bear the loss.
Name - Avnip Sharma
Semester - 8th
Course - BBA.LL.B
College - New Law College, Bharati Vidhyapeth, Pune