DAMODARA

M
SANJIVAYYA
NATIONAL
LAW
UIVERSITY

A
PROJECT REPORT
ON

FINDER OF GOODS
RIGHTS, RESPONSIBILITIES,
LIABILITIES AN ANALYSIS

Submitted
ByName:
Harshvardhan Dhanik
Class: 1

st

Semester, 5 Year B.A., LL.B. (Hons.)

Hall Ticket
No. : 201245

CONTENTS
Serial
no
1
2
3
4
5
6

TOPIC
INTRODUCTION
RIGHTS OF FINDER OF GOODS
RESPONSIBILITIES OF FINDER OF GOODS
LIABILITIES OF FINDER OF GOODS
CONCLUSION
BIBLIOGRAPHY

PG. NO

INTRODUCTION
Finder of goods is a unique topic on which I have presented my project. This project basically
helped me understanding the rights liabilities and responsibilities of finder of goods. In respect of
duty and liabilities a finder is treated at par with bailee. The finders position, therefore, has been
considered along with bailment. Section 71 of Indian contract act lays down the responsibility of
a finder of goods.

RIGHTS OF FINDER OF
GOODS
AS we know the rights of finder of goods is subject to the same responsibility as a bailee.
A finder of goods is a bailee thereof and as such bound by the duty of reasonable care1. He does
not have the right to sue the owner for compensation for trouble and expense voluntarily incurred
by him to preserve the goods and to find out the owner. Early English cases disallowed not only
any compensation, but also right to lien for expenses.
Section 168 and 169; however, protect the interest of a finder in two ways. Section 168 allows
the finder to retain the goods against the owner until he receives compensation for trouble and
expense. Further, where the owner has offered a specific reward for the return of the goods lost,
the finder may sue for such reward, and may retain the goods until he receives it.
Section 169 allows the finder to sell the goods in certain circumstances. Where the thing found is
commonly the subject of sale and if the owner cannot be found with reasonable diligence, or if
he refuses to pay the lawful charges of the finder the finder may sell the goods in the following
cases:

When the thing is in the danger of perishing or of losing greater part of its value, or
When the lawful charges of the finder in respect of the thing found, amount to two-third
of its value.

Rights of the finder of goods are discussed below-

1. Right to compensation the bailor is responsible to the bailee for any loss which
the bailee may sustain by reason that the bailor was not entitled to make the
1 He is under no higher duty than that Isaack v. clark,(1615)2 bulstr 306.

bailment or to receive back the goods, or to give directions respecting them. If the
bailor has no right to bail the goods or to receive them back or to give directions
respecting them and consequently the bailee is exposed to some loss, the bailor is
responsible for the same. Taken from the section 164 of the Indian contract act.
2. Right to expenses or remuneration- where by the conditions of the bailment, the
goods are to be kept or to be carried, or to have work done upon them by the
bailee for the bailor2, and the bailee is to receive no remuneration, the bailor shall
repay to the bailee the necessary expenses incurred by him for the purpose of the
bailment. A bailee is entitled to recover his agreed charges. But where there is no
such agreement at all, section 158 comes into play. The section says that where
the bailee is required by the terms of bailment to keep or carry the goods or to do
some work upon them for the benefit of the bailor and the contract provides for no
reward, the bailee has a right to ask the bailor for payment of necessary expense
incurred by him for the purpose of the bailment. The American law is also the
same. Where the bailment is gratuitous and the bailee is in no \way benefited, the
bailor has to bear the expenses, if any, of the bailee for the keeping the chattel. It
is akin to the lien of a warehouseman for claiming charges for the preservationof
the goods.3 Where the bailment is for the benefit of the bailee, there, in reference
to expenses, the following two propositions apply:
If in using the thing, the borrower is put to any expense, this must be borne by
himself. Thus for example, if a horse is lent to a friend for a journey, he must bear
expenses of his food during that journey, and to getting him shod, if he should
chance to require it , for it is a burden which is naturally attendant upon the use of
horse.
the borrower is compellable to bear the ordinary expenses; for the loan being for
his benefit he must be presumed to engage to bear the burden as an incident to the
use.4
3. Right of lien- if the bailees lawful charges are not paid he may retain the goods.
The right to retain any property until the charges due in respect of the property are

2 The person who delivers the goods is called the bailor and the person to whom
they are delivered is called the bailee.
3 WIILINGTON ON THE CONTRACTS as cited in ramachandran, THE LAW OF
CONTRACT IN INDIA, 2266(vol.iii).
4 STORY ON BAILMENTS Ss. 256 and 273

paid is called the right of lien. The Supreme court5 cited the following passage
from HALSBURYS LAWS OF ENGLAND6 as to the nature of this right:
Lien is in its primary sense a right in one man to retain that which is in his
possession are satisfied. In this primary sense it is given by law and not by
contract.
Liens are of two kinds namely:
1. Particular lien, and
2. General lien.

4. Rights to sue- if a third person wrongfully deprives the bailee of the use or
possession of the goods bailed, or does them any injury, the bailee is entitled to
use such remedies as the owner might have used in the like case if no bailment
had been made; and either the bailor or the bailee may bring a suit against a third
person for such depravation or injury. Section 180 enables a bailee to sue any
person who has wrongfully deprived him of the use or possession of the goods
bailed or has done them any injury.7

5 Syndicate bank v. Vijay kumar,(1992) 2 SCC 330 : AIR 1992 SC 1066, 1068.
6 552, para 695, vol 20, 2nd edn.
7 Karnataka Electric Board v. Halappa ,(1987) 1 TAC 451, suit by bailee against
carrier.

RESPONSIBILITIES OF FINDER
OF GOODS
1. TO TAKE CARE OF THE GOODS ENTRUSTED The first and most important
duty of a bailee is to take care of the goods entrusted to him. The question as to
the standard of care expected of a bailee or the degree of negligence , which
should make him responsible, has been much debated. Roman law recognized
three degrees of diligence (or of negligence) viz., high degree of diligence,
ordinary and slight diligence. Common or ordinary diligence is that degree of
diligence, which men in general, exert in respect of their own concerns. In the
words of Sir William jones, it is the care which a person of common prudence and
capable of governing of family, takes of his own concerns. High or great diligence
is, of course, extraordinary diligence or that which very prudent persons take of
their own concerns; and slight diligence is that which persons of less than
common prudence take in their own concerns. In civil law, ordinary . Wslight
diligence levissima diligentia. Conversely there are three degrees of negligence,
lata culpa, gross fault or negligence, levis culpa,ordinary fault or negliugence and
levissima culpa, slight fault or negligence.

2. DUTY NOT TO MIX WITH OWN GOODS- another obligation of the bailee is
to keep the goods of the bailor separate from his own. But where the goodsd of
the bailor and bailee become mixed such mixing may be with the consent of the
bailor, or it may be the result of accident, mistake or inadvertence, or lastly, it may
be willful or intentional. The law then seems to be that in cases of intermixture, if
the goods are easily distinguishable and can be separated, each party may claim
nhis proportionate share. But, if the mixture is indistinguishable, he who
occasions the wrongful mixture, must bear the whole loss.8
Where however, a bailee, by accident or inadvertence, mixes the chattels confined
to him by the bailor with his own, or where the accidental intermixture results
from an act of God or of an unauthorized third party, the mixture if it is composed
of substances similar in kind and quality, belongs to the bailor and bailee as

8 Spence V. Union marine Insurance Co.ltd., (1869) 3 CP 427

tenants in common in proportion as each contributed to the combination, any cost

incidental to its separation into shares being borne by the bailee.9

3. DUTY NOT TO MAKE ANY UNAUTHORIZED USE The bailee is under a

duty not to use the goods in any unauthorized way.10The bailee therefore,
precluded from using the chattel bailed, for his own personal advantage in any
manner whatsoever, without, the consent of the bailor, express or implied, unless
such use in needful for its preservation. Apart from such necessary use, if the
bailee applied the chattel to any purpose other than that of bare custody he
becomes responsible for any loss or damage resulting from his breach of good
faith,11 except where the cause of the loss or damage is independent of his acts and
is inherent in the chattel itself. Further, where the bailee acts in a manner
inconsistent with the conditions of the bailment, the bailor gets a right to
terminate the bailment as the possessory title reverts to the bailor and entitles him
to maintain an action of trover.12

4. DUTY NOT TO SET UP ADVERSE TITLE As a rule, the bailee is estopped

from denying the bailors title or setting up against the bailor his own title or the
right of a third party. But the estoppel ceases on actual eviction by title
paramount.13mere knowledge of the third partys title or an adverse claim on the
jus tertii. He must however inform the bailor of the third partys claim.14

9 Lupton V. White,(1808) 33 ER817:10 RR 101; SEE also Sandeman & son v. Tyzack,
(1913) AC680.
10 Hafizullah v. Jayanarayan,(1961) 27 cut. LT 340
11 (Cf.) Re. Tidd v. overell,(1893) 3 ch.154
12 Morrison v. Shaw, (1916) 2 KB 783.
13 Biddle v. Bond,(1865) 122 ER 1470(Cf.)
14 Ramson v. Platt,(1911) 2 KB 291.

5. DUTY TO RETURN GOODS a furher duty arises on the part of the bailee that
he must return the goods, on the expiry of the time fixed or when the purpose is
accomplished. If he does not, he becomes liable for damages occasioned by loss
of use during the period for which it is detained. He is also responsible as an
insurer, that is becomes absolutely liable even without any negligence on his part
if the chattel is lost or destroyed, while it is so detained. Apart from an action for
damages against the bailee for non-return of the goods, in case the bailee sells the
goods bailed the bailor can follow the proceeds wherever they can be
distinguished either by being actually kept separate or being mingled with bailees
other funds.15in keeping with the provisions of Secs. 151 and 152, a bailee is
excused from returning the subject matter of the bailment to the bailor where it
has been taken away from him by authority of law exercised through regular and
valid proceedings. Where the goods are lost without negligence the bailee need
not return them or be responsible for the loss.

15 Re Halletts Estate, (1879) 13 Ch.d 696, 710.

LIABILITIES OF FINDER OF
GOODS
A little is known about the liabilities of the finder of goods which are as follows
1. To try and find out the true owner.
2. To take due care of the goods. Such a finder is entitled to the possession of
such goods against all the world except the true owner.16
3. Such a finder is entitled to a lien, retain the goods even against the true owner
until he is paid by the owner, compensation. For the custody, care and
preservation, although he is not entitled to sue for such compensation.
In English law once a finder accepts responsibility for the goods his liability is
that of a gratitutious bailee.17

16 Hollins v. Fowler, LR 7 HL 757.

17 Newman v. Bourne & Hollings-worth (1951) 31 TLR 209