Bailment and Pledge

Aashish Mehra
Abhinav Venkat
Barkha Sharda
Aviral Sinha
Antony Brabhu
 Bailment

Sec.148 defines ‘bailment’ as the

delivery of goods by one person to
another for some purpose, up on a
contract, that they shall, when the
purpose is accomplished, be returned or
otherwise disposed of according to the
direction of the person delivering them.
The person delivering the goods is called
the ‘bailor’ and the person to whom they
are delivered is called the ‘bailee’.
Eg: A delivers a piece of cloth to B ,a
tailor ,to be stitched in to a suit. there is
a contract of bailment between A and B.
Examples
 Hiring a bicycle
 Giving cloth to a tailor
 Delivering watch for repair
Kinds of Bailment
 Gratuitous bailment: Goods given to
a friend or any one else, to be used
by him without any (unnecessary)
reward or remuneration or
consideration.
 Bailment for reward or remuneration:
For example, goods given on hire,
goods given for repair against
charges, etc.
Requisites of bailment
 Contract
 Delivery of possession
 For some purpose
 Return of specific goods
Bailor: Rights, Duties &
Liabilities
 Termination of bailment (Section 153): For
example, A lets to B for hire a horse for his
own riding. B drives the horse in his carriage.
A can terminate the bailment.
 Return of goods (Sections 160 & 161): Bailor
has the right to get back the goods from the
bailee as soon as time for which they were
bailed has expired.
 Right to claim compensation (Section 154): For
wrongful use of goods by bailee.
 Claim in case of mixture of goods by the bailee (Section
155-157):
(i) With the consent of bailor. Bailor can claim
proportionate share in mixed goods.
(ii) Without consent of bailor. But goods can be
separated. Bailor can claim expenses of separation & any
damage arising from the mixture.
(iii) Without consent of bailor. But goods cannot be
separated. Bailor is fully entitled to compensation for the
loss of the goods.
 Right to receive any increase or profit from goods bailed.
 Put bailee into possession (Section 149).
 Disclose faults in the goods bailed (Section
150). Not disclosing is a liability for bailor.
 Repay necessary expenses (Section 158). To
repay to bailee who receives no remuneration.
 To indemnify gratuitous bailee (Section 159).
Indemnifying for any loss due to earlier
demand by bailor.
 Responsible for any loss due to defect in title
(Section 164).
 To take back the goods.
Duties of bailor
 To disclose known faults
 To bear extraordinary expenses of
bailment
 To indemnify bailee for loss in case
premature termination of gratuitous
bailment
 To receive back the goods
 To indemnify the bailee
Duties of bailee
 To take reasonable care of the goods
bailed
 Not to make any unauthorised use of
goods
 Not to mix the goods bailed with his
own goods
 To return the goods
Rights of Bailee
1. Enforcement of rights
2. Bailment by several joint owners
3. Right to compensation: imperfect title
4. Right to remuneration:extraordinary
damages
5. Right to claim damages: defects
6. Right to sue
7. Right of lein
 Finder of Lost Goods
Rights of finder of goods
1. Right of lien
2. Right to sue for reward
3. Right of sale
(i) If owner can not be found
(ii)If charges are 2/3 rd of value of
goods and owner refuses to pay
(iii) If goods are perishable in nature
Obligations of finder of lost
goods
1. Take reasonable care of goods
2. Not to use for his own purpose
3. Not to mix goods with his own goods
4. Try to find out the true owner of
goods

Termination of Bailment
Termination Of Bailment
 Doing an act inconsistent with terms
of bailment[S.153]
 At desire of the bailor in case of
gratuitous bailment[S.159]
 On expiry of period[S.160]
 On accomplishment of object[S.160]
 Death of the bailor or bailee [S.162]
 PLEDGE
 Pledge is a special type of bailment
where transfer of goods is for security
of something
 pledges are a form of security to
assure that a person will repay a debt
or perform an act under contract. In a
pledge one person temporarily gives
possession of property to another
party.
Uses Of Pledge
 securing loans
 pawning property for cash
 guaranteeing that contracted work
will be done
Pledge has three parts:
 two separate parties
 a debt or obligation
 a contract of pledge
In sale both possession and ownership of property are permanently
transferred to the buyer. In a pledge only possession passes to a second
party

Pledge

Sales
PLEDGE OR PAWN
 Bailment of goods as security for
payment of debt or performance of a
promise :PLEDGE
 Bailor: PAWNER
 Bailee: PAWNEE
 Example:
 A borrows Rs.100 from B & keeps his
watch as security : pledge
Difference between bailment
& pledge:
 PURPOSE: security? ; repairs?
 RIGHT OF SALE: sale on default? ; no
right to sale?
 RIGHT OF USING THE GOODS: no
right?
Rights of Pawnee:
 Right of retainer{S.173}: right to retain
goods until dues paid
 Right of transfer for subsequent
advances:{S.174}: on lending money to
same debtor without further security ;right
to retain earlier goods extends
 Right to extraordinary expenses {S.175}
 Right to sue the pawner or sell the goods
on default.
Rights of Pawnor:
 Enforcement of pawnee’s duties
 Defaulting pawnor’s right to redeem
Example
 John asks to borrow $500 from Mary. Mary decides first
that John will have to pledge his stereo as security that
he will repay the debt by a specific time. In law John is
called the pledgor, and Mary the pledgee. The stereo is
referred to as pledged property. As in any common
pledge contract, possession of the pledged property is
transferred to the pledgee. At the same time, however,
ownership (or title) of the pledged property remains with
the pledgor. John gives the stereo to Mary, but he still
legally owns it. If John repays the debt under the
contractual agreement, Mary must return the stereo. But
if he fails to pay, she can sell it to satisfy his debt
Thank You