BAILMENT AND

PLEDGE
Indian Special Contract
Act
Content
• Definition
• No. of Persons
• Essential of Bailment
• Types of Bailment
• Duties & Rights of Bailee & Bailor
• Termination of Bailment
• Finder of goods
• Duties & Rights of Finder of goods.
• Pledge Definition
• Duties & Rights of Pledgor & Pledgee
• Pledge by Non-owner
• Differences
Definition U\S 148

“ Bailmentis the 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 of according to the direction
of the person delivering them.”
Definition in layman language

“ Anycontract where by some movable goods are

given by one person to another only for some
purpose and the goods are to be return back or
disposed off as per the desire of the giver is known as
Bailment.”
No. of Persons Involved

• There are two persons involved in the bailment

contract.

1. Bailor: “ The person delivering the goods is called

the bailor.”

2. Bailee: “ The person to whom they are delivered is

called the bailee.”
Essentials of Bailment

• Goods: Bailment can be effected only with respect to

goods.

• Delivery: Delivery of goods by one person to another

is essential.
‘Delivery’ includes:
 Physical delivery
 Constructive delivery
 Symbolic delivery
Cont….

• To be Returned: Without demand unless agreed

otherwise.

• In Specie: The same goods are to be returned and not

the equivalent. Including any accretion, e.g., calf
born to a cow.

• Ownership: Only the possession of the movable

goods is transferred and not the ownership.
 Types of Bailment

Types of Bailment

Bailment on the bases of Bailment on the bases

Reward of Benefits

Gratuitous Non-Gratuitous Bailor Benefit Bailee Benefit Mutual Benefit

Bailment Bailment Bailment Bailment Bailment
Duties of Bailee (Rights of Bailor)

• Duty to take Care.

• Responsible of Damage.
• Not to make Unauthorized use.
• Not to mix other goods with the goods of bailor.
• Duty to return the goods.
• Not to create the adverse title (Ownership).
• Bailee should return any increment in goods.
Rights of Bailee (Duties of Bailor)

• Right to receive the damages from the defect of the goods.

• Right to return the Goods.
• Right to protect the goods.
• Right to recover expense.
• If the bailee returns the goods to the bailor in good faith
without having knowledge of his defective title then also
he is not responsible.
• If some third deprives the bailee from using having
possession of goods, he as well as the bailor can sue for
their rights.
Termination of Bailment

• On the expiry of the stipulated period.

• On the accomplishment of the specified purpose.

• By bailee’s act inconsistent with conditions of bailment.

• A gratuitous bailment may be terminated at any time.

Finder of Goods

• Definition:
• Finder of goods is a special case of bailment.

• A finder of the goods is a person who finds the goods

belonging to some other person and keeps them under his
protection till the actual owner of the goods is found.

• Here there is an unintended formation of the contract. The

finder of the goods automatically becomes bailee even when
there is no bailment from the bailor.
Duties & Rights of Finder of Goods

• Search the real owner and return the goods back to him.
• Take a good care of the goods until they are returned
back to the real owner.
• He has a right to be paid for the expenses which he has
incurred to keep the goods safe as well as in searching
the real owner.
• He also has the right to keep the goods in his possession
till he gets the expenses and can sell the goods and
recover the expense, if they are not paid by owner.
Pledge \ Pawn

• Definition:
• “Any contract where the goods are given by person to
another only for the purpose of serving as security against
some payment to be made is known as Contract of Pledge”.
No. of Persons Involved

• There are two persons involved in the bailment

contract.

1. Pawnor \ Pledgor: “ The person, who delivers the

goods as security, is called the pawnor or pledgor”.

2. Pawnee \ Pledgee: “ The person to whom the

goods are so delivered is called the pawnee or
pledgee”.
Rights of Pawnee (Duties of Pawnor)

• Retainer
• Retention for subsequent advances.
• Right to extra ordinary expenses.
• Right in case of pawnor’s default.
Rights of Pawnor (Duties of Pawnee)
• The pledgor has a right to claim back the security
pledged on repayment of the debt with interest and
other charges.
• He has a right to receive a reasonable notice in case the
pledgee intends to sell the goods.
• In case he does not receive the notice he has a right to
claim any damages that may results.
• In case of sale, the pledgor is entitled to receive from the
pledgee any surplus that may remain with him after the
debt is completely paid off.
Cont….
• The pledgor has a right to claim any accruals to the goods
pledged.

• If any loss is caused to the goods because of mishandling

or negligence on the part of the pledgee, the pledgor has
a right to claim the same.
Pledge by Non-Owners

• Mercantile agents
• Person in possession under a voidable contract.
• Pledgor having limited interest.
• Seller in possession of goods after sale.
• Buyer in possession of goods under an agreement to
sell
• Co-owner in possession.
Difference between ‘Pledge’ and ‘Bailment’.
Bailment
• Here, one party surrenders
goods to another party for
specified period or purpose.
• Here, the goods are to be
returned after time is over or
purpose is over.
• Here, the goods may be
returned in a changed from also
according to the instructions of
the bailor.
• The bailee can not sell the
goods.
Pledge
• Here, goods are surrendered as
a security for the loan taken or
for performance of a promise.
• Here, the goods are to be
returned only when pawnor
returns money to the pawnee.
• Here, the goods are to be
returned in the same form.
• The pawnee can sell goods
after giving a due notice to the
pawnor.
Difference between ‘Sale’ and ‘Bailment’.
Bailment Sale

• Ownership: Not • Ownership: Transferred.

transferred.
• Return: Buyer is in no
• Return: Bailee is bound to obligation to return the
return the goods in specie. goods.
Difference between ‘License’ and ‘Bailment’.
Bailment License

• Delivery: Goods are • Delivery: Goods are not

delivered to bailee. delivered to licenser.

• Permission: There is • Permission: Permission is

nothing like permission for give to only one person for
use. the use.
Thank you
DIPESH PATEL