Bailment is the delivery of goods by one person (known as the bailor), to another person (known as the bailee), for

some purpose, upon a contract that the goods shall be returned to bailor (or otherwise disposed of, as per bailors direction) by the bailee, immediately after the purpose for which the goods were initially bailed, is accomplished [Section 148]

Main Characteristics of Bailment

(a) Delivery of goods by way of actual delivery, or constructive delivery of goods, already in possession of the other person (bailee) (b) Delivery of goods only; and not of currency notes, etc. (c) Contract that goods will be returned to the bailor on completion of the purpose for which it was bailed. Exception: But, the finder of lost goods, holds such goods as a bailee on behalf the owner, though there is no contract between them. (d) Bailee must return the same specific bailed goods (in specie).

Duties (obligations) of Bailor

(a) (i) To disclose known faults in the goods (Section 150), which may materially interfere with the use of such goods, or may expose the bailee to some extraordinary risks (e.g. defect in brake of a car) (ii) In a non-gratuitous bailment, the bailor is liable for damages for both known and unknown faults. In a gratuitous bailment, the bailor is liable for damages for only known faults

Duties (obligations) of Bailor

(b) Liability for breach of warranty (i.e. authority to bail) [Section 164], i.e. where bailor was not entitled: (i) To make the bailment, or (ii) To receive the goods back, or (iii)To give direction in respect of the disposal of the goods so bailed. (c) (i) If gratuitous bailment, bailor must bear all necessary expenses (i.e. both ordinary and extraordinary expenses) incurred by the bailee [Section 158] (ii) But if non-gratuitous bailment, bailor is liable only for extra-ordinary expenses (and not the necessary expenses)

Duties (obligations) of Bailee

(i) To take due care of the goods bailed [Section 151], that is, to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take in the case of his own goods of the same bulk, quality and value as the goods bailed, unless otherwise provided in any special contract. Thus, if bailee has taken due care, he is not responsible for any loss, destruction, deterioration or damage to the bailed goods [Section 152] (ii) Not to make any unauthorised use of the goods bailed [Section 154]

Duties (obligations) of Bailee

(Continued) (Continued)

(iii) Not to mix up bailors goods with his own [Sections 155 to 157] (a) Where such mixed up goods can be separated or divided, he is liable for expenses of separation or division of the goods, and also for the damages so caused, if any. (b) Where such mixed up goods cannot be separated or divided, he must compensate the bailor of the entire loss suffered by the bailor.

Duties (obligations) of Bailee

(Continued) (Continued)

(iv) To return the bailed goods [Section 160] to bailor, or to deliver it as per bailors direction, without demand, immediately after expiry of the period, or on accomplishment of the purpose for which these were bailed. Otherwise, the bailee will be liable for any loss, destruction or deterioration of the goods caused by such delay; (v) To return any accretion (addition) to the bailed goods [Section 163], in the absence of any contract to the contrary (i.e. to return cow with calf born to her).

Rights of Bailee
1. All duties/obligations of bailor, conversely speaking, will become the rights of the other party, viz. the bailee, that is, (i) to For claiming compensation for damages caused due the non-disclosure of the faults in the goods

(ii) For breach of the warranty and damages arising thereby (iii) To claim necessary expenses, if gratuitous bailment, and only extra- ordinary expenses, if non-gratuitous bailment

Rights of Bailee

(Continued) (Continued)

2. Right of Lien (Sections 170 and 171)

Bailee enjoys right of particular lien, i.e. the right to retain only goods in question, in his possession, till the other person pays debt or claimed dues [Section 170]. Under Section 171, only certain categories of the bailees have right of general lien, like bankers, factors, wharfingers, attorneys of the High Courts, and the policy brokers.

3. Rights against wrongful deprivation or injury to goods [Sections 180 and 181]

Where a third person wrongfully deprives the bailee of the use or possession of the goods bailed to him, or causes any injury to these goods, the bailee can use such remedies as the owner of the goods would have for his own goods. In such cases, either bailee or bailor can file a suit. The amount of compensation realised is appropriately apportioned between the bailor and the bailee as per their interests [Section 181].

Rights of Bailor
(a) To enforce all duties of a bailee. (b) If gratuitous bailment, bailor can demand return of goods bailed, even before expiry of stipulated period, or accomplishment of purpose. But, if bailee acted by believing that the bailment will be for the full period, the bailee must be compensated by the bailor for all expenses and losses to the bailee [Section 159].

Termination of Bailment
1. On expiry of the stipulated period. 2. On accomplishment of the particular purpose. 3. By the action of bailee, being inconsistent with the conditions of the contract [Section 153]. 4. Termination of a Gratuitous Bailment. Here, the bailor can recall bailed goods, even prematurely [Section 159]. But, he must compensate the bailee for any loss (But, only in excess of the benefits derived by gratuitous bailment). 5. Gratuitous Bailment terminates, on the death of either party [Section 162].

Duties of Finder of Lost Goods

1. He is treated as a bailee of such goods. Accordingly, he must discharge various responsibilities of a bailee, like taking the required care of the goods, and so on. 2. He must make a reasonable effort to trace the real owner, and return it to him. But, he is entitled to reimbursement of expenses incurred by him in this connection.

Rights of Finder of Lost Goods

1. To retain the goods till he is able to find the true owner, and till he is duly compensated by the true owner for his expenses for preserving and safe keeping of the goods, and in tracing the true owner. He, however, has no right to sue owner for such recovery [Section 168]. 2. If owner of the lost goods has announced some reward, the finder is entitled to receive such reward as well. Here, he can even sue the true owner, for recovery of such reward, and he can retain such goods pending receipt of the reward.

Rights of Finder of Lost Goods

(Continued) (Continued)

2. He has right to sell the goods [Section 169]: (i) Where true owner is not found, despite reasonable effort, and goods so found are usually subject to sale (ii) Where such goods are perishable in nature (iii)Where true owner refuses to pay the reasonable charges to the finder, on demand, provided such charges amount to two thirds of the value of such lost goods