Definition, Essentials and Duties of Bailor and Bailee under the Indian Contract Act, 1872

Bailment in simple words means delivering goods to a particular person without transfer of ownership. It is a technical word or term in common law although etymologically it means overhanding of goods. Anyone who gets custody without possession is not a bailee. If any person is already in possession of the goods of other contracts to hold them as a bailee he or she will hence become bailee and the owner will become the bailor in such cases.

In the bailment contract, the bailee’s duty is to deal with the goods according to the instructions given by the bailor.

1. Delivery of possession

There should be the delivery of possession from one person to another. This is distinct from them custody, one who has custody without is possession is not a bailee example of this can be a servant or a guest in someone’s house using their goods is not a bailee.

To understand this further we can refer to a Madras High Court decision in Kaliaperumal Pillai v Visalakshmi (AIR 1938 Mad 32). A lady handed over to a goldsmith certain jewelery for the purpose of melting it and making new out of it. Every evening when the goldsmith completed the work the lady would receive the key of the box in which the half made jewels were kept one night the jewels were stolen.

The lady took action against the goldsmith but it failed as the court held that delivery is necessary to constitute a bailment and any bailment could be gathered from facts must be taken to have to come to an end as soon as the plaintiff was put in possession of the melted gold. The mere leaving of the box in a room and keeping the key in her possession will not amount to delivery within the meaning and provision of section 149.

2. Delivery should be done upon a contract

There should be a certain purpose attached to this delivery of goods and when the purpose is fulfilled the goods shall be returned to the bailor. Under the ambit of the section when one good goes into the possession of another without any contract is no bailment.

In the case of Ram Gualm v Govt of UP the plaintiff’s ornaments were stolen and recovered by the police and while in police custody, it was stolen again, the plaintiff’s action against the state for damages was dismissed as there was no contract between them. But the English law on the other hand recognizes bailment without a contract.

3. Delivery should have a purpose

As mentioned earlier there should be some purpose attached to the delivery and the condition is when the purpose here is accomplished the goods will be returned to the bailer or disposed of according to his mandate.

Section 150 of the Indian Contract Act deals with the duty of the bailor, there are two kinds of bailor

1. Gratuitous bailor
2. Bailor for reward

The duty of the first kind or the gratuitous bailor is to disclose faults in the goods bailed if any if the bailor is aware. If those damages expose the bailee to some risks the bailor will be held responsible for the damages caused by the non-disclosure of the fault in the goods.

If the goods are bailed for hire the bailor will be held liable for such damages irrespective of if he was or wasn’t aware of a fault in the goods.

The duty of bailor for consideration is much greater than that of the first type. As this is his profession, it becomes a binding duty on him to check whether the goods he delivers are safe for the purpose of bailment. The defense of him not being aware is not applied.

We can understand this with the help of the Reed v Dean case in which the plaintiffs hired a launch for a holiday on the River Thames. The launch caught fire and they were unable to extinguish it as the fire fighting equipment was out of order they were injured and suffered losses.

It was held by the court that it was implied that the launch was fit for the purpose it was hired for and therefore the defendant was held liable. Where a bailor delivers goods which are dangerous in nature to any person the fact should be disclosed to the bailee.

1. Duty of reasonable care

In all cases of bailment, the bailee needs to take reasonable and standard care of the bailment, as a man of ordinary prudence would do. The care taken should be such which a person will take of his own goods under such circumstances

2. Duty not to make unauthorized use

There is a duty of bailee not to make unauthorized of the goods bailed to him the goods should be used strictly for the purpose the goods have been bailed. Any unauthorized use of good will make him absolutely liable for damage to goods and there is no defense against this even from the Act of God or an Inevitable Accident.

3. Duty to not mix

The bailee should maintain the separate identity of the goods of the bailor. He should not mix it with his or any other goods without the consent of the bailor. If mixed both will have a proportionate interest in the mixture produced.

In any case, if the goods are mixed without the consent of the bailor and the goods can be separated by any means the bailee will bear the cost of separation, but if it is beyond separation the bailee will compensate the bailor for any loss.

4. Duty to return

There is a duty laid under section 160 to return the goods bailed on the expiration of time or accomplishment of the purpose and later on it becomes the bailee’s responsibility if the goods are not returned.

5. Duty to return increased

In the absence of any agreement to the contrary, the bailee is bound to return the bailor natural increases or profits accruing to the goods during the period of bailment, which is laid down under section 163 of the Indian Contract Act.

By going through this we came to know about the various duties of bailor as well as bailee and on whom the liabilities are fixed upon if any damages are suffered.