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Bailment - Indian Contract Act,1872 | Meaning,Types, Rights,Liabilities & More - [Complete Study]

Updated: Jun 17, 2019

Under section 148 of Indian Contract Act, 1872, a "bailment" is 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 directions of the person delivering them.The person delivering the goods is called the "bailor". The person to whom they are delivered is called the "bailee".


How is the delivery to bailee made?


According Indian Contract Act 1872 under Section 149,the delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorized to hold them on his behalf.


Liabilities of the bailee


1. Care of Goods


It is the duty of the bailee that he should take as much care of the goods as a man of ordinary prudence takes care about his own goods.


2. Act According The Bailment


Any act of the bailee should not be against the conditions of the contract. Otherwise contract will be voidable at the option of the bailor.


3. Mixing is Not Allowed


It is the duty of the bailee that he should keep the bailor goods separate from his own goods. If he mixed without the consent of the bailor then he himself will bear the expenses of separation and loss.


4. Should Not Deny The Title


It is the duty of the bailee that he should not deny or change the title of the bailor about the ownership of goods.


5. Default of Responsibility


It is the duty of the bailee that he should not deny or change the title of the bailor about the ownership of goods.


6. Return of Goods


It is the duty of the bailee to return or deliver the goods bailed according to the bailors conditions.


7. Return at Proper Time


It is the duty of the bailee that he should return the goods bailed as the time or purpose of bailment completes without the demand of the bailor.


8. Return of Profit


It is also the duty of the bailee that he should deliver the profit or any increase occurred in the bailed goods to the bailor.


9. Proper Use of Goods


It is the duty of the bailee that he should use the goods according the conditions of the contract. If he misuses the goods then he will compensate the loss to the bailor.


Rights of bailee


1. Recovery of Losses


If the bailee suffers a loss or damage due to the defects of the bailed goods he has a right to recover it from the bailor.


2. Compensation Right


It is the right of the bailee that he should received compensation from the bailor for any loss which he has suffered due to defects in the title of the bailor.


3. Right of Retain


Sometimes bailee performs some services for the purpose of bailment. In such cases bailee has a right to detain such bailed goods until he receives the reward of his services.


4. Recovery Of Expenses


All the expenses incurred for the bailment may be recovered by the bailee from the bailor.


5. Right of Indemnity


Any loss which bailee has sustained may recover from the bailor on the following grounds, "The bailor was not entitled to make the bailment, or receive back the goods, or to give directions in this respect."

The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in section 151 i.e. in all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quantity and value as the goods bailed.



Kinds of lien held by the bailee


In general, Lien means the right to keep the possession of the property of a person until that person clear the debts. In case of bailment, the bailee has the right to keep the possession of the property of the bailor until the bailor pays lawful charges to the bailee. Thus, right of Lien is probably the most important of rights of a bailee because it gives the bailee the power to get paid for his services.


Lien is of two kinds - Particular and General.


  1. 1. Particular Lien

This means that the lien holder has a right to keep possession of only that particular property for which the charges are owed. For example, A gives a horse and a bicycle to B. A agrees to pay B charges for training the horse and no charges for keeping the bicycle. Now, if A fails to pay charges for the horse, B is entitled to keep possession only of the horse and not of the bicycle. He must return the bicycle.

Section 170 gives this right to the bailee. It says that where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labor or skill in respect of the goods bailed, he has, in absense of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.


Illustrations - A delivers a rough diamond to B to be cut and polished, which is accordingly done. B is entitled to keep the diamond until charges for his services are paid.

A gives cloth to B, a tailor, to make into a cloth. B promises to deliver the coat as soon as it is done and also to give 3 months credit for the price. B is not entitled to keep the coat until he is paid.

Conditions for Particular Lien -


1. Exercise of labor or skill - This right is subject to the condition that the bailee has exercised labor or skill in respect of the goods. Further, it has been frequently pointed out that the labor or skill must be such as improves the goods.

2. Labor or skill exercised must be for the purpose of the bailment - Any services rendered that are beyond the purpose of the bailment do not give a right of lien. For example, A bails his car to B to repair Engine. But B repairs tires instead. B will not get the right of lien.

3. Labor or skill exercised must be in respect of the goods - As mentioned before, the bailee gets a right of lien only upon the goods upon which the service was performed.


  1. 2. General Lien


As opposed to Particular Lien, General Lien gives a right to the bailee to keep the possession of any goods for any amount due in respect of any goods. Section 171 says that, bankers, factors, wharfingers, attorneys of a High Court, and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.

Thus, this right is only available to bankers, factors, wharfingers, attorneys of high court, and policy brokers. However, this right can be given to the bailee by making an express contract between the bailor and the bailee.



Responsibility of the bailor towards bailee


1. Duty to dispose faults:


Bailer should disclose faults present in goods at the time of making delivery. Faults are of two types namely ; Known faults and Un-known faults. On the other hand bailments also are of two types namely Gratuitous bailment and Non-Gratuitous bailment. In case of gratuitous bailment, bailer is liable to compensate for bailee injuries arising out of known faults. In Gratuitous bailment, bailer is not answerable to un-known faults. In case of Non-Gratuitous bailment, bailer is answerable to both known faults and Un-known faults.


2. Duty to contribute for expenses:


Bailer should Contribute for expenses incurred by bailee. In case of Gratuitous bailment, bailer need not contribute for ordinary expenses and extra ordinary expenses or to the contributed by bailer. In case of Non-Gratuitous bailment, bailer should contribute for both ordinary expenses and extra ordinary expenses.


3. Duty with regard to defective title:


In case where bailer has delivered the goods with defective title, the bailee may come across suffering from the side of true owner due to bailers defective title. In such a case bailer with defective title should compensate bailee.


4. Duty to Indemnify:


Principal of indemnity operates between bailer and bailee, where bailer becomes implied indemnifier and bailee becomes implied indemnity holder. So bailer has duty to indemnify bailee.


5. Duty to take the Goods back:


After fulfillment of purpose bailee returns the goods to bailer. Then bailer should take them back. If bailer refuses to take the goods back, bailer has to compensate bailee.








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