Discuss the contract of bailment with the duties of Bailor and Bailee. Illustrate with suitable examples.

Question: Discuss the contract of bailment with the duties of Bailor and Bailee. Illustrate with suitable examples. [BJS 2018]

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Answer

The term Bailment originated from the French word ‘Bailer’ which simply translates to the phrase ‘to deliver’. The person who delivers the said goods is known as the “Bailor” whereas the person to whom these goods are delivered is called the “Bailee”. In Indian context, the concept of Bailment is discussed in Chapter IX of the Indian Contract Act, 1872.

Essentials for Bailment

1. There has to be delivery of Goods.
   
2. The delivery made should be because of a valid purpose.
3. The goods must be returned or disposed of.

Bailor’s Duties (Sections 150, 158, 159 and 164) 

1) Duty to disclose defects (Section 150): The bailor has a duty to disclose any known defects or risks associated with the property being bailed. This includes informing the bailee of any hidden defects or potential dangers that may affect the property or pose a risk to the bailee or others.

2) Duty to bear expenses (Section 158): The duty is upon the Bailor of the goods to make good any expenses in any form which have been incurred by the Bailee for the purpose of the bailment of the goods.

3) Duty to indemnify the bailee (Section 159): According to Section 159 of the Indian Contract Act 1872 bailor has a duty to indemnify the loss suffered by the bailee under the contract. 

For example, A asks his friend B to give him cycle for one hour. B instead of his own cycle gives C's cycle to A. While A was riding, the true owner of the cycle catches A and surrenders him to police custody. A is entitled to recover iron B all costs, which A had to pay in getting out of this situation. 

4) Duty to receive back the goods: It is the duty of the bailor that when the bailee, in accordance with the terms of bailment, returns the goods to him that: the bailor should receive them. 

5) To pay damages for defect in bailor's title (Section 164): The bailor is responsible to the bailee for any loss which the bailee may sustain the reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions, respecting them.

Duties of the Bailee

1) Duty to take Reasonable Care: Section 151 of the Indian Contract Act states:

“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, quality and value as the goods bailed.”

2) Duty when Unauthorized use of the Goods occur: This aspect is dealt with in Section 154 of the Indian Contract Act, which states that –

“If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.” 

3) Duty in case of Mixing of or Parting with the Goods: The relevant sections dealing with this aspect are Sections 155, 156 and 157 of the Indian Contract Act.

• If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, the bailor and the bailee shall have an interest, in proportion to their respective shares, in the mixture thus produced.
• If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, and the goods can be separated or divided, the property in the goods remains in the parties respectively; but the bailee is bound to bear the expense of separation or division, and any damage arising from the mixture.
• If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods in such a manner that it is impossible to separate the goods bailed from the other goods and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods. Illustration: A bails a barrel of Cape flour worth Rs. 45 to B. B, without A's consent, mixes the flour with country flour of his own, worth only Rs. 25 a barrel. B must compensate A for the loss of his flour.

4) Duty to return the goods: The primary obligation as a bailee is to return the property to the bailor in the same condition in which it was entrusted to the bailee. This typically involves delivering the goods back to the bailor at the agreed-upon time or when the purpose is accomplished.