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Indian Contract Act 1872

Contract of Bailment and Pledge

Contract of bailment and pledge are different from each other. According to section 148 of The Indian Contract Act, 1872, Bailment means delivery of goods from one person to another person for some purpose. On the accomplishment of such purpose, the person receiving the goods returns or otherwise disposes of them as per the instructions of the person delivering them. The person who delivers the goods is known as bailor. The person to whom such goods are delivered is known as bailee.

Contract of Bailment and Pledge

Bailment is a delivery of goods for some purpose on an understanding that they are to be returned after the achievement of such purpose. In case of a contract of bailment, there is only the change of possession and not ownership.

Bailor remains the owner of the goods; bailee only gets the possession of such goods. There may be actual delivery or constructive delivery of goods.

Learn more about the Duties of Bailor here in detail.

Gratuitous Bailment

In this type of bailment, neither the bailor nor the bailee receives any remuneration. Such a bailment may be for the exclusive benefit of either the bailor or the bailee. However, it terminates on the death of either the bailor or the bailee.

Section 159 states that in the case of the gratuitous bailment, the bailor or the lender may require the bailee to return the goods at any time, even before the expiration of the period of lending. Also, he can do so even before the fulfilment of the purpose of bailment.

However, if the bailee or the borrower incurs any loss due to this act of the bailor, the bailor needs to indemnify him for the loss or damages.

Bailment for Reward

It is for the mutual benefit of both the bailor and the bailee. For example, A hands over his goods to B for transporting them to Delhi. A has the benefit of transportation and B gets transportation charges. Thus, both of them are benefitted.

Contract of Bailment and Pledge

Source: freepik.com

Pledge

It is a special type of bailment. It is a bailment of goods as security for payment or performance of duty. The person who pledges the goods (or bailor) is the pledgor or pawner. The person to whom such goods are deposited is known as pledgee or pawnee (section 172).

It is the duty of the Pawnee to take care of the goods pledged. In a contract of pledge, any type of documents, goods, securities can be pledged. Government securities should be pledged by endorsement and delivery. Pawnee has a right to sell the goods pledged in some exceptional situations.

There are some important ingredients of the pledge: –

  • The property should be handed over (delivered) to Pawnee.
  • Delivery should be in accordance with the contract of pledge.
  • Delivery of goods should be only as security.
  • There should be a condition to return such goods.

Solved Example on Contract of Bailment and Pledge

Q: Define bailment and write the different forms of bailment.

Ans: Bailment means handing over or delivery of goods by a person to another for some purpose which are returnable after the accomplishment of such purpose.

Various forms of bailment are as follows:-

  • Delivery of goods by a person to another for some purpose.
  • Goods are given to a friend or relative for their use without any charge.
  • Goods on hire.
  • Delivery of goods as security to a creditor.
  • Delivery of goods for transportation.
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Varinder Gulati
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Varinder Gulati

Can a pledgee to whom the gold jewellery is pledged can re pledge the jewellery to some other financer

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