As per the section 148 of the Indian Contract Act, 1872, a bailment is a contract where one person delivers goods to another person for some purpose. The person delivering the goods is the Bailor and the person receiving the goods is the Bailee. After the accomplishment of the purpose, the Bailee needs to return these goods to the Bailor or dispose of them according to the directions of the Bailor. Let us now discuss the duties of bailee and bailor.
Duties of Bailee and Bailor
Bailment refers to the voluntary delivery of goods. Also, such delivery is for a temporary purpose and after the fulfilment of which the bailee shall either return the goods in the same or altered form or dispose of them.
In the contract of bailment, the ownership of the goods remains with the Bailor and only the possession transfers to the bailee. Such delivery of goods may be actual or constructive.
For example, when A hands over the keys of a godown to B, it amounts to the delivery of goods in the godown. Also, A is the bailor and B is the bailee.
Learn about the Rights available to the Parties here.
Duties of a Bailee
Duties of a bailee in respect of goods are as follows:
1. Take proper care of goods
According to section 151, it is the duty of a bailee to take care of goods bailed to him. Bailee should take care of these goods as an ordinary man will take care of his goods of the same value, quality, and quantity.
Thus, if the bailee takes due care of goods then he will not be liable for any loss, deterioration of such goods. Also, the bailee needs to take the same degree of care of goods whether the bailment is for reward or gratuitous.
However, the bailee is not liable for any loss due to the happening of any act by God or public enemies though he agrees to take special care of the goods.
As per section 153, the Bailee shall not make any unauthorized use of goods bailed. In case he makes any unauthorized use, then bailor can terminate the bailment.
Bailor can also claim for damages caused to goods bailed due to unauthorized use as per Section 154.
3. Keep goods separate
The bailee needs to keep the goods separately from his own goods. He should not mix the goods under bailment with his own goods. In case bailee mixes the goods with his own goods without the consent of the bailor, then:
- Bailor also has an interest in the mixture.
- If the goods can be separated or divided, the property in the goods remains with both the parties. But, the bailee bears the expenses of separation or any damages arising from the mixture.
- If it is not possible to separate the goods, the bailee shall compensate the bailor for the loss of goods.
4. Not set adverse title
A bailee must not set an adverse title to the goods bailed.
5. Return Goods
The duty of the bailee is to return the goods without demand on the accomplishment of the purpose or the expiration of the time period. In case of his failure to do so, he shall be liable for the loss, destruction, deterioration, damages or destruction of goods even without negligence.
6. Return increase or profits
A bailee shall return the goods along with any increase or profit accruing to the goods to the bailor, in the absence of any contract to the contrary.
For example, A leaves a hen in the custody of B. The hen gets a chick. B shall deliver the hen along with the chick to A.
Also, learn about the Responsibilities of the Principal to Third-parties here.
Duties of a bailor
Duties of a bailor are as follows:
- It is the duty of a bailor to disclose all faults. If bailor fails to disclose such faults then he will be responsible for the damage caused to goods or loss suffered by the bailee.
- Also, the bailor is under the duty to pay the extraordinary expenses incurred by the bailee for such bailment.
- It is the duty of the bailor to accept the goods after the purpose for which such goods were bailed is accomplished.
- It is the duty of the bailor to indemnify the bailee for the cost incurred due to the defective title of goods bailed to the bailee.
Solved Example on Duties of Bailee and Bailor
Explain Bailee’s, Particular Lien?
Ans. As per section 170 of the Indian Contract Act, 1872, the bailee has a lien on the goods that he receives under the contract of bailment. When the bailor bails the goods to the bailee for a particular purpose and the bailee expands skill and labour on these goods, he has a right to retain the goods until the bailor pays him his charges in respect of skill and labour. However, the right of lien arises only when the bailee uses skill and labour on the goods to confer an additional value on the goods.
For example, X gives a piece of cloth to Y for stitching a shirt. Y promises to deliver the shirt in a week’s time. After a week Y has the shirt ready. But, he has a right to retain it until X pays him his charges.
Section 171 states the provisions for a general lien. It is a right to detain any property belonging to another person which is in the possession of the person exercising the lien in respect of any payment lawfully due to him.