RIGHTS AND DUTIES OF BAILOR AND BAILEE

ASSIGNMENT # 2 SEMESTER SPRING-2020

SUBMISSION DATE (JULY 22, 2020)

BY

BISMAH TARIQ

ROLL NO # 18181624-076

LAW-304 (LAW OF CONTRACT II)

LL.B (HONS) BACHELORS OF LAW –CBM

SUBMITTED TO

MR. KHAWAJA MUSHFIQ HAROON

SCHOOL OF LAW

UNIVERSITY OF GUJRAT
 Rights and Duties of Bailor and Bailee

Since bailments are not necessarily consensual, it follows that there is not always a contractual
obligations between bailor and bailee, but also the implied terms by law.The rights and duties of
bailor and bailee are reverse against each other.

RIGHTS OF BAILOR:

1. Bailor’s goods to be taken or kept with care and in case of any loss to
the goods, to get compensation: [section 152]

It is the right of the bailor that his goods which he has bailed, should be kept with
ordinary care and wisdom like the lay man keeps his own goods. It is the right of the
bailor that his goods should be saved from any sort of loss due to the negligence of
bailee. Though the goods bailed are not in the ownership of bailee, but they are in the
possession of bailee, so law requires from the bailee to keep those goods with ordinary
care under the similar circumstances.

According to Section 151 of Contract Act 1872:

“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.”

~:ILLUSTRATION:~
Raheel delivered his motor bike to Asim for repairing. When a mob was passing by the
repair shop. Asim didn’t keep the motor bike inside the shop. Due to the negligence of
Asim, Raheel suffered loss and here, Raheel has a right to claim compensation from
Asim under Section 152.

CASE LAW: BLOCK VS. SHERRY (1904)

Block gives his coat to sherry- a waiter in hotel. Sherry didn’t take necessary care of coat
and put it on some random table. An other waiter of that hotel spilled water on that coat.
Due to the negligence of Sherry, Block suffers loss and Sherry was held liable by court.
The judgment which the court gave was that a restaurant keeper is not absolutely liable as
 a insurer for the security of the property of their customers but , is liable for negligence as
a bailee, where he accepts the property of any specific customer for safekeeping.
MARTIN VS. LCC
A patient named martin admitted in the LCC hospital, where expensive belongings of
Martin were handed over for safe custody to hospital administration, which were later
stolen. The court held hospital liable as Martin had paid the cost of care, but due to
hospital carelessness, things were stolen.

2. To terminate the contract in case of any bailee’s act inconsistent with

conditions:
If the bailee uses the goods in an unauthorized manner, the bailor has the right to
terminate the contract of bailment before the completion of the bailment. A contract of
bailment is regarded as a voidable contract in such an event the bailee cannot sue the
bailor for a breach of contract.

According to Section 153 of Contract Act 1872:

“A contract of bailment is avoidable at the option of the bailor, if the bailee does any
act with regard to the goods bailed, inconsistent with the conditions of the
bailment.”

ILLUSTRATION
A lets to B, for hire, a horse for his own riding. B drives the horse in his carriage. This is
at the option of A, a termination of bailment.

3. To get compensation in case of bailee’s failure to prove the discharge

of duty:

In case of any loss occurred to the goods bailed, due to the negligence of bailee and he
even doesn’t put a necessary effort to avoid the loss to goods. So, in that case, it is the
right of the bailor to get compensation.

Burden of Proof:

As It is the general right of the bailor that his goods should be taken or kept with
necessary care by bailee as it is required from the bailee as a man of ordinary prudence.
So, in case of any loss occurred to goods , the loss which was avoidable , but due to the
negligence of bailee, it occurred, so bailee would pay the compensation. In court, the
onus to proof the discharge of ordinary care would be on the bailee. The loss or damage
 caused to the goods entrusted to the bailee is Prima Facie evidence of negligence, and
the burden of disproving negligence lies on the bailee against the bailor’s right.

According to Section 152 of Contract Act 1872:

“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.”

ILLUSTRATION
Saleem delivers his car to azeem at a repair shop. When azeem saw that many people are
protesting across the city and a mob is heading towards his shop. He kept the car inside the work
place and in case, he discharge his duty but mob attacked the shop and destroyed the car. So, it is
duty of azeem to prove the discharge of duty on his part. But, Azeem failed to do so, then It is
the right of saleem to claim compensation from azeem for that loss.

CASE LAW: (1923) 27 CWN 1017

The defendant- ship owner didn’t take care of goods bailed as an ordinary prudent man and did
negligence on the part of a carrier of goods to send jute in a boat with twenty or thorty leaks on
its side, one or one and a half inches in length, and keep the goods in the hold of boat for thirty
hours. The defendant as a bailee didn’t act as a man of ordinary prudence. He couldn’t take his
own goods of the same quality and value under the same circumstances. So, Court held him
liable to compensate the bailor on the part of his negligence and carelessness.

4. To claim compensation for any damage arising through the

unauthorized use of goods bailed :
DESCRIPTION:

It is the right of bailor to claim compensation for any damage arised through the unauthorized
use of goods bailed. The contract to bailment is voidable at the option of the bailor, if the bailee
does not act with regard to the goods bailed in consistent with the conditions of the bailment. It is
well-settled law that a wrongful use or disposal of the goods by the bailee determines the
bailment and remits the bailor to the rights and remedies of a person entitled to possession, a
wrongful act mean for this purpose, a dealing wholly inconsistent with the terms of the bailment.

According to Section 154 of Contract Act 1872:

 “ 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.”

ILLUSTRATION
(a) A lends a horse to B for his own riding only. B allows C, a member of his family, to ride the
horse. C rides with care, but the horse accidentally falls and is injured. B is liable to make
compensation to A for the injury done to the horse.

(b) A hires a horse in Karachi from B expressly to march to Hyderabad. A rides with due care,
but marches to Khairpur instead. The horse accidentally falls and is injured. A is liable to make
compensation to B for the injury to the horse.

5. To claim the interest in proportion to his share in mixed goods:

It is the right of the bailor that his goods should not be mixed with the goods of bailee. If, the
bailee does so, then, the bailor has right to claim the interest in proportion to his share in the
mixed goods.

According to Section 155 of Contract Act 1872:

“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.”

6. To get his specific goods by the separation from mixed goods:

It is the right of bailor to claim the separation of goods in case of unauthorized mixture
of goods. If the bailee, without the consent of the bailor mixes bailors goods with his own
goods and the goods can be separated, the bailor has a right to claim his goods after
separation.

According to Section 156 of Contract Act 1872:

“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.”

ILLUSTRATION
A bails 100 bales of cotton marked with a particular mark to B. B, without A's consent, mixes the
100 bales with other bales of his own, bearing a different mark. A is entitled to have his 100
bales returned, and B is bound to bear all the expense incurred in the separation of the bales, and
any other incidental damage.

7. To get compensation by the bailee for the loss of goods:

It is the right of the bailor to claim compensation in case of unauthorized mixture of

goods which cannot be separated. If the bailee without the consent of the bailor mixes
bailors goods with his own goods and the goods cannot be separated, the bailor has a
right to claim compensation from bailee for the loss of the goods.

According to Section 157 of Contract Act 1872:

“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 Taka 45 to B. B, without A's consent, mixes the flour
with country flour of his own, worth only Taka 25 a barrel. B must compensate A for the
loss of his flour.

8. To get back the goods when the purpose of bailment is fulfilled:

It is the right of bailor to demand return of goods. The bailor has a right to get back the
goods bailed, without any demand, as soon as the purpose of bailment is accomplished
or after the expiry of period of bailment.

According to Section 160 of Contract Act 1872:

“It is the duty of the bailee to return, or deliver according to the bailor's direction,
the goods bailed, without demand, as soon as the time for which they were bailed has
expired, or the purpose for which they were bailed has accomplished.”

ILLUSTRATION
Ahmed delivers his bike to Anees for repair. After repairing Ahmed’s bike, It is the duty of
Anees to return the bike to Ahmed, as the purpose of bailment is completed, it would be the right
of Ahmed to get back his bike.

9. To get back the goods bailed on demand anytime:

The bailor may at any time require the return of things bailed for use. If the bailment is
gratuitous, then even though the goods are bailed for specific time period, but bailor has right
to demand the return of goods even before the expiration of bailment period or the
accomplishment of purpose.

According to Section 159 of Contract Act 1872:

“The lender of a thing for use may at any time require its return, if the loan was
gratuitous, even though he lent it for a specified time or purpose.”

ILLUSTRATION
A lends his car to B for one month and B hires that car for employment. B had agreed
with C to give him ride to Lahore against Rs. 1000 as rent. A demands the return of car
before B’s ride day. So, in that case A has right to get his car back even before the
accomplishment of purpose.
CASE LAW:
• Teckchand v. Mahdeo , AIR 1922: The court held that bailee is liable to
return the goods only when the purpose is accomplished but this doesn’t mean
that bailee is under obligation to only return the goods when the purpose is
accomplished. However, the duty should also be laid on bailee even though, the
purpose is not accomplished.

10. To get compensation in case of loss arised after bailee’s failure to

return the goods bailed:
If the bailee does not return or deliver the goods according to the bailor’s directions, after the
accomplishment of purpose or after the expiry of period of bailment, the bailor has a right to
claim compensation for any loss, destruction and deterioration of goods from that time.

A bailee who refuses either refuses to return the goods or fails to return the goods to the bailor, is
responsible to the bailor for any loss, destruction or deterioration of the goods from that time,
against which, the bailor has a right to sue bailee in the court for wrongful conversion or in
detinue, and bailor has a right to recover the damages in case of bailee’s misconduct.

According to Section 161 of Contract Act 1872:

“If, by the default of the bailee, the goods are not returned, delivered or tendered at the
proper time, he is responsible to the bailor for any loss, destruction or deterioration of
the goods from that time.”

CASE LAW: DHIAN SINGH V. STATE OF INDIA, 1958

In court, the defendant arises on a refusal to deliver the said goods to plaintiff, the wrongful
detention of goods is a continuing wrong. The court gave the verdict in action for wrongful
detention of goods. The defendant had to pay in court the compensation for refusing to return
the goods to plaintiff on demand.

11. To receive the increase or profit from goods bailed:

In the absence of contract to the contrary, the bailor has a right to demand any increase
or profit which may have occurred from the goods bailed.

According to Section 163 of Contract Act 1872:

“In the absence of any contract to the contrary, the bailee is bound to deliver to the
bailor, or according to his directions, any increase or profit which may have
accrued from the goods bailed.”

~:ILLUSTRATION:~
Mr. A leaves a cow in the custody of Mr. B to be taken care of. The cow has a calf then Mr.
B is bound to deliver the calf as well as the cow to Mr. A.

CASE LAW: Motilal Hirabai vs Bai Mani 1924

The main question, in this case was that whether the plaintiff ‘A’as a bailor is entitled to
redeem the "B" shares. It has been objected that in the present proceedings the rights of
BaiGulab cannot be properly adjudicated. In their lordships' opinion any declaration made in
there proceedings cannot affect the right (if any) of Bai Gulab to the shares in dispute. It is
quite competent for her personal representative, she having died, to bring an action for the
ascertainment of her rights. But it is equally clear that the mortgagees have no right to
withhold the "B"shares, from the plaintiff. The Ginning and Manufacturing Company
compulsorily capitalised the excess profits after payment of dividends of six per cent. The
company was perfectly competent to make such capitalisation and there is nothing to show
that it was invalid in any way. These shares were received by the trustees, as training out of
and appertaining to the original "A" shares, and it is impossible to contend that the right to
these shares could be differentiated from the right to the " A" shares. It has been objected that
the word "accretion " applied by the Subordinate Judge and the High Court in respect of the "
B " was that In the absence of my contract to the contrary, the bailee in bound to deliver to
the bailor, or according to his directions, any increase or profit which may have accrued from
the goods bailed.

Liabilities of Bailor:

1. To disclose faults in the goods bailed:

• Gratuitous Bailment: It is the duty of the bailor to disclose all the defects in the
goods that he is aware of to the Bailee that can interfere with the use of goods or can
expose him to extraordinary risks. And failure to do the same will make bailor liable
for damages.
• Non Gratuitous Bailment (Bailment for Reward):This duty particularly deals with
the goods given on hire. As per this provision, when the goods are bailed for hire,
then in such a situation even if the bailor is aware of the defect in the goods or not
will be held liable for the injury that has been caused due to the existence of such
defect.
TYPES OF KNOWLEDGE OF LIABILITY OF BAILOR
BAILMENT FAULTS
GRATITOUS NO NO
BAILMENT
YES YES
BAILMENT FOR NO YES
HIRE

YES YES

According to Section 150 of Contract Act 1872:

“The bailor is bound to disclose to the bailee faults in the goods bailed, of which the
bailor is aware, and which materially interfere with the use of them, or expose the
bailee to extraordinary risks; and if he does not make such disclosure, he is
responsible for damage arising to the bailee directly from such faults.
If the goods are bailed for hire, the bailor is responsible for such damage, whether
he was or was not aware of the existence of such faults in the goods bailed.”

[CASE LAW: HYMAN VS. NYE & SONS (1881) 6QBD 685]
 In Hyman v Nye & Sons, the plaintiff took a carriage on hire from the defendant but the
carriage was not fit for the journey and subsequently. During the journey a bolt in the
under-part of the carriage broke, the splinter bar became displaced. The carriage was
upset and the plaintiff suffered injuries. Holding the defendant liable, Justice Lindley
said: “ A person who lets out carriages is not responsible for all defects discoverable or
not; he is not an insurer against all the defects which care and skill guard against. His
duty is to supply a carriage as fit for the purpose for which it is hired as care and skill can
render it.The court held that even though the defendant was aware of such defect or not
he shall be liable.

[REED VS. DEAN (1949) 1 KB 188]

The plantiff hired a motor launch from the defendant for a holiday on the river Thames.
The launch caught fire, and the plantiffs were unable to extinguish it, the fire-fighting
equipment being out of order. They were injured and suffered loss. The court held that
there was an implied undertaking that the launch was fit for the purpose for which it was
hired as a reasonable care and skill could make it. The defendant was accordingly held
liable.

2. To pay the necessary expenses to bailee:

The bailor must repay to the bailee all the necessary expenses which the bailee has
already incurred for the purpose of bailment in the case of gratuitous bailment. But in
case of non gratuitous bailment, the bailor is liable to repay the extra-ordinary expenses
incurred by the bailee.

According to Section 158 of Contract Act 1872:

“Where, by the conditions of the bailment, the goods are to be kept or to be carried,
or to have work done upon them by the bailee for the bailor, and the bailee is to
receive no remuneration, the bailor shall repay to the bailee the necessary expenses
incurred by him for the purpose of the bailment.”

~:ILLUSTRATION:~
1) Mr. X delivers a dog to Mr. Y. Y incurred Rs 100 as feeding expenses and Rs 200 as
medical expenses when the dog become sick. State the legal position (a) if nothing was
charged by either party. (b) If Mr. X charged Rs 500 from Y.
Solution:
(a) It is a case of gratuitous bailment where x (the bailor) must repay Rs 100 as feeding
expenses 300 to Mr. Y (the bailee) because the bailor is bound to bear all expenses
incurred by the bailee for the purpose of bailment.
 (b) It is the case of non gratuitous bailment where Mr. X (the bailor) must repay Rs 200
to Y (the bailee) because the bailor is Bound to bear all extraordinary expenses (and not
ordinary expenses) incurred by the bailee for the purpose of bailment.

2) A lends a horse to B a friend, for two days. The feeding charges are to be paid by B.
But if the horse meets with an accident. A will have to repay B medical expenses incurred by B.

CASE LAW: Surya Investment Co. v. State Trading Corporation of India,

AIR 1987
The Hon’ble Calcutta High Court in the case of Surya Investment Co. v. State Trading
Corporation of India, reported at AIR 1987 Cal 46, has held that:

“If the Bailee has to incur any expenditure for the preservation of the goods from deterioration
not provided for in the contract of bailment, the Bailee will be entitled to recover such
expenditure from the owner inasmuch as the owner will derive benefit therefrom if ultimately the
goods are delivered to the owner. A Bailee cannot lose the possession as well as charges for
bailment.A Bailee’s right of lien arises out of its possession and is lost with the loss of
possession.”
Subsequently, the Hon’ble Court also observed that the Bailee cannot be denied its claim for
storage charges solely on the ground that the Bailee has claimed or exercised the right of lien
and, therefore, it is not entitled to get any charge for keeping the goods bailed.

3. To compensate the bailee for the loss that exceeds the benefit in case of
demand to return the goods bailed prior to the maturity period to
return the goods:

If the loss caused to the bailee due to premature termination is more than the benefit
obtained by the bailee, it is the duty of the bailor to compensate the bailee for such an
excess loss. Bailment is made for the benefit as a consideration of both parties, but, if
bailor demands the goods bailed before the expiration of time or accomplishment of task.
So, the loss will be suffered by the bailee more. The law stated that in case of loss
exceeding the benefit, so, bailor has to compensate the bailee. Though, as the owner of
goods, law allowed the bailor to demand his goods back at any time, but the exception is
that, when the loss exceeds the benefit. So, that difference amount would be compensated
to the bailee as a duty of bailor.

According to Section 159 of Contract Act 1872:

“But, if, on the faith of such loan made for a specified time or purpose, the borrower
has acted in such a manner that the return of the thing lent before the time agreed
upon would cause him loss exceeding the benefit actually derived by him from the
 loan, the lender must, if he compels the return, indemnify the borrower for the
amount in which the loss so occasioned exceeds the benefit so derived.”

4. To compensate the bailee in case when the bailor was not entitled to
make bailment or receive back goods or give directions:

It is the Duty to indemnify the bailee against the defective title of the bailor. If the bailor
does not have any title to deliver the goods to the bailee, he would be liable to indemnify
to the bailee for any loss which the bailee has paid to the original owner.

According to Section 164 of Contract Act 1872:

“The bailor is responsible to the bailee for any loss which the bailee may sustain by
reason that the bailor was not entitled to make the bailment, or to receive back the
goods or to give directions, respecting them.”

~:ILLUSTRATION:~
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 main owner of the cycle catches A and surrenders
him to police custody. A is entitled to recover from B all costs, which A had to pay in
getting out of this situation.

5. To pay the remuneration to bailee for his services regarding goods

bailed:

It is the duty of the bailee to pay the remuneration to bailee for his services regarding
goods bailed.
• Particular Lien: Where the bailee has in accordance with the purpose of
bailment, rendered and service involving the exercise of labour and skill in
respect of goods bailed, he has, in the absence of a contract to contrary, a right to
retain such goods until he receives due remuneration for the services he has
rendered in respect of them. ( A bailee may be deprived of particular lien under a
special contract).
~:ILLUSTRATION:~
X gives a piece of cloth to Y, a tailor to make a coat. Y promises X to deliver the
coat as soon as it is finished. Y is entitled to retain the coat till he is paid for(if he
has not allowed any credit period) but is not entitled to retain the coat(if he has
allowed one month’s credit for the payment).
 • General Lien:
A general lien is a right of bailee to retain all the goods as security for the general
balance of amount until the full satisfaction of the claims due whether in respect
of those goods or other goods. In the absence of a contract to the contrary, general
lien is available only to bankers, factors, wharfinger, attorneys of a high court and
policy brokers. The general lien is available to other persons only when there is an
express contract to that effect.
~:ILLUSTRATION:~
X deposited US 64 units and shares of Reliance Industries Ltd. As security with
Citi Banks and took a loan against the shares of Reliance Industries Ltd. Citi Bank
may retain both the securities until its claims are fully satisfied.

According to Section 170 of Contract Act 1872:

“Where the bailee has, in accordance with the purpose of the bailment, rendered
any service involving the exercise of labour or skill in respect of the goods bailed, he
has, in the absence 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.”

According to Section 171 of Contract Act 1872:

“Bankers, factors, wharfingers, advocate of the Supreme 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.”

CASE LAW: Kalloomal Tapeshwari Prasad & Co. v. Rashtriya

Chemicals & Fertilizers Limited, AIR 1990
The Allahabad High Court, in the case of Kalloomal Tapeshwari Prasad & Co. v. Rashtriya
Chemicals & Fertilizers Limited, reported at AIR 1990 All 214, has provided an understanding
of Section 170 in the following manner:
“On an examination of this Section, it will be apparent that the extent of bailee's lien is in respect
of services involving the exercise of labour or skill rendered by him in respect of goods bailed. It
follows that the services which are to be rendered must be limited to the labour or skill which has
been spent by the bailor over the goods bailed. The lien has nothing to do with any other service
rendered by the bailor in respect of contract of bailment. As a matter of fact, labour and skill
must have been spent firstly in accordance with the purpose of bailment, must have been so spent
so as to improve the goods bailed and thirdly it applies only to such goods over which the bailee
has bestowed his labour and expense and not to other goods. All these conditions are again
subject to a contract to the contrary. If there be any contract to the contrary the bailee will not be
entitled to enforce his lien under S. 170”.
Rights of Bailee:

1. To get compensation for any damage suffered in case of disclosure of

faulted goods by the bailor:
The bailee is entitled to receive compensation for damages from the bailor, if the bailor
doesn’t disclose to the bailee, the faults of the goods bailed.

According to Section 150 of Contract Act 1872:

“The bailor is bound to disclose to the bailee faults in the goods bailed, of which the
bailor is aware, and which materially interfere with the use of them, or expose the
bailee to extraordinary risks”

2. To get repayment by the Bailor for necessary expenses incurred:

In the contract of Bailment, the Bailee incurs expenses to ensure the safety of goods. The
Bailee has the right to reIcover such expenses from the bailor.

According to Section 158 of Contract Act 1872:

“Where, by the conditions of the bailment, the goods are to be kept or to be carried,
or to have work done upon them by the bailee for the bailor, and the bailee is to
receive no remuneration, the bailor shall repay to the bailee the necessary expenses
incurred by him for the purpose of the bailment.”

3. To indemnify by the bailor in case of any loss, being suffered due to

prior return of goods:

It is the right of the bailee to to be indemnified in case of premature termination of

gratuitous bailment.

According to Section 159 of Contract Act 1872:

“If, on the faith of such loan made for a specified time or purpose, the borrower has
acted in such a manner that the return of the thing lent before the time agreed upon
would cause him loss exceeding the benefit actually derived by him from the loan,
the lender must, if he compels the return, indemnify the borrower for the amount in
which the loss so occasioned exceeds the benefit so derived.”
 4. To get compensation, If loss is being suffered from the bailor’s non-
performance due to the defective title to the goods:

It is the Right of the bailee to recover loss in case of bailor’s defective title. If the bailor
is not entitled to make the bailment or if the ownership of such goods bailed is defective
to some extent. E.g: The goods are of theft or some fraud.

According to Section 164 of Contract Act 1872:

“The bailor is responsible to the bailee for any loss which the bailee may sustain by
reason that the bailor was not entitled to make the bailment, or to receive back the
goods or to give directions, respecting them.”

~:ILLUSTRATION:~
Mr. A delivers his car to Mr. B in a repair shop to fix the broken mirror of car. In that scenario,
Mr. C visited that repair shop and claims that this car belongs to him. If Mr. C would sue in court
for the recovery of that car, then it is not Mr. B’s concern to check out that the car originally
belongs to whom, Mr. A or Mr. C. In that case, it is the right of Mr. B as a bailee to claim the
repair charges or any other expense from the actual bailor, Mr. A, who has delivered the car to
him. Mr. B has no right to claim that amount from Mr. C, though he may be the actual owner of
car. It is only the concern between the Mr. A and Mr. C to proof that this car belongs to them,
bailee has no duty in this matter.

5. To retain the goods bailed until the recovery of due remuneration for
the services or to claim Lien:

The bailee has right to retain the goods bailed until he receives due remuneration for the
services he has rendered in respect of bailment. When the goods are bailed to the Bailee
he is entitled to receive certain remuneration for services that he has rendered. But in case
of gratuitous bailment, the Bailee is not awarded any remuneration.

According to Section 170 of Contract Act 1872:

“Where the bailee has, in accordance with the purpose of the bailment, rendered
any service involving the exercise of labour or skill in respect of the goods bailed, he
has, in the absence 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.”
 Bailee has the right over Lien. By this, we mean that if the bailor fails to make payment
of remuneration or does not pay the amount due, the Bailee has the right to keep the
goods bailed in his possession till the time debtor dues are cleared.
~:ILLUSTRATION:~
a. A delivers a rough diamond to B, A jeweller, to be cut and polished, which is
accordingly done. B is entitled to retain the stone till he is paid for the services he
has rendered.
b. A gives cloth to B, a tailor, to make into a coat. B promises A to deliver the coat
as soon as it is finished, and to give a three months' credit for the price. B is not
entitled to retain the coat until he is paid.

~:CASE LAW: Surya Investment Co. v. S.T.C :~

In the case of Surya Investment Co. v. S.T.C, the court held that expenses incurred by
Bailee during preservation of goods under lien shall be borne by bailor.

6. To suit against a wrongdoer:

After the goods have been bailed and any third party deprives the Bailee of use of such
goods, then the Bailee can bring an action against the third party.

According to Section 180 of Contract Act 1872:

“If a third person wrongfully deprives the bailee of the use or possession of the
goods bailed, or does them any injury, the baliee is entitled to use such remedies as
the owner might have used in the like case if no bailment had been made; and either
the bailor or the bailee may bring a suit against a third person for such deprivation
or injury.”

Liabilities of Bailee:

1. To take care of goods bailed:

The bailee should take reasonable care of the goods which are in his possession. The
degree of care required by the bailee is similar to that of a man of ordinary prudence would take
of his own goods under the similar circumstances. If he has taken such care, he is not liable, even
if the goods are lost or damaged. He is also not liable for the destruction or the loss of goods due
to an act of god. It is the duty of the Bailee to take care of goods as his own goods. He shall
ensure all safety measures that are necessary to protect the goods. The standard of care should be
such as taken care by a prudent man. The goods shall be taken care of equally whether they are
gratuitous or non-gratuitous. The Bailee shall be held liable for payment of compensation if he
fails to take due care. But if the Bailee has taken due care and instead of that the goods are
damaged then in such a situation Bailee will not be liable to pay compensation. The Bailee is not
liable for the loss of goods due to destruction by fire.

According to Section 151 of Contract Act 1872:

“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. To not use the goods bailed in unauthorized way:

Bailee is duty bound to use the goods for a specific purpose only and not otherwise. If
he uses the goods for any other purpose than what is agreed for then the bailor has the
right to terminate such bailment or is entitled with compensation for damage caused
due to unauthorized use. A contract of bailment is voidable at the option of the bailor,
if the bailee doesn’t act with regards to the goods bailed in consistent with the
conditions of the bailment. He can use the goods as per the terms and condition of the
bailment.

According to Section 154 of Contract Act 1872:

“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. To not mix bailor’s goods with his own goods:

It is the duty of the Bailee not to mix bailor’s goods with his own. But if he wants to
do the same then he shall seek consent from the bailor for mixing of goods. If the
bailor agrees for the mixing of the goods then the interest in the mixed goods shall be
shared in proportion.

According to Section 155 of Contract Act 1872:

“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.”
4. To bear the expenses in the separation of mixed goods:
If the bailee without the consent of bailor, mixes the goods of bailor with his own
goods, in such a manner that it is possible to separate the goods bailed from the other
goods and deliver them back, then, it is the duty of the bailee to bear the expenses
incurred in the separation of mixed goods.

According to Section 156 of Contract Act 1872:

“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”

~:ILLUSTRATION:~

A bails 100 bales of cotton marked with a particular mark to B. B, without A's
consent, mixes the 100 bales with other bales of his own, bearing a different mark. A
is entitled to have his 100 bales returned, and B is bound to bear all the expense
incurred in the separation of the bales, and any other incidental damage.

5. To compensate the bailor for loss in case of impossibility of

separation of mixed goods:

If the bailee without the consent of bailor, mixes the goods of 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, then, it is the duty of the bailee to compensate the
bailor for loss

According to Section 157 of Contract Act 1872:

“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 Taka 45 to B. B, without A's consent, mixes the
flour with country flour of his own, worth only Taka 25 a barrel. B must compensate
A for the loss of his flour.
6. To return the goods to bailor on demand before the expiration of
pre-decided period:

If bailment is gratuitous, it is the duty of the bailee to return the goods bailed on the
demand by the bailor at any time. Bailor can demand the return of goods at any time
or even before the accomplishment of specific time or purpose for which he bailed the
goods to bailee.

According to Section 159 of Contract Act 1872:

“The lender of a thing for use may at any time require its return, if the loan was
gratuitous, even though he lent it for a specified time or purpose. But, if, on the
faith of such loan made for a specified time or purpose”

7. To return the goods to bailor on the expiration of time:

The section casts duty on bailee to return the goods to bailor without demand under
the following circumstances:
• As soon as the time for which the goods were bailed has expired.
• As soon as the purpose for which the goods were bailed has accomplished.
•
According to Section 160 of Contract Act 1872:
“It is the duty of the bailee to return, or deliver according to the bailor's
direction, the goods bailed, without demand, as soon as the time for which they
were bailed has expired, or the purpose for which they were bailed has
accomplished.”

8. To compensate the bailor in case of any loss incurred after the

bailee’s failure to return the goods on fixed time:

The Bailee must return the goods without waiting for demand from bailor:
the time specified in the contract has expired or the purpose
• specified in the contract is accomplished,
• if the goods are not returned, then:
i. The goods shall be at risk of the bailee,
 ii. The bailee shall be liable for any loss or damage, even if such loss is caused
without any fault or negligence of the bailee or due to an act of god or other
unavoidable reasons.
• Bailee is duty bound to return the goods once the purpose is achieved or on the
expiry of the time period for which the goods were bailed. But if the Bailee makes
default in returning the goods on proper time then he will be responsible with the
loss, destruction or deterioration of the goods if any.
According to Section 161 of Contract Act 1872:
“If, by the default of the bailee, the goods are not returned, delivered or
tendered at the proper time, he is responsible to the bailor for any loss,
destruction or deterioration of the goods from that time.”

~:CASE LAW: Bank of India v. Grains & Gunny Agencies :~

In the case of Bank of India v. Grains & Gunny Agencies, the court held that if the
goods are lost or destroyed due to the negligence of servant of Bailee, then in such
case as well Bailee shall be liable.

9. To give the increased sum or profit to the bailor earned from the
goods bailed:

The Bailee has a duty to return the goods along with increase or profit subject to
contract to the contrary. Accretion that has accrued from the bailed goods is the part
of the bailed goods and therefore bailor has the right over such accretions if any. And
such accretions shall be handed over to the bailor along with the goods bailed.

According to Section 163 of Contract Act 1872:

“In the absence of any contract to the contrary, the bailee is bound to deliver to
the bailor, or according to his directions, any increase or profit which may have
accrued from the goods bailed.”

10. To not set up any adverse title:

The bailee must not do any act which is inconsistent with the title of the bailor. He
must not set up his own title or a third parties title on the goods bailed to him.
The bailee must hold the goods on behalf and for the bailor. He cannot deny the right
of the bailor to bail the goods or receive them back. If he delivers the goods bailed to
any person other than bailor, he may prove that such a person had a right to them as
against the bailor.