Bailment and pledge

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 Bailment (sec.148)
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.(sec.148)

The person delivering the goods is called ‘bailor’

The person to whom they are delivered is called

‘bailee’

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 Requirements for bailment
Contract

Delivery of possession of goods for some purpose.

Return of good when the purpose accomplished.

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 Classification of bailment
 Bailment may be for the:
1. Exclusive benefit of the bailor:Delivery to neighbour for
safe custody.
2. Exclusive benefit of the bailee: Eg lending a cycle to
friend
3. Mutual benefits of the bailor and bailee.Eg to repair my
watch
 Bailment may also classified as:
1. Gratuitous bailment.Eg : lending book to friend
2. Non- gratuitous bailment Eg : Goods kept in godown

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 Duties of bailor
To disclose known faults: The hourse is vicious.

To bear extraordinary expenses of bailment. Eg:

Accident caused to the hourse

To receive back the goods:After the expiry of the term

To indemnify bailee: Where the title of the goods is

defective and the bailee suffers as a consequence

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 Duties of bailee
To take reasonable care of goods:Eg Jewellery handed
over to the hospital authorities.
Not to make any unauthorized use of the goods.:Eg horse
only to be used by the head of the family n not all family
members.
Not to mix the goods bailed with his own goods:
a) Can be seperated Eg Cotton Bales
b)Cannot be seperated Eg Wheat
Not to set up an adverse title: On behalf of the bailor
To return any accretion to the goods:To return incase of
any increased benefit from the goods Eg: Cow and calf.
To return the goods.
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 Rights of bailor
Enforcement of rights :All the liabilities and duties of
the bailee are rights of bailor

Avoidance of contract: Eg gave horse for riding only

and used with carriage .

Return of goods lent gratuitously:Lent of books

Compensation from a wrong-doer : Can bring the third

party to the Court who does or intend to harm the
pocession .
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 Rights of bailee

Delivery of goods to one of several joint bailors of

goods: Can return to anyone if nothing contrary is
mentioned

Delivery of goods to bailor without title.:Bailee

cannot be questioned for returning the goods to the
bailor whom he in good faith believed to be true
owner.

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 Rights to apply to court to stop delivery. SO that the
bailee can first bring a suit in respect to the goods
bailed.

Rights of action against trespassers: Can take the

trespasser to the Court.

Bailee’s lien: Where the rightful charges of the bailee

are not yet repayed ,he can continue the pocession of
the goods ,also known as “Particular Lien”

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 Law relating to lien
Lien means the right of a person to retain possession of
goods of another until some debt or claim of the
person in possession is settled.
Lien may be-
1. Particular or Specific lien (sec.170)- means the right
to retain the particular goods until claims arising on
those goods are satisfied. Particular lien is attached
to specific goods for the unpaid price or claim
thereof.

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 General lien (sec. 171)- means the right to retain
goods of another until all the claims of the holder are
satisfied.
General lien is a right to retention of goods not only
towards the demands arising out of the article in
possession but for a general balance of account in
favour of the holder.
General lien is available only to bankers, policy
brokers.
Eg: If two securities are given to a banker but the
loan is taken against one of the securities,banker may
retain both the securities until his claim is satisfied

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 Finder of goods
A person who comes by an article is not obliged to
pick it up or take, charge of it. But if he does pick it
up, he becomes a bailee’.

Sec 71 clearly lays down that a “person who finds

goods belonging to another and takes them into his
custody is subject to the same responsibility as a bailee

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 Rights of finder of goods
Right of lien

Right to sue for reward

Right of sale

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 Obligations of finder
 He must take reasonable care of the goods and if , inspite
of this , the goods are destroyed, he is not responsible for
any loss.
 He must not use the goods for his own purpose.
 He must not mix the goods with his own goods.
 He must try to find out the owner of the goods. If he does
not do that, he will be liable as a trespasser ( one who
interferes with another’s property ).

The liability of a hotel-keeper or an inn-keeper in respect of

goods belonging to a guest is that of bailee of goods.

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 Termination of bailment
On the expiry of the period.
On the achievement of the object.
Inconsistent use of goods.
Destruction of the subject matter
Gratuitous bailment
Death of the bailor or bailee.

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 Pledge
The bailment of goods as security for payment of a
debt or performance of a promise is called pledge.
In this case bailor is called the pawnor and bailee is
called the Pawnee. The transaction between pawnor
and Pawnee is known as pledge.
In the pledge contract only movable property can be
pledged as a security for payment of a debt.

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 Essentials of Pledge Contracts
The goods must be delivered as security for payment
of a debt or for performance of a promise
There must be actual or constructive delivery of goods
in pledged.
The pledge can be made of movable goods only.
Movable goods include documents, shares, or valuable
things.
Transfer of possession is essential.

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 Difference between pledge and bailment
Pledge Bailment
 Goods are pledged to Goods may be bailed for
ensure repayment of a any purpose.
debt or for performance  Goods are bailed for
of a promise. carrying out a specific
Goods are pledged as a purpose or for a
security particular period of
time.

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 Rights of a Pawnee
 To retain the goods (Section 173and 174) – the
Pawnee may retain the goods for---
(a) Payment of the debt or the performance of the
promise;
(b) Interest on the debt; and
(c) All necessary expenses incurred by him in respect
of the possession or for the preservation of the goods
pledged.
To recover extra-ordinary expenses(Section 175)

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 Contd..
 Right on pawnor‟s default (Sec.176)- If the pawnor
makes default in payment of the debt, or performance
of a promise at the stipulated time in respect of which
the goods were pledged
a) The pawnee may bring a suit against the pawnor upon
the debt or promise;
(b) Retain the goods pledged as a collateral security;
(c) He may sell the goods pledged, on giving the pawnor
reasonable notice of the sale.

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 Rights of a Pawnor

1. Right of redemption

2. Preservation and maintenance

3. To receive back the goods

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 Pledge by persons other than the true owner
In general goods may be pledged by the owner of the
goods. In the following cases, a valid pledge may be
made by a person who is not the true owner of the
goods:-
1. Pledge by mercantile agent (Sec.178) :Where the
Merchantile agent is with the consent of the owner is
in pocession of the goods or documents.
2. Pledge by a person in possession of goods under
voidable contract (Sec.178) :

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 3. Pledge by a person with limited interest (Sec.179) :Eg
F finds a pen on road and pledged it at Rs 20to P.F
incurred Rs 10 in repairing of the pen,The owner can
get the pen by paying Rs 10 to P
4. Pledge by co-owner in pocession:With the assent of all
owners can create a valid contract.

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