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BAILMENT
Bailment is derived from a French word baillier which means to deliver or any kind of handing over. Bailment is the delivery of goods by one person to another for some purpose, when the purpose is accomplished, the goods are returned to or otherwise disposed off according to the direction of the person delivering them.
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BAILMENT
According
to Contract Act 1872 Chapter 9 section 148 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 off according to the directions of the person delivering them".
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Bailee Bailor
: : :
EXAMPLES
A lends a book to B to be returned after the examination. There is a contract of bailment between A & B. A places his damaged car in possession of a repairer R. A is bailor and R is bailee in this case and there is a contract of bailment between A & R. X who is going out of station delivers a horse to Y for proper care. Keeping valuables in locker of a bank.
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Delivery Purpose
Return
of Goods
of Specific Goods
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Agreement
Bailment
is usually created by an agreement between bailor & bailee. The agreement may be expressed or implied. In certain exceptional cases bailment is implied by law. eg: bailment b/w a finder of goods and owner of goods. All the essential of a valid contract are applied.
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Delivery of Goods
There
must be delivery of goods. It means that the possession of goods must be transferred.
The
delivery must be voluntary. eg : the delivery of jewellery by its owner to a thief who shows a revolver, does not create a bailment, because the delivery is not voluntary.
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Purpose
Delivery
of goods should be for some specific purpose, task or performance. If the goods are delivered by mistake it should not be considered as Bailment. eg : Wrong delivery of Goods to shop A instead of shop B , does not create any bailment.
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Types of Bailment
1) On the basis of Rewards:
Gratuitous: No consideration passes b/w the bailor and the bailee. eg : X lends a horse to Y for riding without any charge. Non-Gratuitous: Some consideration passes b/w the bailor and the bailee. eg :Y hires a horse from X.
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For the exclusive benefit of bailer eg :Delivery of some valuables to a neighbour for safe custody without charges. For the exclusive benefit of bailee
Duties of Bailor
Duty to bear the risk of loss
Duty to receive back the goods Duty to Disclose Defects
Duties of Bailor
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Duties of Bailee
Duty to take care of goods bailed
Duties of Bailor
Duties of Bailee(contd)
A) Duty to take care of goods bailed (Sec 151,152) :
The bailee is bound to take care of the goods whether the bailment is gratuitous or non-gratuitous.
Duties of Bailee(contd)
C) Duty not to mix bailors goods with own goods (Sec 155,157) D) Duty to return the goods (Sec 160,161) :
The bailee must return or deliver the goods according to the bailors directions without demand, after the accomplishment of purpose or after the period of bailment. If he fails to do so, he is responsible to the bailor for any loss or damage. eg: X lent a horse to Y for 5 days. On the expiry of 5 days, Y did not return the horse. The horse died without any fault on part of Y. Y was responsible to X for the loss.
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Duties of Bailee(contd)
E) Duty to return accretions to the goods (Sec 163) : 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.
eg: A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is bound to deliver the calf as well as the cow to A.
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Rights of a Bailor
A) Right to claim damages in case of Negligence (Sec 152): If the bailee has not taken reasonable care, the bailor has a right to claim damages for the loss, destruction or deterioration of the goods bailed. B) Right to Terminate the contract in case of Unauthorized use (Sec 153): If the bailee does any act in respect of goods bailed, which is inconsistent with the conditions of the bailment, the bailor has a right to terminate the contract of bailment.
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Rights of a Bailee
A) Right to claim damages (Sec 150) : If the bailor does not disclose the defect in the goods which are known to him and the bailee suffers some loss due to such defects, the bailee has a right to claim damages. B) Right to claim Reimbursement of Expenses (Sec 158) : The bailee has a right to claim reimbursement of all the necessary expenses which he has already incurred for the purpose of bailment.
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PLEDGE
Pledge is a special type of bailment where transfer of goods is for security of something.
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PLEDGE
According to Contract Act 1872 Chapter 9 section 172 The bailment of goods as security of payment of a debt or performance of a promise is called Pledge. The bailor in this case is called Pledger or Pawner and bailee is called Pledgee or Pawnee.
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EXAMPLES
`200 from B and keeps his watch as security for payment of the debt. The bailment of watch in this case in called pledge. X borrows `1 lakh from a bank and keeps his shares as security for payment of a debt. It is a contract of pledge.
A borrows
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Pledge is a type of bailment so it possess the same requisites as of bailment. Agreement Delivery of Possession Purpose Return of goods after the performance of promise or payment of debt
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RIGHTS OF PAWNOR
Right
to get back goods : On the performance of promise or repayment of loan and interest the pawnor is entitled to get back the goods pledged
to redeem debt (Sec 177) : If a time is stipulated for payment of debt or performance of promise, in such case if pawnor makes default in payment or performance at stipulated time he may still redeem the pledged goods before actual sale.
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Rights
and maintenance of goods : The pawnor has a right to see that the Pawnee preserves the goods pledged and properly maintain them. Right of an ordinary debtor : In addition to above rights, the pawnor has the rights of an ordinary debtor which are conferred on him by various statutes meant for the protection of debtors.
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RIGHTS OF PAWNEE
Right of retainer (Sec 173) : The Pawnee may retain the pledged goods until his dues are paid. He may also retain the goods for payment of interest due on debt and expenses incurred in respect of possession of goods. Right of retainer for subsequent advances When the Pawnee lends money to same pawnor after the date of pledge, it is presumed that the right of retainer over the pledged goods extends to subsequent advance also.
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Right when pawnor makes default(Sec 176) : When the pawnor fails to redeem his pledge the Pawnee can exercise the following rights : He may file a suit against the pawnor He may sell the goods pledged after giving a reasonable notice of sale
1. 2.
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Purpose
Pledge is bailment of goods for a specific purpose, i.e. repayment of a debt or performance of a duty.
Pawnee cannot use the goods pledged. Pawnee can sell the goods after giving notice to the pawnor in case of default by the pawnor.
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Right to Use
Bailee can use the goods as per terms of bailment. Bailee can either retain the goods or sue the bailor for his dues.
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Right to sell
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