Finder of goods as a Bailee

By | October 29, 2019
Finder of goods as a Bailee

The rights unique to the finder of good under the Indian Contract Act can be found in its Sections 168 and 169. A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.

Introduction

The act of a person placing their property under the custody of another party is in the usual course of things by a mutual agreement called the contract of Bailment subject to the fulfilment of certain conditions. In such an agreement, the former party is known as a Bailor of goods and the latter is known as the Bailee of the said goods.

This type of contract is very widespread and can be seen in various situations in our day to day lives. For example, when a person gives his damaged car for repairs, it can be a contract of Bailment wherein the owner of the car is the Bailor of the car and the repair shop is the Bailee of the same. A contract doesn’t always have to appear so transactional on the face of it, as in the case of neighbour leaving their dog with another neighbour for a set period.

In the case of a contract of bailment, it is very important to note that the Bailee is bound to return or dispose of off the goods when the period of Bailment expires. However what happens when one finds goods which don’t belong to them? Does the finder of the goods have any responsibilities towards the goods? Can the finder claim any rights over the goods? Does the good have to be returned back on the discovery of the true owner of the goods? What is the title of the goods throughout the entire process? We will attempt to find an answer to these questions in this article.

According to the Indian Contract Act, more specifically S. 71 of the Indian Contract Act –

“A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.[1]

This section clearly states that in the case a person finds goods he has no ownership of, and he takes the same with him in his custody, he would assume the same rights and duties as a Bailee would under the Indian Contract Act. Over and above that, certain sections of the Indian Contract Act confers certain rights and duties unique to the finder of goods only.

Rights of the Finder of Goods

The rights unique to the finder of good under the Indian Contract Act can be found in its Sections 168 and 169.

Section 168 – Suing for Specific Reward: This Section States that –

“The finder of goods has no right to sue the owner for compensation for trouble and expense voluntarily incurred by him to preserve the goods and to find out the owner; but he may retain the goods against the owner until he receives such compensation; and, where the owner has offered a specific reward for the return of goods lost, the finder may sue for such reward, and may retain the goods until he receives it.”

Therefore, the finder of such goods cannot claim ownership or even compensation for costs incurred towards the goods when the owner of the goods finds the goods and seeks the possession of the same them. However, on type of right that the Finder of goods is entitled to be called the Right of Lien.

Right of Lien

While Section 168 says that the finder of a good does not have a right to sue its owner for ant expenses or troubles incurred voluntarily by him to look after the goods or to find its rightful owner, the finder of the good still has a Rights of Particular Lien with respect to that very good.

This essentially means that the can retain these goods till the period wherein he receives compensation for the troubles and expense voluntarily incurred by him in order to preserve and maintain the goods and to furthermore find its owner.

Right to claim the reward announced by the owner, if any

While we have seen above that the finder does have the right over the retention of the good till he isn’t paid fair compensation for maintaining the same in the form of a Right of Lien, the finder of the good in addition to the right has another right. When, after the owner of a good loses his good, and offers a specific reward for the retrieval and return of the same the finder of the goods can sue for that reward and furthermore may also retain the possession of the goods until he receives the said compensation.

Even in the case where the goods were found by the owner voluntarily and the owner of the goods only promises to compensate for the same later on, the finder of the goods can hold the owner to that promise of compensation. The agreement of promise to compensate in such a case would be legally binding and the owner would be bound by the same

Section 169 – Can the finder of the goods sell it at any point?

This section states that –

“When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses, upon demand, to pay the lawful charges of the finder, the finder may sell it—

(1) When the thing is in danger of perishing or of losing the greater part of its value, or,

(2) When the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.”

This section lays down the conditions upon whose fulfilment, the finder of the goods can sell the goods legally. This can either when –

  • The owner isn’t anywhere to be found or if the owner completely and simply refuses to actually pay the lawful charges owed to the finder of the goods in lieu of the maintenance of the goods by the latter.
  • The thing is in danger of losing its value or perishing. Eg.- Perishable goods such as Apples.
  • When the lawful charges incurred by the finder of the goods towards the maintenance of the goods exceeds 2/3rds of the value of the goods itself.

Duties of the Finder of the Goods

The finder of the goods, as provided in S.71 of the act plays the role identical to that of the Bailee of the goods. The same can be said to be the situation in the case of the Finder of goods. There aren’t any duties separately prescribed to the finder of the goods vis a vis a Bailee under the Indian Contract Act. In line with the same, the duties of the finder of goods are provided as follows.

  • Duty to take Reasonable Care 

 Section 151 of the Indian Contract Act states that –

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]

This essentially imposes the reasonable man standard on the Finder of goods with respect to taking care of the goods bailed to him, which means that the culpability of the Finder of goods in case of any mishap with regards to the goods would be tested on the basis of whether the Finder of goods took as good care of the goods as a reasonable man of ordinary prudence would have taken.

Furthermore, the obligation of the Finder of goods also includes the responsibility of taking reasonable care to avoid any damage that had occurred to the good in the past, provided that the Finder of goods was aware of the same.[3]

  • Duty when Unauthorized use of the Goods occur 

 This aspect is dealt with in Section 154 of the Indian Contract Act, which states that –

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.”[4]

The said section imposes the liability on the Finder of goods in a situation wherein the goods are used beyond the authority designated. This means that the Finder of goods cannot use the goods for his personal benefits or for any other reason beyond authority designated wherein the Bailor suffers any loss/damage.

  • Duty in case of Mixing of or Parting with the Goods 

The relevant sections dealing with this aspect are Sections 155, 156 and 157 of the Indian Contract Act. The Finder of goods has the responsibility of taking reasonable care while dealing with the goods entrusted upon him by the bailor as discussed in a previous section. One subpart of that responsibility includes his duty of not mixing the goods of the Bailor with that of his own part of the goods.

If the Finder of goods does mix the goods with his own, while having the consent of the Bailor in doing the same, the Bailor would in such a situation have interest over those goods in the proportion to the goods bailed by him. For this to happen the consent will have to be explicit in nature

In Section 156 and 157 certain conditions are mentioned describing the liability of the Finder of goods when he does not obtain the consent of the Bailor while mixing a part or whole of the goods bailed with those of his own. In such a situation the liability of the Finder of goods is equal to the loss or damage suffered by the Bailor as a consequence of such mixing of or parting with the goods.

  • Duty to return goods 

One of the primary essentials of a contract of Bailment is the fact that once the purpose for which the goods were bailed has been accomplished, the Finder of goods is bound to either return the good back to the Bailor or dispose of the good, depending on the condition set in the contract. However, according to Section 159 of the Indian Contract Act, the Bailor can ask for the good back at any point in the case where the good was provided to the Finder of goods gratuitously. The Finder of goods is bound to return the same but can claim damages for any damage accrued due to the same.

According to Section 160, when the time of bailment expires, the Finder of goods is bound to return the goods as per the manner demanded by the bailor, subject to reasonability.

According to Section 165, in cases involving multiple owners of the good that has been bailed, the Finder of goods is under the obligation to return the goods to any of the Co-Bailors as per the directions provided to him.

  • Duty in case of failure to return the goods 

Section 161 of the Indian Contract Act stipulates that in the event the Finder of goods fails to return the goods in stipulated or if reasonable time depending on the terms of the bailment, the liability is upon the Finder of goods to make good any loss or damage caused to the Bailor due to delay in return of the good or the failure to return the goods at all.

  • Duty to return back the increase or Profit derived from the goods

Section 163 of the Indian Contract Act says that in the absence of any contrary contract or agreement stating otherwise, the Finder of goods is under the obligation to completely deliver the increase or profit which has been accrued from the bailed goods back to the Bailor of the goods.

Conclusion

We learn from this article that the Finder of goods can be said to be a part of a quasi-contract or a pseudo contract, i.e. an implied agreement having the same degree of enforceability as that of an actual contract.

Furthermore, the finder of goods has the same responsibilities as a Bailee of goods according to Section 71 of the Indian contract. The only difference is in the rights unique to the finder of goods as provided in Sections 168 and 169 of the Indian Contract Act.


[1] Ram Krishna Tarafdar v. Nemai Krishna Tarafdar And Ors, AIR 1974 Cal 173

[2] Section 151, Indian Contract Act, 1872

[3] Lakhichand Ramchand v. G.I.P. Rly. Co., (1912) 14 Bom. LR 165

[4] Section 154, Indian Contract Act, 1872


  1. Rights of a Bailee and a Bailor
  2. Bailment: Concept and Definition
Aman Jha
Author: Aman Jha

Hi! I’m a student of Law, studying at National Law University, Delhi. My interests vary from keeping a track of the progress in the field of Artificial Intelligence at Silicon Valley, to the Goals Scored under the floodlights of the ‘Theatre of Dreams’ at Greater Manchester and everything in between. Oh, and I know a little bit of law as well!

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