The person who delivers the said goods is known as the “Bailor” whereas the person to whom these goods are delivered is called the “Bailee”. This article will look into the Rights provided to the Bailee and the Bailor via the Indian Contract Act, 1872.
Bailment as a concept is primarily used in common law countries. Under most common law systems, Bailment is defined as the process of placing one’s personal property or their goods in the temporary custody or the temporary control of another person. The term Bailment originated from the French word ‘Bailer’ which simply translates to the phrase ‘To Deliver’.
The person who delivers the said goods is known as the “Bailor” whereas the person to whom these goods are delivered is called the “Bailee”. In the Indian context, the concept of Bailment is discussed in Chapter IX of the Indian Contract Act, 1872.
For an agreement of Bailment to be valid under the Indian Contract Act, it needs to fulfil certain conditions essential to the section of Bailment in the said Statute. They are stated in the following Section.
Essentials for Bailment
- There has to be delivery of Goods – For the agreement of bailment to be legally valid, it is necessary that the goods be delivered from one party (person) to another party (person). This essentially means that the possession of goods has to be changed.
- The delivery made should be because of a valid purpose – In the contract of such a nature, it is impertinent to show that there were an intention and purpose for which the goods are delivered.
- The goods must be returned back or disposed of – For a contract of Bailment to be Valid, it is essential to return or dispose of the goods when the purpose of Bailment is accomplished.
In every contract of Bailments, the Bailee and the Bailor are granted certain rights and have certain duties imposed upon them by virtue of the nature of the agreement. It is very important to note that the rights granted to the Bailee are similar to the duties imposed on the Bailor and the Rights granted to the Bailor are similar to the Duties imposed on the Bailee. This is because the right granted to one party usually imposes an obligation or a duty of performance or omission on the other party.
As in the contract of Bailment, there are only two sets of parties to the contract, from the logic deduced above, it can be concluded that the right granted to one party is naturally the duty imposed on the other party, subject to a few restrictions.
We will now look into the Rights provided to the Bailee and the Bailor via the Indian Contract Act, 1872.
Rights of a Bailee
The Right to deliver the Goods bailed to any/either Bailors
In the situation wherein there are several joint owners who have bailed certain goods unless there is a condition regarding the same specified, the Bailee has the right to choose to deliver the goods to any of the Joint owners he may so, please.
Eg. – Ram, Shyam and Gyan are the Joint owners of a Private Jet. They delivered the same on the agreement of hire to Amit for a month. After the expiry of a month, Amit can choose to return the private jet to any of the three Joint Owners, unless the owner to whom the Jet is to be returned to is specified in the contract.
The Right to Deliver the Goods of Bailment even without a title
If a Bailor hands over his goods to a Bailee even without having its actual title or ownership, and the Bailee in furtherance of it returns the goods back to the Bailor as per the agreement of Bailment in good faith, the Bailee is not responsible for the same.
Eg. – A, who does not have ownership over a car transfers it to B as per an agreement of bailment, B would not be liable for transferring the car back to A as per the terms of the agreement if done in good faith, even if the original owner of the car finds out about the same.
The Right to apply to the Court in case of a dispute of Title over the Goods –
If a good bailed is claimed to be rightfully owned by multiple parties other than the bailor of the good itself, the Bailee may apply to the Court to stop delivery of such good and to decide the title of the good.
Eg. – X, a dealer of cars delivered a car to Y for using over the summer. Subsequently, Z asserted and claimed that the car actually belonged to him and that he had only handed it over to X for repairs, and hence Y should return the same to him. Y can in such a case, apply to the court to decide the question of the ownership of the car in order to have the car delivered back to its rightful owner.
The Right of Lien –
In the event that the Bailor of the goods fails to pay up the rightful charges incurred by the Bailee in the maintenance of the goods, the Bailee may refuse to return the good till the period that such charges are duly paid back to the Bailee.
Eg. A gives his watch for repair to B. B can refuse to return the watch till the time that A does not pay B for the charges of the repairs carried out on the said watch.
Rights of a Bailor
The Right of Enforceability –
In the event that the Bailee of a good happens to be neglectful of any of their duties, the Bailor can, as a matter of right, enforce the same by filing a suit against the Bailee for the loss suffered by him due to such neglect of the Bailee.
Eg. – Ram bails Shyam his car according to the contract of Bailment. Shyam doesn’t take care that a reasonable man would, by leaving the keys inside the car which leads its theft. Thus, Ram can file a suit against Shyam for the neglect of his duty.
The Right to Avoid the said Contract –
In the event that the Bailee does any act/omits to do an act in contravention to the terms of the Bailment agreed upon, the Bailor can terminate the contract at any point thereafter, due to such contravention.
Eg. – Anku lends Smriti a car only for Private use. Smriti however, uses the car as a Taxi. Anku can terminate the contract due to the same at any point thereafter.
The Right to Return the Goods when lent Gratuitously –
If the Bailor lends certain goods to the Bailee but does so gratuitously, he can demand back the bailed goods at any point of time before the expiry of the time period of agreement of Bailment.
Eg. – Max, while going out of station delivered his Jewellery to Rocky for safekeeping for a month gratuitously. However, Max returned earlier than expected. He then may demand the return of his Jewellery even though the period of one month hadn’t expired. However, Max is to make good any charges incurred to Rocky in maintaining the Jewellery.
The Right of the Bailor to get compensated –
If a third party does anything to injure the good or cause deprivation of the use of the good to the Bailee, the Bailor may in such a situation file a suit against such third party, and can also seek compensation in furtherance of the same.
Eg. Sita Bailed 50kgs of Wheat to Gita, who owned a godown, for safekeeping. Rita, a fraudulent woman prepared a fake order of Delivery for 20kgs of Wheat and claimed the same from Gita. Gita believing in good faith that the 20kgs had to be sold from Sita to Rita, delivers the same to Rita. Therefore, Sita can file a suit to recover damages from Rita for the 20 kilos of Wheat.