Contract of Bailment Explained

Introduction to Contract of Bailment

The Contract of Bailment is one of the most important special contracts under the Indian Contract Act, 1872. It is commonly used in daily life, whether we deposit goods in a cloakroom, give our vehicle for repair, or keep valuables in a bank locker.

In simple words, bailment means the delivery of goods by one person to another for a specific purpose, upon a contract that the goods shall be returned or disposed of once the purpose is achieved.

This concept plays a crucial role in commercial transactions, banking, warehousing, transport, and repair services.

Definition of Contract of Bailment (Section 148)

According to Section 148 of the Indian Contract Act, 1872:

“A bailment is the delivery of goods by one person to another for some purpose, upon a contract that the goods shall, when the purpose is accomplished, be returned or otherwise disposed of in accordance with the directions of the person delivering them.”

Important Terms:

Bailor – The person who delivers the goods
Bailee – The person to whom the goods are delivered
Goods – Movable property (not money or immovable property)

Essential Elements of a Contract of Bailment

For a valid contract of bailment, the following essentials must be present:

1. Delivery of Goods

There must be a delivery of goods from the bailor to the bailee.

2. Delivery for Some Purpose

The goods must be delivered for a specific purpose.

3. Return or Disposal of Goods

Once the purpose is completed, the goods must be returned or disposed of as per the bailor’s directions.

4. Ownership Not Transferred

Only possession is transferred, ownership remains with the bailor.

5. Contract

There must be a contract (express or implied) between the bailor and bailee.

Kinds of Delivery of Goods (Section 149)

1. Actual Delivery

Goods are physically handed over to the bailee.
Example: Giving a watch for repair.

2. Constructive Delivery

Goods are not physically transferred but control is given.
Example: Handing over keys of a warehouse.

3. Symbolic Delivery

Something representing the goods is delivered.
Example: Delivery of documents of title.

Kinds of Bailment

1. Gratuitous Bailment (Section 150)

Bailment made without reward.

Example:

Lending a book to a friend

2. Non-Gratuitous Bailment

Bailment made for consideration.

Example:

Giving clothes to a dry cleaner

Rights of Bailor

The bailor enjoys the following rights:

To deliver goods according to bailment conditions
To claim return of goods upon accomplishment of purpose
To claim compensation for misuse of goods
To claim necessary expenses incurred by bailee
To claim return of accretions (increase or profit from goods)

Duties of Bailor

To disclose known faults in goods
To bear extraordinary expenses
To indemnify bailee for bailor’s defects in title
To receive back goods after purpose is completed

Rights of Bailee

A bailee has the following rights:

To deliver goods according to bailor’s directions
To deliver goods to any one of joint bailors
To deliver goods in good faith
To claim necessary expenses
To take action against third persons for harm to goods

Duties of Bailee

To take reasonable care of goods
Not to make unauthorized use of goods
Not to mix bailor’s goods with his own
To return goods on completion of purpose
To return any accretion to goods

Finder of Lost Goods (Section 168 & 169)

A finder of goods has the same rights and responsibilities as a bailee.

Rights of Finder:

Right to reward (if promised)
Right to sue for reward
Right to lien (right to retain goods)

Termination of Bailment (Section 153–162)

A bailment is terminated by:

Completion of purpose
Expiry of time
Inconsistent use of goods
Death of either party (gratuitous bailment)
Loss or destruction of goods

Finder of Goods vs Bailee

Basis	Finder of Goods	Bailee
Contract	No contract	Contract exists
Reward	Conditional	As per agreement
Ownership	No ownership	No ownership

Important Case Laws on Contract of Bailment

1. Coggs v. Bernard

Established principles of bailment and duties of bailee.

2. Ultzen v. Nicols

Hotel keeper held liable as bailee for guest’s belongings.

3. State of Gujarat v. Memon Mahomed

Government held liable as bailee for seized goods.

Examples of Contract of Bailment in Daily Life

Parking vehicles in paid parking
Bank lockers
Courier services
Repair shops
Warehouses

Difference Between Bailment and Pledge

Bailment	Pledge
General bailment	Bailment of goods as security
Goods returned	Goods sold on default
No debt necessary	Debt or promise necessary

Conclusion

The Contract of Bailment is a practical and frequently used contract that governs the temporary transfer of goods. Understanding bailment helps law students, lawyers, and businesses handle responsibilities, rights, and liabilities efficiently.

The provisions under the Indian Contract Act, 1872 ensure fairness between bailor and bailee and protect goods during temporary possession.

Frequently Asked Questions (FAQ)

Q1. Is money a subject of bailment?

No, money is not goods unless specific money is to be returned.

Q2. Can bailment exist without consideration?

Yes, gratuitous bailment exists without consideration.

Q3. Is finder of goods a bailee?

Yes, finder of goods has rights and responsibilities of a bailee.

Introduction to Contract of Bailment

This concept plays a crucial role in commercial transactions, banking, warehousing, transport, and repair services.

Definition of Contract of Bailment (Section 148)

According to Section 148 of the Indian Contract Act, 1872:

“A bailment is the delivery of goods by one person to another for some purpose, upon a contract that the goods shall, when the purpose is accomplished, be returned or otherwise disposed of in accordance with the directions of the person delivering them.”

Important Terms:

Bailor – The person who delivers the goods
Bailee – The person to whom the goods are delivered
Goods – Movable property (not money or immovable property)

Essential Elements of a Contract of Bailment

For a valid contract of bailment, the following essentials must be present:

1. Delivery of Goods

There must be a delivery of goods from the bailor to the bailee.

2. Delivery for Some Purpose

The goods must be delivered for a specific purpose.

3. Return or Disposal of Goods

Once the purpose is completed, the goods must be returned or disposed of as per the bailor’s directions.

4. Ownership Not Transferred

Only possession is transferred, ownership remains with the bailor.

5. Contract

There must be a contract (express or implied) between the bailor and bailee.

Kinds of Delivery of Goods (Section 149)

1. Actual Delivery

Goods are physically handed over to the bailee.
Example: Giving a watch for repair.

2. Constructive Delivery

Goods are not physically transferred but control is given.
Example: Handing over keys of a warehouse.

3. Symbolic Delivery

Something representing the goods is delivered.
Example: Delivery of documents of title.

Kinds of Bailment

1. Gratuitous Bailment (Section 150)

Bailment made without reward.

Example:

Lending a book to a friend

2. Non-Gratuitous Bailment

Bailment made for consideration.

Example:

Giving clothes to a dry cleaner

Rights of Bailor

The bailor enjoys the following rights:

To deliver goods according to bailment conditions
To claim return of goods upon accomplishment of purpose
To claim compensation for misuse of goods
To claim necessary expenses incurred by bailee
To claim return of accretions (increase or profit from goods)

Duties of Bailor

To disclose known faults in goods
To bear extraordinary expenses
To indemnify bailee for bailor’s defects in title
To receive back goods after purpose is completed

Rights of Bailee

A bailee has the following rights:

To deliver goods according to bailor’s directions
To deliver goods to any one of joint bailors
To deliver goods in good faith
To claim necessary expenses
To take action against third persons for harm to goods

Duties of Bailee

To take reasonable care of goods
Not to make unauthorized use of goods
Not to mix bailor’s goods with his own
To return goods on completion of purpose
To return any accretion to goods

Finder of Lost Goods (Section 168 & 169)

A finder of goods has the same rights and responsibilities as a bailee.

Rights of Finder:

Right to reward (if promised)
Right to sue for reward
Right to lien (right to retain goods)

Termination of Bailment (Section 153–162)

A bailment is terminated by:

Completion of purpose
Expiry of time
Inconsistent use of goods
Death of either party (gratuitous bailment)
Loss or destruction of goods

Finder of Goods vs Bailee

Basis	Finder of Goods	Bailee
Contract	No contract	Contract exists
Reward	Conditional	As per agreement
Ownership	No ownership	No ownership

Important Case Laws on Contract of Bailment

1. Coggs v. Bernard

Established principles of bailment and duties of bailee.

2. Ultzen v. Nicols

Hotel keeper held liable as bailee for guest’s belongings.

3. State of Gujarat v. Memon Mahomed

Government held liable as bailee for seized goods.

Examples of Contract of Bailment in Daily Life

Parking vehicles in paid parking
Bank lockers
Courier services
Repair shops
Warehouses

Difference Between Bailment and Pledge

Bailment	Pledge
General bailment	Bailment of goods as security
Goods returned	Goods sold on default
No debt necessary	Debt or promise necessary

Conclusion

The provisions under the Indian Contract Act, 1872 ensure fairness between bailor and bailee and protect goods during temporary possession.

Frequently Asked Questions (FAQ)

Q1. Is money a subject of bailment?

No, money is not goods unless specific money is to be returned.

Q2. Can bailment exist without consideration?

Yes, gratuitous bailment exists without consideration.

Q3. Is finder of goods a bailee?

Yes, finder of goods has rights and responsibilities of a bailee.