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Fifteenth Edition : May 2025
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Preface to Fifteenth Edition I-5
Preface to First Edition I-7
Syllabus I-9
Chapter-Heads I-13
Leading Cases I-29
UNIT 1
GENERAL PRINCIPLES OF THE INDIAN CONTRACT ACT, 1872
CHAPTER 1 INTRODUCTION
CHAPTER 2
NATURE AND KINDS OF CONTRACTS
CHAPTER 3
CHAPTER 4 CONSIDERATION
CHAPTER 5 CAPACITY OF PARTIES
CHAPTER 6 FREE CONSENT
CHAPTER 7
CHAPTER 8
AGREEMENTS EXPRESSLY DECLARED VOID
CHAPTER 9
CONTINGENT CONTRACTS
CHAPTER 10
QUASI CONTRACTS OR CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT
DISCHARGE OF CONTRACT AND REMEDIES FOR BREACH
CHAPTER 11
DISCHARGE OF CONTRACT
CHAPTER 12
REMEDIES FOR BREACH OF CONTRACT
INTRODUCTION TO SPECIAL CONTRACTS
CHAPTER
13
CONTRACTS OF INDEMNITY AND GUARANTEE
CHAPTER 14
BAILMENT AND PLEDGE
CHAPTER 15 AGENCY
UNIT 4 SALE OF GOODS ACT, 1930
CHAPTER 16 CONTRACT OF SALE OF GOODS
CHAPTER 17 CONDITIONS AND WARRANTIES
CHAPTER 18 TRANSFER OF PROPERTY
CHAPTER 19
PERFORMANCE OF CONTRACT OF SALE
CHAPTER 20
CHAPTER 21 AUCTION SALE
UNIT 5
LIMITED LIABILITY PARTNERSHIP ACT, 2008
CHAPTER 22
CHAPTER 23 INCORPORATION OF LIMITED LIABILITY PARTNERSHIP
CHAPTER 24 PARTNERS AND THEIR RELATIONS
CHAPTER 25
FINANCIAL DISCLOSURES
CHAPTER
26 CONVERSION TO LLP
BAILMENT
14.1 DEFINITION OF BAILMENT (SECTION 148)
In everyday life there are many instances of entrustment of goods or movable property by one person to another. For instance, a person may deliver cloth to a tailor for the purpose of stitching, a watch may be entrusted to a watch repairer for repairs, a book may be lent to a person for reading, goods may be delivered to a carrier for transshipment, an ornament may be entrusted to a jeweller for mending etc.
In all these cases, the delivery or entrustment of goods by one person to another is known as bailment.
‘Bailment’ is thus the legal relation that arises whenever movable property
14.2
is under a duty to return the property to the former, or to dispose it, as the former directs. The essence of bailment is transfer of possession, ownership remaining with the bailor. There cannot be bailment of immovable property.
Examples :
(i) A deposited his luggage in a cloak room at the railway station. This is a contract of bailment. In this example A is bailor and the railway administration is the bailee.
(ii) A gave his car to B, a car workshop owner, for repairs. This is a contract of bailment in which A is the bailor and B is the bailee.
The Explanation to the section states that,
For example, if A sells a particular scooter to B but B leaves it in A’s possession till he completes his other purchases, A becomes a bailee although earlier he was a owner.
[State of Gujarat vs. Menon Mohammad Haji Hasan].
14.2 ESSENTIAL OF BAILMENT
The following are the essential features of bailment :
14.2.1 Speci c movable property
There cannot be bailment of immovable property.
14.2.2
Delivery of goods for change of possession
The essence of bailment is transfer of possession, ownership remaining with the bailor, change of possession requires delivery of goods. According to S. 149,
Delivery should involve change of possession in the legal sense of the term the bailee should have de fact control of the property. Mere custody does not involve change of possession. One who has custody without possession, like a servant, or a guest using his host’s goods is not a bailee.
Case (i) : In Indra Kumar vs. State of M.P. [AIR 1963 All 70], it was held that a mere fact that a person, who travels by a roadways bus is allowed to keep the luggage on the roof of the bus does not make it an implied contract to return the luggage at the destination; there being no entrustment nor bailment.
Case (ii) : In Sri Hanuman Steel Rolling Mills vs. CESC Ltd. [AIR 1996 Cal 449], it was held that supply of electricity meter to a consumer of electricity is one of the obligation in a contract for supply of energy to him, and therefore the contract is not of bailment of meter.
Case (ii) : In
waiter and hung on a hook behind A. While A was dining, his coat was stolen. In a suit by A, it was held that the proprietor of the restaurant was liable for the loss. The waiter, in this case, had taken possession
act as servant under instruction from the owner to collect the coat and become the bailee.
14.2.2.1 Types of delivery
Delivery means transfer of possession of a thing from one person to another. Delivery may be actual, symbolic or constructive. They are explained below :
(i) Actual delivery. Actual delivery involves physically handing over the possession of the goods. For example, A hands over to B, a tailor, certain clothes for tailoring.
(ii) Symbolic delivery. are delivered, it is called symbolic delivery. For example, handing over the key of the godown is a symbolic delivery. Similarly, goods in transit, when they are on a railway, can be delivered by handing over the railway receipt representing the goods.
(iii) Constructive delivery. When a person who is already in possession of the goods agrees to hold them as a bailee, it is called constructive delivery.
Deposit of valuables in a bank locker is not bailment. Similarly, mere leaving of box in room in another person’s house, when key of the box is not handed over to him does not amount to delivery within the meaning of Section 149.
Case : In the leading case Kaliaperumal Pillai v. Visalakshmi a lady employed a goldsmith for the purpose of melting old jewellery and making new ones. Every evening, she used to receive the half-made jewels from the goldsmith, put them into a box, and lock it up. While the box was left in the room of the goldsmith, she used to retain the key herself. One night, the jewels were stolen, and the lady sued the goldsmith holding him liable as the bailee. It was held that, “Any bailment that could be gathered from the facts in possession of the melted gold. Delivery is necessary to constitute bailment. The mere leaving of box in room in the defendant’s house, to delivery within the meaning of the provision in Section 149.” This is an important case from examination point of view.
14.2.3 Delivery for some purpose and usually upon a contract
Delivery of goods should be for some purpose. The goods may be lent or hired or deposited for safe custody or as security for a debt. Section 148 of the Act contemplates delivery based upon a contract. English law recognises bailment without contract. Usually the delivery of goods is the result of a has held that there can be bailment without a contract.
Case : In State of Gujarat vs. Menon Mohammad Haji the vehicles and goods belonging to M power under the Sea Customs Act. M was not found guilty and the
But in the meanwhile the vehicles remained totally uncared for and parts of the vehicles were pilfered-away, leaving only the skeletons of the vehicles. The vehicles had become useless for all practical purposes. In an action by the owner, it was contended on behalf of rejected this contention. with by the Contract Act only in cases where it arises from a contract but it is not correct to say that there cannot be a bailment without an property seized or its value.
14.2.4 Obligation to return the goods or dispose them according to directions of the bailor
The essence of bailment is the obligation of the bailee to return the goods or to dispose them according to the directions of the bailor. return or disposal of the goods may be given even after the accomplishment
of the purpose of bailment. Even where the contract is silent about the return of the goods, there is an implied term in a bailment to return the goods within a reasonable time after the accomplishment of the purpose. It is not original or in altered form.
Examples :
(i) A deposits money with his banker. There is no bailment in this case as the banker is not bound to return the same currency notes and coins. The relationship between the banker and customer is that of debtor and creditor.
(ii) A farmer delivers grain to a miller to be used by him in his trade, and is entitled to claim an equal quantity of corn of like quality or its market price. It is not bailment.
14.3 KINDS OF BAILMENT
14.3.1 Classi cation of Bailment from ‘Bene t’ point of view . In such a bailment of a thing with a bailee, who is to keep for the bailor. In this case there is by the bailor to the bailee for his use. In this
example, the hire of a thing by the bailor to the bailee for reward or pledge of goods by the bailor to the bailee as security for loan.
14.3.2 Classi cation of Bailment from ‘Reward’ point of view
In case of gratuitous bailment, no compensation passes between the bailor and the bailee, that is, neither the bailor nor the bailee gets any remuneration. are : any charge, without reward for the bailee and class notes by the bailor to the bailee for the use of the bailee. Non-gratuitous bailment is for reward for valuable consideration. In this case either the bailor or the bailee is entitled to remuneration. For example, bailment for hire. Bailment for hire may be hiring for use of the goods; hiring for safe custody, , of services in keeping the goods; hiring for work on or with regard to the goods.
14.6
Criteria
No remuneration passes between bailor and bailee.
It is the duty of the bailor to disclose to the bailee known faults in the goods bailed (S.
It is the duty of the bailor to meet the necessary expenses incurred by the bailee for the
If a gratuitous bailment is made and the bailor compels the return of the goods bailed even before the expiry of that time or accomplishment of the purpose, having a right to do so, he has to make good the
such earlier demand of the
terminated in case of death of
14.4 SUB-BAILMENT
Either the bailor or the bailee is entitled to remuneration.
Bailor is responsible for damages arising to the bailee due to faults in the goods even if he himself was not aware of existence of such faults in the goods bailed.
Bailor has no duty to pay the necessary expenses.
Bailor has no right to terminate the bailment before the expiry purpose.
Non-gratuitous bailment is not terminated in case of death of the bailor or the bailee.
A sub-bailee is a person to whom the actual possession of goods is transferred by someone who is not himself the owner of the goods, but has a
might sub-bail by engaging another carrier as sub-contractor.
14.5 CONSIDERATION IN RELATION TO GRATUITOUS BAILMENT
Since the Act deals with bailment based upon a contract, it becomes necessary to discover consideration supporting the contract if bailment is
gratuitous, instance, if A deposited his silver plate with B for safe custody, and B accepts the same gratuitously, B becomes liable to A if the plate is not returned, or in
to support the promise on the part of the bailee to return the goods. Thus, even a gratuitous bailment is a valid contract.
14.6 DIFFERENCE BETWEEN BAILMENT AND SALE
Sale
Ownership is not transferred to the buyer; only possession is transferred.
The bailee is required to return the goods to the bailor or otherwise dispose them according to the directions of the bailor.
Bailment may be gratuitous or non-gratuitous.
Ownership is transferred to the buyer.
returned to the seller.
The buyer is required to pay the price of goods purchased. Bailment is usually upon on a contract. But there may be bailment without contract,
the time of bailment.
All the essentials of contract must be present in case of sale.
delivered at the time of sale.
The Indian Contract Act, 1872 contains provisions for bailment. contains provisions relating to sale.
14.7 DIFFERENCE BETWEEN BAILMENT AND LICENCE
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 persons delivering them. It is the duty of the bailee to take reasonable care of the goods.
A contract of license is a contract whereby a person is allowed to enter or use or to place his goods in the premises belonging to another person. The goods are not delivered to the other party. There are two parties in such a contract : Licensor and licensee. The licensor is the person who authorises the use of the premises and licensee is the person who
14.8
is authorised to enter or use or place the goods in the premises belonging to the licensor.
The questions whether a transaction amounts to bailment or some other species of contract, sometimes arises specially in the case of vehicles left on the land either gratuitously or on payment of a small charge.
The relationship between the owner of the parking lot and the owner of the car, where parking was at the owner’s risk, was held to be of licensor and licencee, and not that of bailor and bailee
Case : In the owner of a motor car, who went to see a horse race, parked his
printed “Seaway Car Park, Car Park Ticket”. This ticket purported to absolve B from any liability for loss of or damage to cars. The
the thief represented A. The car was never recovered. In a suit by A for negligence based upon the duty of a bailee, it was held that in the absence of delivery, the relationship between the two was only that of a licensor and licensee, and not that of bailor and bailee.
It held, “the hotel-owner cannot contract out of liability for its negligence or that of its servants in respect of a vehicle of its guest in any circumstance.”
14.8 DUTIES OF BAILEE
The duties of a bailee are as follows:
14.8.1 Duty to take reasonable care of the goods delivered to him (Section 151 and 152)
Section 151 has laid down a uniform standard care for all kinds of bailment. According to this section,
The banker-bailee, gratuitous or for reward, is bound to take the same care of the property entrusted to him as a reasonably prudent man and careful man may fairly be expected to take of his own property of the like description.
14.9
Case : In the leading case
boot of the coach. The suitcase was stolen from the boot. B was held liable for damages as he failed to take reasonable care of the suitcase.
The bailee is not an insurer of the goods bailed to him. Section 152 states that,
Thus, if the bailee takes the care as is stipulated in S. 151, he is not responsible for any loss or damage to the goods bailed. The bailee is not liable for loss caused by State enemies, communal riots or by an
Case (i) : In a bailee kept the bailor’s ornaments locked in a safe. But he kept the key in the cash-box in the same room which was situated on the ground
burglars by removing the latch. The ornaments were stolen from the safe by using the key from the cash box. The bailee was held liable for not taking reasonable care of the goods.
Case (ii) : In bailee was held not liable for damage to the foodgrains caused by very heavy
14.8.2 Duty not to deviate from the terms of the contract (S. 153)
According to Section 153 of the Act,
bailed, will entitle the bailor to avoid the contract, and insist on the return of the goods bailed.
Example : (Illustration to S. 153). A lets B, for hire a horse for his own riding. B drives the horse in his carriage. This is, at the option of A, a termination of bailment.
If, according to the contract, the goods should be deposited at one place, and in fact, the goods are deposited at another place, the bailee will be liable for loss or damage to the goods, since his act is inconsistent with the conditions of bailment.
