INTRODUCTION

A contract of bailment is a legal relationship in which the owner of goods (the bailor) temporarily delivers them to another person (the bailee) for a specific purpose, under the agreement that the goods will be returned or otherwise disposed of according to the bailor’s instructions once the purpose is fulfilled. This concept is rooted in the principle of trust and responsibility, as the bailee is obligated to exercise reasonable care to protect the goods while they are in their possession. Bailment is a common legal arrangement in everyday transactions, such as leaving a car with a valet, storing goods in a warehouse, or giving personal items to a dry cleaner. Under Section 148 of the Indian Contract Act, 1872, bailment is defined as the delivery of goods by one person to another for a purpose, on the condition that they will be returned or dealt with as per the bailor’s direction.

The contract typically involves mutual consent and a clear purpose. Delivery of possession can be actual (physical transfer) or constructive (legal transfer without physical handover). The duties of the bailor and bailee depend on whether the bailment is gratuitous or for compensation. Understanding the legal framework of bailment ensures clarity, trust, and protection of rights in these temporary transfers of goods.

DUTIES OF A BAILEE

The following are the duties of every bailee:

1. Duty of Reasonable Care [Sections 151 – 152]

Section 151 lays down this duty as that 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. The section lays down a uniform standard of care for “all cases of bailment”.[i] Originally in English law, liability in bailment was absolute. It was no excuse for the bailee to say that the damage or failure to return was due to no fault of his own; he was liable in any case. Thus, where goods were delivered to a bailee for safe custody and he was robbed of them, the court held him liable, saying, “it is a delivery which chargeth him to keep at his peril”.[ii] The first concession was given to a gratuitous bailee. It was laid down in R. v. Viscount Hertford[iii] that “if money be given to one to keep generally without consideration and if the person be robbed, he is discharged.”

For the purpose of duty of care modern English law divides bailees into two kinds only, namely, gratuitous bailee and bailee for reward. A gratuitous bailee is liable for loss of, or damage to, goods only if he is guilty of gross negligence. “There is a certain degree of negligence to which everyone attaches great blame”, and that may be called ‘gross negligence’. In India, however, Section 151 prescribes a uniform standard of care in all cases of bailment, that is, a degree of care which a man of ordinary prudence would take of his own goods of the same type and under similar circumstances If the care devoted by the bailee falls below this standard, he will be liable for loss of or damage to the goods.

As per Section 152, a bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in Section 151. “No cast-iron standard can be laid down for the measure of care due from a bailee and the nature and amount of care must vary with the posture of each case.”[iv] The burden of proof is on the bailee to show that he was exercising reasonable care and if he can prove that he will not be liable. If the bailee places before the court evidence to show that he had taken reasonable care to avoid damage which was reasonably foreseeable or had taken all reasonable precautions to obviate risks which were reasonably apprehended, he would be absolved of his liability.[v]

2. Duty not to make unauthorised use [Section 154]

Section 154 provides 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 damage arising to the goods from or during such use of them. Goods must be used by the bailee strictly for the purpose for which they have been bailed to him. Any unauthorised use of the good would make the bailee absolutely liable for any loss of or damage to the goods. Section 153 states that any contract of bailment is avoidable at the option of the bailor, if the bailee does any act with regard to the goods bailed, inconsistent with the conditions of the bailment.

3. Duty not to mix [Sections 155 – 157]

The bailee should maintain the separate identity of the bailor’s goods. He should not mix his own goods with those of the bailor and without his consent. If the goods are mixed with the consent of the bailor, both will have a proportionate interest in the mixture thus produced, as per Section 155 which states that if the bailee, with the consent of the bailor, mixes the goods of the bailee with his own goods, the bailor and the bailee shall have an interest in proportion to their respective shares, in the mixture thus produced.

If the mixture is made without the bailor’s consent, and if the goods can be separated or divided, the bailee is bound to bear the expenses of separation as well as any damage arising from the mixture, as per Section 156 which states that if the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, and the goods can be separated or divided, the property in the goods remains in the parties respectively, but the bailee is bound to bear the expense of separation or division and any damage arising from the mixture.

As per Section 157, if the bailee, without the consent of the bailee, mixes the goods of the bailor with his own goods, in such a manner that it is impossible to separate the goods bailed from the other goods, and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods. However, if the mixture is beyond separation, the bailee must compensate the bailor for his loss.

4. Duty to return [Sections 160 – 161]

Section 160 provides for the duty to return as the duty of the bailee according to the bailor’s directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished. According to Section 161, if by the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time. When the purpose of bailment is accomplished or the time for which the goods were bailed has expired, the bailee should return the goods to the bailor without demand.[vi]

5. Duty not to set up “jus tertii”

A bailee is not entitled to set up, as against the bailor’s demand, the defence of jus tertii, that is to say, that the good belong to a third person. The bailee is estopped from denying the right of the bailor to bail the goods and to receive them back.

6. Duty to return increase [Section 163]

In the absence of any agreement to the contrary, the bailee is bound to return to the bailor natural increases or profits accruing to the goods during the period of bailment. This is so provided in Section 163, which states that 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.

CONCLUSION

The contract of bailment establishes a legal relationship grounded in trust and responsibility, where the bailee is entrusted with the temporary possession of goods for a specific purpose under agreed conditions. Understanding the duties of a bailee—such as exercising reasonable care, refraining from unauthorized use, maintaining the distinct identity of goods, returning goods promptly, and ensuring any natural increases are returned—is essential for ensuring fairness and protecting the rights of both parties involved. These duties, as outlined under the Indian Contract Act, 1872, provide clarity on the legal obligations and expectations in a bailment arrangement. By adhering to these principles, both bailors and bailees can engage in secure and trustworthy transactions, thereby promoting confidence in commercial and personal exchanges.

[i] Wilson v. Brett, (1843) 11 M&W 113.

[ii] Southcot v. Bennet, 1601 Cro Eliz 815:78 ER 1041.

[iii] R. v. Viscount Hertford, (1681) Shower 172: 39 ER 870.

[iv] Shanti Lal v. Tara Chand Madan Gopal, AIR 1933 All 158.

[v] Kuttappa v. State of Kerala, (1988) 2 KLT 54.

[vi] Dhian Singh Sobha Singh v. Union of India, AIR 1958 SC 274.