INTRODUCTION
Bailment implies a sort of relationship in which the personal property of one person temporarily goes into the possession of another. The ownership of the articles or goods is in one person and the possession in another. The circumstances in which this happens are numerous. Thus, bailment is a subject of considerable public importance.[i] A contract of bailment is a legal relationship in which the owner of goods (the bailor) temporarily delivers them to another party (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. The bailee has a duty of reasonable care to protect the goods while they are in their possession. Bailments are common in situations like leaving a car with a valet, storing goods in a warehouse, or giving items to a dry cleaner. This type of contract typically involves mutual consent, a clear purpose, and compensation (though not always).
‘Bailment’ is defined in Section 148 of the Indian Contract Act, 1872 as 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 person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’. If a person is already in possession of the goods of other contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.
ESSENTIAL FEATURES
The following essential features of “bailment” are emphasised by the definition under Section 148 of the Act.
- Delivery of Possession
The first important characteristic of bailment is ‘the delivery of possession’ by one person to another.[ii] ‘Delivery of possession’ for this purpose should be distinguished from a mere ‘custody’. ‘One who has custody without possession, like a servant, or a guest using his host’s goods is not a bailee.’ The goods must be handed over to the bailee for whatever is the purpose of bailment. Once this is done, a bailment arises, irrespective of the manner in which this happens.
- Delivery should be upon contract
Delivery of goods should be made for some purpose and upon a contract that when the purpose is accomplished the goods shall be returned to the bailor. When a person’s goods go into the possession of another without any contract, there is no bailment within the meaning of its definition in Section 148. A well-known illustration is the decision of the Allahabad High Court in Ram Gulam v. Govt. of UP.[iii]
English law recognizes bailment without contract. In the words of Cheshire and Fifoot, “at the present day, no doubt, in most instances where goods are lent or hired or deposited for safe custody, or as security for a debt, the delivery will be the result of a contract. But this ingredient, though usual is not essential.[iv] The contract may be express or implied.
- Delivery should be upon some purpose
Bailment of goods is always made for some purpose and is subject to the condition that when the purpose is accomplished the good will be returned to the bailor or disposed of according to his mandate.[v] If the person to whom the goods are delivered is not bound to restore them to the person delivering them or to deal with them according to his directions, their relationship will not be that of bailor and bailee.
ACTUAL OR CONSTRUCTIVE DELIVERY
Section 149 provides for the delivery of possessions to the bailee. The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf. An explanation to Section 148 provides that if a person already in possession of the goods of another contracts to hold them as a bailee, he therefore becomes the bailee and the owner becomes the bailor although they may not have been delivered by way of bailment.
Delivery of possession is thus of two kinds, namely:
- Actual delivery, and
- Constructive delivery
When the bailor hands over to the bailee physical possession of the goods, that is called “actual delivery”. “Constructive delivery” takes place when there is no change of physical possession, goods remaining where they are, but something is done which has the effect of putting them in the possession of the bailee. For example, delivery of a railway receipt amounts to delivery of the goods.[vi]
DUTY OF A BAILOR
According to Section 150 which deals with the duty of bailor, bailors are of two kinds, namely:
- Gratuitous bailor
- Bailor for reward
A person who lends his articles or goods without any charge, is called a ‘gratuitous bailor’. His duty is naturally much less than that of a bailor for hire or consideration. The duty of a gratuitous bailor is provided under Section 150 that the bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults. If such goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of the existence of such faults in the goods bailed.
CONCLUSION
The concept of a contract of bailment plays a vital role in both legal and commercial transactions by establishing a clear legal relationship between the bailor and bailee. As defined under Section 148 of the Indian Contract Act, 1872, it involves the delivery of goods by one party to another for a specific purpose, with the understanding that they will be returned or disposed of according to the bailor’s instructions once the purpose is fulfilled. The essential features of bailment, such as delivery of possession, the existence of a contract, and the purpose of the delivery, underscore its legal significance. Furthermore, the concepts of actual and constructive delivery and the differentiated duties of bailors—gratuitous or for reward—highlight the responsibilities and expectations in such agreements. Understanding these principles ensures that both parties’ rights are protected and their obligations are clearly defined, thereby promoting trust and fairness in transactions involving the temporary transfer of goods.
[i] C. V. Davidge, Bailment, (1925) 41 LQR 433.
[ii] New India Assurance Co. Ltd. v. DDA, (1991) 2 PLR (Del) 82.
[iii] Ram Gulam v. Govt. of UP, AIR 1950 All 206.
[iv] R. v. Macdonald, (1885) LR 15 QBD 323.
[v] Gangaram v. Crown, AIR 1943 Nag 436.
[vi] Morvi Mercantile Bank Ltd. v. Union of India, AIR 1965 SC 1954.
