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Bailment Under Indian Contract Act
In our daily lives, we use this term when we give our securities, such as our bank relationships, our clothes to be ironed, a bailment for repair or servicing, a book from the library for a certain amount of time, asking our neighbors to look at our house while we are away, and so on.
Meaning of Bailment
The term 'bailment' derives from the French word 'baillier,' which means to deliver. As per the provision "Bailment" is the delivery of goods by one person to another for some purpose with the condition that the goods be restored or otherwise disposed of as directed by the person delivering them.
In other words, Bailment is a contractual term that defined under Section 148 of the Indian Contact Act of 1872 as providing some goods to another for the purpose of safeguarding for a time frame after which the goods are returned to the original owner. It only applies to movable property.
Further, the person delivering the goods is known as the Bailor, and the person to whom the goods are delivered is known as the Bailee, in which case the bailee maintains control over the goods. There are several commercial contracts based on Bailment in which the owner grants another party temporary control of movable goods. Contracts of bailment are thus made in areas such as technology, machinery, hardware, and engineering. Ownership of goods stays with the actual owner, the bailor, in a bailment contract, but possession of goods passes to the bailee, giving the bailee the legal right to exclusive possession. They have a legal relationship with each other.
Parties in Bailment Contract
Bailor − The person who delivers the goods is referred to as the bailor.
Bailee − The bailee is the person to whom the goods are delivered.
Essentials of Bailment
It includes −
The bailor and the bailee must reach an agreement. This agreement might be express or implied. So far, a bailment may also be implied by law. Bailment, for example, occurs between a finder of goods and the owner of those goods.
Delivery of Goods
The goods must be delivered. It means that possession of goods must be transferred. The following points should be mentioned in this regard −
The delivery must be voluntary; for example, delivering jewelry to a thief who shows a revolver does not result in a bailment since the delivery is not voluntary.
Delivery can be both actual and constructive.
The delivery of goods must be for an intended purpose. For example, delivering goods to Jaipur Golden Roadways rather than Patel Roadways does not result in a bailment.
Return of Specific Goods
At the end of the purpose or the expiry of the bailment period, the goods that are the subject of the bailment must be returned to the bailor or otherwise disposed of in accordance with the bailor's directions. It should be noted that the same goods must be returned in their original or desired state.
Types of Bailments
Following are the major types of bailment −
Classification based on Reward
Gratuitous Bailment − A gratuitous bailment occurs when no consideration is passed between the bailor and the bailee. Both parties in the contract will not act on mutual benefits.
Non - Gratuitous Bailment − A non-gratuitous bailment occurs when consideration is passed between the bailor and the bailee. In this case, both parties’ benefit.
Classification based on Benefit
Bailment for the Exclusive Benefit of the Bailor − A bailment in which the bailor delivers goods to the bailee only for the benefit of the bailor himself.
As an example, A gives his valuables to his relative B for safekeeping at no charge. This is a bailment for the exclusive benefit of bailor 'A'.
Bailment for the Exclusive Benefit of the Bailee − This is a bailment in which the bailor delivers goods to the bailee only for the benefit of the bailee.
For example, X lent his car to his friend Y for a brief time at no charge. This is a bailment for the exclusive benefit of bailee 'Y'.
Bailment for the Mutual Benefit of the Bailor and the Bailee − This is a bailment in which the bailor delivers goods to the bailee only for the benefit of the bailee.
For example, P gave Q his car keys so he could drop his and Q's kids off at their respective homes. This is a bailment for the mutual benefit of the bailor 'P' and the bailee 'Q,' since both are benefiting.
The term 'Bailment' broadly refers to the transfer of possession to another person in order to fulfill some predetermined agreement, which may require the bailee to do something or vice versa in exchange for some consideration that is not required to exist. In general, the bailor does not have the right to use bailed assets while they have a bailee.
Frequently Asked Questions (FAQ)
Q1. What is bailment, and what are its types?
Ans. Bailments are classified into three types: those that benefit both parties, those that benefit just the bailor, and those that benefit only the bailee. Although the burden varies according to the type of bailment, the bailee must always treat the bailor's property with reasonable care.
Q2. What are the three elements of a bailment?
Ans. Three elements are generally necessary for the existence of a bailment: delivery, acceptance, and consideration.
Q3. How many parties are there in a bailment contract?
Ans. It requires at least two parties, with one being the bailor and the other being the bailee. An agreement or contract is required under this, which can be written or verbal; after entering such an agreement, the bailee must have returned the possession to the bailor.
Q4. What is the minimum in a bailment contract?
Ans. A minimum of two parties are required in a Bailment contract, namely the Bailor and the Bailee. The person who delivers the goods is known as the Bailor. The person to whom the goods are delivered is known as the bailee. Movable goods are referred to as goods.
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