Duties of Bailor and Bailee Under Indian Contract Act

Bailment is derived from the French word 'baillier,' which means "to deliver," and it refers to any type of handling. In a legal sense, it refers to the transfer of possession of goods from one person to another for a specified purpose.

Bailment is defined in Section 184 as the delivery of goods by one person to another for some purpose, subject to a contract that they would be returned or otherwise disposed of according to the directives of the person delivering them after the purpose is accomplished. The individual delivering the goods is called the 'bailor," and the person to whom they are given is called the 'bailee'.

Bailor

A bailor is an individual who gives up the right to own his property for a short period of time without altering the ownership of the goods or property.

Bailee

A bailee is a single person who receives the goods or property from the bailor, gaining custody of it but not ownership.

Duties of Bailor and Bailee

Duties of bailor and bailee include −

Duties of Bailor

Disclosure of known faults (Section 150)

If the bailor fails to disclose known faults in the goods bailed to the bailee, he will be held liable for any damage caused to the bailee as a result of such faults. If the bailor bails goods for hire, he is liable for any faults that he is aware of. In a bailment for consideration, he can be held solely responsible for the faults he is aware of but fails to disclose.

Bear extraordinary expenses of bailment (Section 158)

Any extraordinary expenses incurred as a result of the bailment contract must be borne by the bailor. When the goods are required to be carried or kept by the bailee, or some work is done in relation to them, the bailor is required to repay all expenses incurred by the bailee to him.

Indemnification of bailee for incurring loss when bailment is terminated prior to its term (Section 159)

Even though the bailment was for a defined purpose or period of time, the bailor can terminate it at any present time. Any loss incurred by the bailee as a result of such termination shall not exceed the benefit derived from the bailment. If the loss exceeds the benefit, the bailee must be indemnified by the bailor.

Receive back the goods

The bailor will receive the goods when the bailee returns them after the term has expired or the purpose of the bailment has been fulfilled. If the bailor refuses to collect the goods, the bailee is entitled to compensation from the bailor for the expenses incurred as a result of the goods' custody.

Indemnification of the bailee (Section 164)

If the bailor's title to the goods is defective and he is not entitled to make bailment and the bailee suffers loss or damage as a consequence, the bailor will be liable.

Duty to bear normal risks

If the bailee has taken reasonable care of the things bailed, it is the bailor's duty to bear the risk of regular loss, deterioration, and destruction.

Duties of a Bailee

Duty of reasonable care

According to Section 151, a bailee is required to take as much care of the items entrusted to him as a man of ordinary prudence would take of his own goods of similar bulk, quality, and value. The bailee's duty starts when he or she takes delivery of or receives property.

Duty not to make unauthorised use of goods

Goods must be used only for the purpose for which they were bailed to the bailee. Unauthorized use of goods would require the bailee to compensate for any loss or damage to the items. Even an act of God or an inevitable accident would be ineffective. (Sec.154).

Duty not to set up any adverse title against the bailor

A bailee is not authorized to raise the jus tertii defense, which argues that the goods belong to a third person. The bailee is barred from challenging the bailor's right to get the goods back. Section 147, Indian Evidence Act, 1872

Duty to return any accretion to the goods

A bailee is bound to return to the bailor any increase or profit derived from the bailed goods. Section 163 states that, unless there is a contract to the contrary, the bailor is entitled to the profits derived from the goods bailed.

Duty to return the goods

Section 160 requires the bailee to return or deliver the goods bailed. He must deliver the goods as soon as the time frame for which they were bailed has expired or the purpose for which they were bailed is accomplished. If he failed to do so, he is responsible to the bailor for any loss (Sec. 161), notwithstanding if he used reasonable care.

Duty not to do any act inconsistent with the terms of bailment

Section 153 states that if the bailee does any act with respect to the goods in bailment that is inconsistent with the terms of the contract, the bailor may terminate the bailment contract and recover the goods under bailment.

Duty not to mix the bailor’s goods with his own

A bailee is bound not to mix the goods bailed with his own. If he mixes his own goods with those of the bailor, the following rules apply −

• Section 155 states that if the bailee, with the consent of the bailor, mixes the bailor's goods with his own goods, both the bailor and the bailee have an interest in the mixture in proportion to their respective shares.

• Section 156 states that if goods are mixed without the bailor's consent, or if the goods may be separated or divided, the property in the goods remains with the parties. The bailee is bound to protect the expenses of separation or division, as well as any damage arising from such unauthorised mixing.

• If the goods mixed cannot be separated, Section 157 applies. In such a circumstance, the bailor is obligated to compensate for the loss of the goods by the bailee.

Conclusion

The bailee is responsible for carrying out the duties described in the bailment contract. If he is inconsistent or negligent in performing his duties, he is held liable under several legal requirements. He has some uniform or established duties to follow in order to comply with every legal contract, and he cannot abandon those fundamental tasks even if the contract does not provide for them.

These obligations are the heart of a bailment contract. The duties may differ based on the facts, but there are some implied duties, and the bailee must use reasonable care.

Frequently Asked Questions (FAQ)

Q1. What is the difference between a bailor and a bailee?

Ans. The person delivering the goods is called the "bailor." The person to whom they are delivered is called the "bailee."

Q2. What are the duties of a bailor?

Ans. The bailor is bound to disclose to the bailee any flaws in the items bailed of which he is aware and which materially interfere with their usage or expose the bailee to extraordinary risks; and if he fails to do so, he is responsible for any damage done to the bailee directly by such faults.

Q3. What is the duty of the bailor to indemnify the bailee?

Ans. The bailor is responsible to the bailee for any loss which the bailee may sustain because the bailor was not entitled to make the bailment, to receive back the goods, or to give directions respecting them.