Liabilities of Bailor and Bailee

A bailment, as defined under section 148 of the Indian Contract Act of 1872, is a contract in which one party agrees to supply commodities to another party for a certain purpose. The delivery of items voluntarily is referred to as bailment. Additionally, such a delivery is made for a brief period, following which the bailee must either return the things in their original condition or make changes to them, or dispose of them.

Only the possession of the commodities passes to the bailee under the terms of the bailment contract; ownership of the goods remains with the bailor. Such delivery of products may be constructive or actual.

What is the Meaning of Liability?

Liability means to be held accountable for one’s action. Actions which can be inferred as one’s duty and the right of another person.

Essentials for Forming Bailment

The following are the bailment's three key components −

Contract

When things are delivered under a bailment, there is an agreement that they will be returned after the goal has been achieved. Though bailment is founded on a contract, it should be emphasised that there are some exceptions, such as the situation of a finder of goods. The finder of a lost item does not have a contract with the item's owner; nonetheless, as will be seen later, the finder is regarded as the lost item's bailee in legal proceedings. (Sec. 168)

Temporary delivery of goods

A bailment's primary distinguishing feature is that the delivery being considered is only intended to be used temporarily. No bailment is possible if the entire property is transferred and the delivered item is not required to be formally returned or accounted for. Similarly, if the property is provided in exchange for money or another good, the transaction is a sale or exchange rather than a bailment. Delivering government promissory notes to a treasury for cancellation and consolidation into a single note, on the other hand, is not a bailment because the giver has no ownership interest in the individual notes.

Return of specific goods

The person who received the items is required to return them, either to the bailor or to another person as instructed by the bailor. There is no bailment if the delivered item is not specifically required to be returned or accounted for. Even if the bailed items later take on a different form, such as when maize is turned into flour or a piece of fabric is transformed into a garment, the contract is still one of bailment. It is adequate if the owner retains the right to request redelivery of the same item.

Liability of a Bailee

Following are the essential liabilities of Bailee −

Take better care of the goods

A bailee has a responsibility to care after the property that has been bailed to him, as stated in section 151. Bailee should treat these items with the same respect that a typical man would show to his own items of comparable value, quality, and quantity.

Therefore, if the bailee takes proper care of the commodities, he will not be responsible for any loss or damage to such things. Furthermore, whether the bailment is free or for payment, the bailee must treat the goods with the same level of care. Despite agreeing to treat the items with extra care, the bailee is not responsible for any losses caused by acts of God or other bad actors.

Avoiding unapproved use

The Bailee shall not utilise the commodities bailed in any manner not approved by section 153. The bailor may end the bailment if the borrower makes any unlawful usage. According to Section 154, a bailor may also make a claim for losses incurred as a result of unlawful use of items bailed.

Keep products apart/Separate from his own goods

The goods must be kept apart from the bailee's personal belongings. He shouldn't combine his own items with those in bailment. Without the bailor's permission, if the bailee combines the goods with his own goods, then −

• The bailor also has a stake in the mixture.

• The property in the goods stays with both parties even if they can be divided or separated. However, the bailee is responsible for paying any separation costs or damages brought on by the mixture.

• If it is impossible to separate the commodities, the bailee must make up for the lost goods by paying the bailor compensation.

No unfavourable title set

An adverse title to the commodities bailed cannot be shown by the bailee.

Need to Return Items

The bailee has a responsibility to return the goods without asking for payment once the intended purpose has been achieved or the time period has passed. If he fails to do so, even without being negligent, he will be held responsible for any loss, destruction, deterioration, damages, or destruction of products.

Gains or increased returns

Absent a specific agreement to the contrary, a bailee must return the commodities to the bailor together with any increase or profit that results from them. For instance, A hands over care of a hen to B. Hen receives a chick. A will receive the hen and the chick from B.

Liability of a Bailor

Liabilities of a bailor are as follows −

• A bailor is required to reveal all flaws. The damage to the goods or the loss incurred by the bailee will be the bailor's responsibility if he fails to disclose such problems.

• The bailor is also responsible for covering the bailee's unusual costs related to the bailment.

• The bailor has an obligation to take possession of the commodities after the original purpose for which they were bailed has been satisfied.

• The bailor is obligated to reimburse the bailee for any expenses incurred as a result of the goods' defective title.

Conclusion

If the bailee takes any action regarding the commodities bailed that is contrary to the bailment's terms and conditions, the bailor may choose to cancel the contract. A gratuitous bailment is a loan that is granted without any fees, penalties, or other forms of compensation. As a result, borrowing a book from a friend becomes a gratuitous bailment.

Frequently Asked Question

Q1. Who are bailor and bailee?

Ans. The "bailor" is the person who delivers the merchandise. The recipient is known as the "bailee," who receives them.

Q2. Is a bailee liable?

Ans. A gratuitous bailee is responsible to the owner for any harm brought on by mere carelessness.

Q3. What falls under Bailee's purview?

Ans. A bailee is a person who gains possession of property or goods, typically as a result of a bailment contract. When the terms of the contract are met, the bailee is in charge of the safe return of the items to the owner (bailor).

Q4. What obligations does the bailor have?

Ans. A bailor has a responsibility to make all flaws known. The damage to the goods or the loss incurred by the bailee will be the bailor's responsibility if he fails to disclose such problems. The bailor also has a responsibility to cover the bailee's unusual costs related to the bailment.