Contract of Bailment


Here before going further let’s see the correct understanding of the word “Bailment”, so here Bailment is a kind of legal relationship between two parties, where one party which is the owner of the property transfers physical possession of the property for a particular time. But the important thing is that there will be no transfer of ownership.

Bailment is the French word “Baller” which means to handle over or to deliver. In Legal Langaguge, Bailment involves change of physical possession of good from one partiy  to another for some specific purpose.

Provision Relating to the Contract of Bailment

Indian Contract Act has mainly to parts;

  1. General Principle  of Contract
  2. Special Contracts

Here the “Bailment” covers into the Special Contracts.

Defination of Bailment

Section 148 of the Indian Contract Act, 1872 deals with the Defination of the Bailment. So according to the section 148 of the Indian Contract Act, 1872:

“Bailment as a delivery of goods

by one person top another for some purpose,

upon a contract, that they shall,

when the purpose is accomplished, be returned

or otherwise dispose of according to the directions of person delivering them”

Parties Of Bailment:

There shall be two parties in the Bailment one is Bailor who delivers the goods to another and Bailee is the person to whom the good is delivered.

  1. Bailor -: The party who delivers or hands over the goods is known as Bailor
  2. Bailee -: Party to whom the goods are delivered or handled is known as Bailee.

There is a Legal relationship between them and this relation between Bailor and Bailee is known as ‘Bailment’.


—-A delivers a piece of cloth to B( a tailor) to be stitched into a suit. Thus there is a contract
of bailment between A and B. Here A is the Bailor and B is the Bailee.
—-A Lents a book to B to be returned after the examination there is a contract of Bailment
between A and B.


Delivery of possession: Delivery of physical possession is one of the essential things in the Contract of Bailments. A Bailment necessarily involves the delivery of physical possession of goods by one person to another means Bailor to Bailee. Here the important thing is that having custody of the goods does not  create the Relation of the Bailment there is a need for Delivery of possession.

Example- Here Rahul is servant who receives certain goods from his master Mr.Adani to take to a third party has mere custody of the goods; possession remains with the master and the servant does not become a bailee.

So there is provision relating to the Delivery of Possession in Indian Contract Act, 1872. lets see it.

Section 149 provides that

the Delivery of Possession of the goods to the Bailee may be

a) Actual
b) Constructive

a) Actual Delivery :- There will be actual delivery of the goods when the bailor delivered to the bailee physical possession
of the goods. Thus if a bailee takes the custody of another person’s goods even without any formal agreement this is sufficient to constitute Contract of Bailment.

There is one famous case  In Ultizen v. Nichols,

The Plaintiff went to the defendant’s restaurant for the purpose of dining there.

When the plaintiff entered in the restaurant a waiter took the plaintiff’s coat from him without being requested to do so, and

hung it on a hook behind the Plaintiff.

The coat got lost.

It was held that owner of the restaurant was liable for his waiter’s default.

b) Constructive- where there is no change of physical possession goods remaining wherethey are, but something is done which has the effect of putting them in the possession of the bailee, there will be a case of constructive delivery.

Handing of the key of the godown, delivery of the railway rescript are the case of the constructive delivery.

There may be a case where the goods are in physical custody of a person yet theconstructive possession is with some other person in such a case the person havingm physical possession is not said to be a bailee.

In Kalia perumalpillai v. Visa Lakshmi ,

a lady employed a goldsmith for melting her old jewelry and making new one out of it.

Every evening she received the half made jewelry and put it into a box kept at the goldsmith’s premises.

She kept the key of the box with herself.

One night the jewelry was stolen from the box. It was held there was no Bailment.

2- Delivery should be under a contract: A Bailment is usually created by agreement between the Bailor and the Bailee. The agreement may be express or implied however they may be Bailment even without a contract.

For example :
When a person finds the goods belonging to another, a relationship of Bailee and Bailor is automatically created between the finder and the owner.

In K.D. Patil v. State of Mysore(1977)
A’s ornaments having been stolen and recovered by the
police disappeared from police custody. The State was held liable.

3- Delivery should be for some purpose: The delivery of the goods from Bailor to Bailee must be for some purpose. For example: Car or Bike has been given for repairing to mechanic. If goods are delivered by mistake to a person there is no Bailment.

4- Delivery should be on the condition of return of specific goods: It is agreed between the Bailor and the Bailee that as soon as the purpose is achieved the goods shall be returned or disposed off according to the directions of the Bailor. If the goods are not to be specifically returned there is no Bailment but there is a Bailment even if the goods bailed are returned in altered form.

For example:
When a piece of cloth is stitched into a coat. Currency deposited in a bank is not
Bailment because same currency notes are not returned by the bank.

Distinction between Bailment and Pledge
1. Purpose
In a Bailment the goods are delivered for some purpose. For example:
Repairing or safe keeping whereas in a Pledge the goods are delivered for the
security against the debt.
2. Relating to definition of Section
Bailment is defined in Section 14s whereas Pledge is defined in Section 172.
3. Name of Parties
In a Bailment there are two parties Bailor and Bailee whereas in Pledge parties
are Pawnor and Pawnee.
4. Consideration
In a Bailment consideration may or may not be present whereas in Pledge
consideration is always present.
5. Right to sell the goods.
In a Bailment Bailee has no right to sell the goods whereas in a Pledge the
Pawnee has right to sell the goods if Pawnor fails to pay the debt.
6. Use of goods.
In a Bailment Bailee can use the goods only for the specified purpose whereas
in a Pledge the Pawnee has no right to use the goods.
7. Every Pledge is a Bailment but every Bailment is not a Pledge

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