Types of Bailment: Compressive study

Special Contract

Submitted by
Parinsha Sharma
Division B Roll No 53 Class 2013-18 of

Symbiosis Law School, NOIDA

Symbiosis International University,
Pune

In
March, 2014

Under the guidance of

Mrs. Anshul Mittal
Associate Professor,
Symbiosis Law School, NOIDA
Symbiosis International University, PUNE
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 Index

1. Certificate

2. Acknowledgement

3. Introduction

4. Elements of bailment

5. Creation of bailment

7. Types of bailment

8. Special bailment

9. Termination of bailment

10. Conclusion
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CERTIFICATE

The Project entitled “Types of Bailment: Compressive study” submitted to

the Symbiosis Law School, Noida for Law of Contracts as part of Internal
Assessment is based on my original work carried out under the guidance of
Mrs. Anshul mittal from July to October . The research paper has not been
submitted elsewhere for award of any degree.

The material borrowed from other sources and incorporated in the thesis has
been duly acknowledged.

I understand that I myself could be held responsible and accountable for

plagiarism, if any, detected later on.

Parinsha Sharma
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ACKNOWLEDGEMENT

I would like to thank my Special Contract Professor Mrs. Anshul Mittal for
giving me an opportunity to do research work and providing me with the
opportunity to learn more about the given topic. It helped me in building my
concepts.
I would like to thank my family and friends for their constant support and
help whenever I required.
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Types of Bailment: Compressive study

 INTRODUCTION
According to the Section 148 of Indian Contract Act, bailment is the
delivery of goods by one person to another. It is done for a specific
purpose. The person to whom goods are given is called the bailee and
the person who gives the goods is called bailor

To understand bailment imagine that you are going to shift from an

apartment to a house. Your lease will expires in three days, and your
new house will not be ready to move into for two weeks. As a result,
you need to temporarily find a place to store your belongings. You ask a
friend to store your items for two weeks, and your friend agrees to do
so. This arrangement is known as a bailment.

The purpose of the bailment depends upon the particular circumstances

of the transaction. Generally, a bailment occurs in order to either
provide a benefit to the bailor or the bailee, though sometimes a benefit
is provided to both parties. In the initial example, you would benefit
from the bailment of your possessions.

 ELEMENTS OF BAILMENT
The essential elements of a bailment are:
1. The bailor owns personal property or holds the right to possess it.
2. The bailor delivers exclusive possession of and control over the personal
property to the bailee.
3. The bailee knowingly accepts the personal property with the
understanding that he owes a duty to return the property, or to dispose of
it, as directed by the bailor.

 CREATION OF BAILMENT

A bailment is created by an express or implied contract. Whether the

elements of a bailment have been fulfilled is determined by examining all
the facts and circumstances of the particular situation. For example, a
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patron goes into a restaurant and hangs his hat and coat on an
unattended rack. It is unlikely that this created a bailment, because the
restaurant owner never assumed exclusive control over the hat and coat.
However, if there is a checkroom and the hat and coat are checked with
the attendant, a bailment will arise.
If a customer parks her car in a parking lot, keeps the keys, and may
drive the car out herself whenever she wishes, a bailment has not been
created. The courts treat this situation as a lease of space. Suppose,
however, that she takes her car to a parking garage where an attendant,
after giving her a claim check, parks the car. There is a bailment of the
car because the parking garage has accepted delivery and possession of
the car. However, a distinction is made between the car and packages
locked in the trunk. If the parking garage was not aware of the packages,
it probably would not be a bailee of them as it did not knowingly accept
possession of them. The creation of a bailment is illustrated in the Concept
Review box below.

 TYPES OF BAILMENT
Now we move on to discuss classification of bailment. The modern common
law classification of bailments is the two-fold classification set forth in
,
Coggs vs. Bernard Bailment can be classified broadly under the two
headings-

1. On the basis of benefit

2. On the basis or reward

 On the basis of benefit-

In this kind we divide bailment on the basis of benefit, it can be divided

into three part-

1. Bailment for exclusive benefit of bailor.

In this type of bailment, the bailor gives goods to bailee for his own cause
and good. It is for the exclusive benefit of the bailor. For example A was
going on a vacation he gives his pet to B for 4days, B has to take care of his
pet as a bailee but he won’t get any benefit or reward out of it. In this kind
of bailment the duty of bailee is very slight because he is not taking any kind
of benefit and reward out of this contract of bailment so his duty is slight.
And the liability of bailor is very high.
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2. Bailment for the exclusive benefit of the bailee.

In this case the bailee takes possession of the goods for his own cause and
good. The bailor gets nothing. But the bailee is rewarded by the possession
of the goods. For example, a student takes books from one of his friends for
studying. Here the bailee has all the benefits because he is using the book of
bailor but bailor is not getting any reward and benefit out of it. In this kind
of bailment the duty of bailee is very high as the bailor is not taking any kind
of advantages out of this contract he is giving his property to the bailee for
his use only. So the degree of care is very high on the part of bailee. And
the liability of bailor is slight.

3. Bailment for mutual benefit.

In this type of bailment both the bailor and bailee benefits. It’s a kind of
mutual benefit case where both parties get something out of the contract
they made. For example if a person gives his vehicle for repairing, the
garage owner/bailee will be benefited just like the bailor. Here both parties
are getting benefit out of this contract so the duty of care on the part of
bailee is ordinary. And the liability of the bailor is also ordinary

Duty of care
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 On the basis of reward

1. Gratuitous bailment

Gratuitous bailment is a type of bailment where benefit can be of bailor or

bailee but without any monetary award. For example, borrowing a friend’s
car. A gratuitous bailee is liable for loss of the property only if the loss is
caused by the bailee's gross negligence. Therefore a lower standard of care
is imposed upon the bailee in a gratuitous bailment. Gratuitous bailment is
also referred to as naked bailment or bailment for sole benefit of bailor.

The new York court of appeals has just help in siegel vs spear & co. that a
gratuitous bailee is bound to pay damages for breach of his promise to effect
insurance on the article of care.

2. Non-Gratuitous bailment

Non-Gratuitous bailment is a type of bailment where benefit can be of bailor

or bailee but with some monetary award. For example, borrowing a friend’s
car. A gratuitous bailee is liable for every kind of loss and damage to the
property. Therefore a higher standard of care is imposed upon the bailee in a
gratuitous bailment. Example :- Mr. Sean delivers the car on rent to Mr.
Burg Rs. 25,00 per dayn and X has handed over his dress to B who is owner
of a laundry for washing. At a charge of Rs. 10/-. Here both parties are
being benefited.

 Difference between gratuitous bailment and Non-

gratuitous bailment

a) Duty to disclose defects [Sec 151]

 In case of gratuitous bailment

The bailor must disclose all the defects in the goods.

(i) Which are known to him, and

(ii) Which materially interfere with the use of them or expose the bailee to
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extraordinary risks.

Consequence: If the bailor does not disclose such defects and the bailee

suffers some loss due to such defects, the bailor is liable to bailee for such

loss.

 In case of Non-gratuitous bailment

If the bailee suffers any loss due to any defect in the goods, the bailor is

liable to bailee for such loss whether he knows those defects or not.

b) Duty to bear expenses [Sec 158]

 In case of gratuitous bailment

The bailor must repay to the bailee all the necessary expenses which the

bailee has already incurred for the purpose of bailment.

 In case of non-gratuitous bailment

The bailor must repay to the bailee all the extraordinary expenses which the

bailee has incurred for the purpose of bailment.

 Special Bailments

There are some other kinds of bailment which are called special bailments

– Innkeeper:

Under common law, the owner of a facility that provides lodging to the

public for compensation. Duty of strict liability: innkeepers are strictly liable

to guests for personal

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property that is lost or stolen from the innkeeper’s premises even if the loss

was not the innkeeper’s fault

–Warehouse:

Under common law, the owner of a facility that provides storage of property

for compensation. Duty of ordinary care:liable for breach of the duty of

ordinary care (i.e., negligence)

 Indefinite Term vs. Fixed Term

How long are the goods supposed to be held? A person who deposits their
items for a set amount of time and then doesn't come back for them may
give up their rights to the property. In this situation, it may be
considered abandoned property. But if there was never an agreement on
how long the property was to stay, there is no abandonment unless the
owner is given notice.

 Involuntary vs. Voluntary

In a voluntary bailment, another person accepts responsibility for the items.
In an involuntary bailment, someone ends up with the goods without ever
intending to do so. Involuntary bailments most commonly occur with dry
cleaners and auto shops. In these situation, the holder of the items
must take care of them for a reasonable time period.
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 Termination of bailment

Law relating to termination of bailment is discussed in Sees. 153 and 162.

However, these sections are not exhaustive. Hence ordinary rules regarding

discharge or termination of contracts will also apply in the following cases:

1. When the period or purpose is over:

In case the bailment is for a specific period or purpose, it is terminated on

the expiry of that period or on the completion of the purpose.

2. When the bailee makes unauthorized use of the goods:

In case the bailee makes unauthorized use of the goods bailed, the bailment

is voidable at the option of the bailor.

3. When the subject-matter is destroyed or becomes illegal

In case the subject-matter is destroyed or becomes illegal, the bailment is

terminated.

4.At the will of the bailor:

Where the bailment is gratuitous, it can be terminated merely at the sweet

will of the bailor. However, the termination should not cause loss to the

bailee in excess of the benefit derived by him. In case the loss exceeds the

benefit derived by the bailee, the bailor must compensate the bailee for such

a loss (Sec. 159).

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5.When the bailor or bailee dies:

A gratuitous bailment is terminated by the death of the bailor or bailee.

 CONCLUSION

So, by this project we understand different kinds and types of bailment their

termination and difference between them. This paper has taken the

opportunity to explore the concept of bailment with their types also.

Originally, the standard of care owed by a bailee to a bailor in taking care of

goods depended upon the type of bailment entered into. the liability to act

as a bailee of goods only arise out of a valid contract for entrustment and

delivery of property from bailor to bailee and in case of state liability as

abailee the provision of article 299 apply.

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 References

N. E. Palmer, The International and Comparative Law Quarterly, Vol. 24, No.
3 (Jul., 1975), pp. 565-572 Published by: Cambridge University Press on
behalf of the British Institute of International and Comparative Law

Furmston, M. P. (2001). Principles of Commercial Law. London: Routledge

Cavendish.

Kouladis, N. (2003). Principles of Law Relating to International Trade. New

York: Springer.

Norman, P. (1991). Bailment. Sydney: Sweet and Maxwell.

unnell v. Stern, 25 N.E. 910 (N.Y. 1890).

Wamser v. Browning, King & Co., 79 N.E. 861 (N.Y. 1907).

Wall v. Airport Parking Co. of Chicago, 244 N.E.2d 190 (Ill. 1969).

 Cases

Coggs v Bernard (1703) 2 Ld Raym 909 1

East West Corporation v DKBS 1912 and AKTS Svenborg, Utaniko Ltd v P &
O Nedlloyd BV [2003] EWCA Civ 83; [2003] 1 Lloyd's Rep 239 at 248 (CA) 6