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Special Contracts

Duties of a Bailee: Comprehensive study

Submitted by

Prabhnoor Guliani

Division: E PRN: 18010223095 Class: 2018-23 of

Symbiosis Law School, NOIDA

Symbiosis International (Deemed University), PUNE

In

August, 2019

Apurva Verma and Dharmita Prasad

Designation and official address of research guide

Course In Charge of Special Contracts

62A Block Phase, 47/48 Opposite Nokia Siemens Building, Sector 62, Block A,
Industrial Area, Noida, Uttar Pradesh 201301
CERTIFICATE

The project entitled “Duties of a Bailee: Comprehensive Study” submitted to the Symbiosis Law
School, NOIDA for Special Contract as part of internal assessment is based on my original work
carried out under the guidance of Ms. Apurva Verma and Ms. Dharmita Prasad from July 2019 to
August 2019. The research work has not been submitted elsewhere for award or any degree.

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

I understand that I myself could be held responsible and accountable for plagiarism, if any,
detected later on.

Signature of the Candidate

Date
Introduction
Bailment is a term used in common law that describes the change of possession and it refers to the
delivery of personal goods and personal property from one person to another but the ownership in
this situation remains unchanged. If we have to simplify the meaning then we can say it means
“delivery of goods by bailor to bailee for a definite purpose in condition of their return or disposal,
when purpose is established”1 Section 1512 of Indian Contract Act clearly explains the duties of a
Bailee where it is specifically mentioned that in all cases of bailment the bailee is supposed to take
as much care of the goods bailed to him and in the same form of bulk, quality as well as the value
of the goods that were obtained to him in the first place.

For everyone in modern society bailment is virtually prominent in day to day lives for anyone who
has delivered a car to valet, checked a coat in a restaurant, deposited something valuable in a safe
deposit box, rented a house, borrowed some tools or taken their clothes and appliances for repair.
We see this type of contract taking place every day in our lives so it is important to study a topic
like this to help us in our practical life and also learn to examine the legal aspects of the topic as
they are extremely crucial for a budding lawyer. The Bailment Law takes care of the commercial
transactions that take place in warehouses and carriers like FedEx, UPS etc. and bailment includes
all the involved links in the movement of the goods from the bailor to the bailee.

Duties to be Taken Care of by the Bailee

Reasonable Care of Goods.

It should be taken into account that the care of the goods should be taken in the same way an
ordinary person would take care that is cautiously whether the bailment was gratuitous that is for
reward, or non-gratuitous that is not for reward, it should be taken care of with reasonable
precautions in mind in order to no longer be liable. The section also explains a uniform standard
of care in all cases of bailment3 because bailment not only happens in the form of a contract only

1
Anirudh Washwa, Mulla: The Indian Contract Act (15th Edition)
2
Indian Contract Act, Section 151: Care to be taken by bailee.
3
Wilson vs Brett (1843) 11 M&W, 113
but also in the form of a Sue generous relationship4. Bailment only becomes a form of contract
when we introduce a contract otherwise bailment can both voluntary as well as an involuntary
relationship. When a bailee receives the possession of certain goods it is under his duty to take
care of the goods that were brought under his possession and this includes not making any wrongful
use of that good and ultimately return the bailed goods. Section 151 and Section 1525 of Indian
Contract Act deal with this duty of Reasonable Care of Goods and it has been through multiple
landmark cases in the Court like Willson vs Brett and many other cases, it has been seen that the
concept of “Man of Ordinary Prudence”6 is a subjective concept. Over the years how the courts
have interpreted the cases it is evident that the burden of proof can only be shifted from the bailee
and exempt himself from any liability is through a contract. A bailee, in other circumstances cannot
be excused for any damage or failure of goods and will be held liable in any case. 7

Not to Make Any Unauthorized Use of Goods Bailed

A bailee given the possession of the goods is obligated to use the goods according to the terms of
the agreement. In case where the bailee makes unauthorized use of the goods he is liable to make
compensation for the loss of goods under Section 1548 of the Indian Contract Act. It is important
to mention that in case the bailee makes unauthorized use of goods the liability will be absolute.
9
He will be held liable even if he is not guilty for the act of negligence or even if the loss occurred
through Act of God. Section 153 of the Indian Contract Act also makes it clear that the contract of
bailment can become voidable in this situation but it depends on the bailor’s discretion. This means
that the termination of bailment is possible. In India the famous case example dealing with
bailment is of Vidya Prakash Sethi vs Punjab National Bank where Section 154 is discussed in
length.

4
Per Shelat J. in State of Bombay vs Memon Mohamed Haji Hasam, 1967 AIR 1885
5
Section 152 of the Indian Contract Act, 1872
6
This is given in the Indian Contract Act where the care needs to be taken by the bailee. In all cases of bailment the
bailee is bound to take as much care of the goods bailed to him in Section 151.
7
CV Davidge, Bailment, (1925)
8
Section 154 of Indian Contract Act, 1872
9
Southcot vs Bennet
Not to Mix the Goods with His Own Goods

The bailee’s responsibilities also include not mixing the good given to him in his possession by
the bailor to mix them with his own goods. This situation can also vary according to the
circumstances. The first situation that rises is when the mixture of the goods is done with the
consent of the bailor, then in such cases the bailor and the bailee both should have a proportionate
interest in the mixture10 and mostly be satisfying to the bailor. In a circumstance where the mixing
is done without the consent provided by the bailor first then this gives birth to two kinds of
situations. The first situation is where the goods can be separated, this is where Section 15611 plays
an important role. In such a case the bailee will be bound to pay for expenses and the efforts that
has risen from the damage caused. The second situation is when the goods cannot be separated so
in such a case the bailee will be left with no option but to deal with the loss and pay a compensation,
as per Section 15712. Lastly, another situation can also arise where the mixtures can get mixed due
to Act of God, by mistake of the bailee or by a third party then in such cases the bailee will have
to bear the loss of the good and pay for the expenses required for the separation of the good or bear
all the loss.

Not to Set Up an Adverse Title

Since the bailee holds the goods of the bailor under his possession based on a contract or on the
basis of trust, the bailee is not entitled to deny the title of the bailor or set up an adverse title.
Adverse possession13 basically refers to a legal principle where a person is not authorized to own
a legal title to a piece of property but acquires ownership without the consent of the legal owner.
This means that the bailee is entitled to return the goods back to the bailor after a given time period
and the bailee cannot deny the bailor this right. But here the burden of proof lies on the bailor
where he will have to establish that that the other person had the right to goods as against the bailor
if he delivers them to someone other than the bailor. If we go by Section 11714 of the Evidence

10
Indian Contract Act, Section 155: Effect of mixture, with bailor’s consent of his goods with the bailee.
11
Section 156: Effect of mixture, without bailor’s consent when the goods can be separated.
12
Section 157: Effect of mixture, without the bailor’s consent, when the goods cannot be separated
13
Wex. Legal Information Institute
14
Section 117, Indian Evidence Act, 1872
Act, 1872, it is mentioned that the bailee cannot hold the goods of the bailor on behalf of him and
call himself the owner.

To Return the Goods Bailed

When the goods are bailed to a bailee the bailee I obligated to return or dispose the goods bailed
according to the directions of the bailor as soon as the purpose of the possessed good is over after
the specified time period for which they were given to the bailee. This is explained under Section
160 of Indian Contract Act15. In case the bailee fails to return the goods to the bailor, bailee will
be responsible for covering the costs of all the damages for any kind of destruction or deterioration
even when all the necessary precautions were taken care of by the bailee. Section 16116 explains
this to protect the rights of the bailor.

To Return Any Accretion to the Goods

The bailor is bound to deliver any increase in profit that was credited from the goods bailed to the
bailor except when it is provided in the contract. This is duly explained in Section 163 of Indian
Contract Act. 17

Literature Review

1. The Responsibility of an Involuntary Bailee. (1922). Harvard Law


Review, 35(7), 873-876. Doi: 10.2307/1329403:

This journal explains the responsibility of a bailee where the bailee is not given enough time to
think whether he wants to be entitled to the possession of the good he involuntarily becomes the
bailee. This journal has explained a variety of situations that may occur at less frequency but since
such situations can happen they have described the situations where a person became a bailee
without his due consent. This describes in the situations where loss of goods can occur by the
bailee and whether they will be held liable or not. This article properly explains the duty that a

15
Section 160: Return of goods bailed, on expiration of time or accomplishment of purpose.
16
Section 161: Bailee’s responsibility when goods are not duly returned. .
17
Section 163: Bailor entitled to increase or profit from the goods bailed
bailee will hold in such cases and in case of any loss incurred the bailee will not be held responsible
although they may be held liable for negligence under tort law.

2. L. T. H. (1928). Negligence. Imputation of Bailee's Contributory Negligence to


Bailor. Virginia Law Review, 14(4), 305-308. Doi: 10.2307/1065081

This article has very informatively explained how in a situation the damage caused to the good by
a third party affects the bailee and how the bailee can be held liable under negligence. Even in
situations where the bailee is not at all at fault, contributory negligence will be imputed. Here the
article clearly explains how situations like these can help the bailor to get compensation for his
goods other than the situations where the plaintiff plays the role of contributory negligence. It
explains that even when such damages to the goods occur due to contributory negligence of the
bailee along with a third party the wrongdoer will provide compensation to the plaintiff.

3. Palmer, N., & Murdoch, J. (1983). Defining the Duty of the Sub-Bailee. The
Modern Law Review, 46(1), 73-78.

In this article the duties of a sub-bailee are explained through various cases like Awad vs Pillai
where the duties of a bailee are explained and how it affects him when the goods are further sublet
to a sub-bailee. It also explains the concepts like gratuitous bailment and how one can recover the
possession back. This is a very informative article that very nicely explains the approaches various
courts around the world have taken to counter various issues that rise in the contract of bailment
and how a bailor can recover his goods and also under what conditions a bailee or a sub-bailee will
be held liable. While it may yet be unsafe to regard these cases as a conclusive assault on the
doctrine of privity, in some aspects the concealed duty of care does show some predetermined
characteristics. Certainly it can often be said that without the original contract the defendant would
not have entered the relation of proximity which made the plaintiff's loss foreseeable. The problem
is rather to identify the conditions on which certain duties of care arise, and their theoretical
foundation.
Objectives of the study
The main objective of this project is to study the duties of the bailee its role in bailment which is
an essential part of the Indian Contract Act, 1872. The aim of this project is to point out what are
the duties that a bailee should keep in mind when receiving the goods from a bailor and how it
should not be depreciated in quality or quantity. Other than that it is also important to study
bailment as it also has a practical application in our lives and have shown bailment as one of the
most essential topics of Special Contracts and needs to be applied as necessary depending from
situation to situation.

Research Methodology
For conducting this research I decided to opt for secondary sources of information and I found it
to be the correct choice because the sources used were reliable of high quality and collecting
information through secondary methods of data collection proved to be less expensive both in
terms of money and time. Secondary research involves the depiction and analysis of the data that
already exists that is the work that has already been conducted and is often used as a comparative
study to primary sources. These sources are basically the accounts that were not experienced by
the person firsthand but we can rely on the information provided in the already existing material
and combine our findings to form an absolutely new account and give our viewpoints in the form
of an outsider’s perspective. For the purposes of projects and research papers, secondary sources
have proven to be most helpful.

Results and Discussion


The results in conducting this research project has enriched my knowledge on the concept of
bailment. Bailment is an important part of our practical life because in everyday situation we lend
something to someone and in many other instances we ourselves become the bailee and are handed
the responsibility of taking care of someone else’s goods. This contractual relationship can be
voluntary or involuntary and in many instances the bailee can be successful in maintaining the
ordinance of the goods like a prudent person would but at other times he can fail due to reasons
like negligence or act of God or damage caused by a third party. For these reasons the Indian
Contract Act, 1872 included the various sections explaining the duties of a bailee and a bailor and
how both of them are obligated to each other.

The provisions presented in the Indian Contract Act have proven to be very efficient and have in
detail explained each and every section required in the completion of this project and has clearly
explained each and every duty that needs to be fulfilled by a bailee in order to be not held liable in
court. It seems absolutely just that a bailee needs to maintain certain responsibilities like to take
reasonable care of the goods being possessed by him from the bailor, not using the good for
unauthorized purposes, not adverting the title of the good to himself or to somebody else. In case
the bailee does not take care of any of the one responsibilities listed in the project he will be held
liable in court and will have to cover the costs of the losses incurred. The bailor at the same time
is also bound by certain responsibilities such as not being a contributory party at fault for the
damage of the good. Each and every section in the bare act entitled to the situation of bailment has
dealt with all of these kinds of situations

The bailee is responsible for a lot of things since the relationship between a bailor and a bailee can
be of trust or a contractual relationship. He is obligated to take good care of the goods given under
his possession and if he causes any damage to the quality, quantity or value of the good he shall
be held liable, but of course there are certain exceptions like when the owner is ready to give the
ownership to the bailee so in such a case the contract between the two becomes void. Also the
bailee is supposed to return the goods after the specified time period in the contract is over because
it is illegal to possess something with adverse title.

The bailee should try to make a wise decision before accepting the possession of a good but certain
situations can arise where the bailee may not be given enough time to decide whether he wants to
hold the goods but at the same time he becomes a bailee, involuntarily. There are different
provisions for that and different courts and cases have shown different interpretations and
judgements.

Critical Analysis
The topic of bailment is an essential part of special contracts since it relates to our day to day life
and has many practical applications it is necessary to understand this concept since many cases
and conflicts have risen from the concept of bailment it gains a special place in Special Contracts.
The duties of a bailee have been listed in a way that provides full justice to the bailor so that the
bailor can have his goods back without it being damaged or deteriorated or lost. In case any of
these three things happen then there are sections mentioned in Indian Contract Act which can hold
the bailee liable for the damage caused by him. A bailee can be held liable if he fails to take
reasonable precautions to take care of goods but at the same time the bailee will be held liable even
when it is not his fault due to contributory negligence or through act of God, the bailee still will
be held liable for the losses.

This provision where the bailee is bound to pay for the mistake of a third party or through the act
of God which can damage the good even when the required precautions were taken by the bailee,
seems a little unfair. To put forward a personal opinion there are no certain measures that a prudent
man can take to protect the goods of a bailor. This seems like an unreasonable clause put in the
contract of bailment where a person will have to recover the costs of the goods of the bailor when
he is not even responsible for the cause of damage. In cases where a third party is at fault, the
bailee is still liable to recover the costs of the goods. This becomes the cause of a contributory
negligence where the bailee is also held liable but this should have certain provisions. If a bailee
gives possession of the good to someone (sub-bailee) with consent and damage is caused by the
sub-bailee then the bailee should be held liable but if the bailee is not aware that a third party is
using the goods and some kind of loss or damage is caused then also the bailee is held liable but
this should not be the case as it is possible that the bailee might have taken all kinds of necessary
precautions but certain loopholes can always come.

Other than that, the bailee is given reasonable responsibilities of not making any kind of
unauthorized use of the goods other than the purpose that the bailor has asked him to do. This
seems like a reasonable duty because it is not the property of the bailee but is merely under his
possession. The bailor is the rightful owner of the good and should be returned to him in due time.
This is also the reason the bailee is not under the discretion to title the goods to himself or to
someone else. In case the bailee does this he will be held liable in court. The bailee is also not
entitled to mix the goods with his own goods as there is a possibility that the good may depreciate
in value. In case the goods can be separated then the bailee is supposed to pay the expenses in
separating the goods and in case where the goods cannot be separated the bailee will have to
compensate the amount for the loss of goods.

Conclusion
In conclusion the provisions provided in the Indian Contract Act, 1872 has immensely helped in
making of this project and provided a lot of legal knowledge on bailment and expanded the horizon
of the knowledge of contract. Bailment has gained an important position in the subject of special
contracts and has been a subject of a number of landmark judgements.

References

 www.legalcrystal.com

 www.jstor.org

 journals.sagepub.com

 indiankanoon.org

 lawnn.com

 www.toppr.com

 www.advocatekhoj.com
 www.academia.edu

 www.managementnote.com

 Anirudh Wadhwa, Mulla (15th Edition)

 Avatar Singh