Bailment is defined by sec. 148 as “the delivery of goods by one person to another for some purpose, upon a contract that , when the purpose is accomplished, be returned or otherwise disposed of, according to the directions of the persons delivering them.” The person delivering goods is called the “bailor”, the person to whom goods are delivered as above is called the “bailee”. The explanation points out that delivery of possession is not necessary, where one person already in possession of goods, contracts to hold them as “bailee”.
The consideration for the contract of bailment is bailor’s parting with the possession of the goods. The transfer of possession may be actual or constructive, e.g. where A holding goods on behalf of B, agrees to hold them on behalf of C, to whom A has sold the goods. “Possesion” here means “juridical possession”. The possession of a servant is not juridical possession but bare custody. Such a person, therefore, does not fall within the definition of a “bailee”.
Common instances of bailment are: giving cloth to the tailor to make a coat, delivering a car to repairers for repairs, consigning goods to a commission agent for sale, delivering goods to a railway company for carriage. Notice that delivery to the bailee can be made by anything which has the effect of putting the goods in the possession of bailee or of any person on its behalf (sec. 149). Bailment must be distinguished from hiring. Generally the intention behind an ordinary bailment is to transfer possession of goods to the bailee, with a view of their safe keeping. The bailee generally doesn’t and in fact is not entitled to use the goods for his own purposes. Hiring is the bailment of goods for reward, with liberty to the hirer to use the goods for his own purposes in terms of the contract of hire.
Duties of bailor (sec.150)
Duties of bailor under sec. 150 are :
(i) the bailor is bound to disclose to the bailee all faults in the goods bailed of which the bailor is aware and which materially interfere with the use of them or which expose the bailee to extraordinary risks. If he fails to do so, he is liable to the bailee in damages.
(ii) (ii) Where goods are bailed by way of hire, the bailor is liable to make good loss caused to the bailee by such defects, whether he was aware of their existence or not. Notice that there is a difference in the degree of responsibility of the bailor, according as bailment is gratuitous or non- gratuitous. In the first case the bailor is liable only for known defects; in the latter case he is liable also for unknown defects.
Thus if A lends his horse to B for riding and the horse is vicious to the knowledge of A, A is bound to disclose the fact to B. Similarly, if a carriage is hired by A from B and the carriage has a defect which makes it dangerous to ride, B is liable to A for damage caused to A by such defect, and this whether B was aware of defect or not. In other words where an article is hired out for use there is an implied warranty that it is fit for such use. If there is a breach of this warranty, there is no obligation to pay the hire.
Duties of bailee
Duty to take care (sec. 151): the first and foremost duty of a bailee is to take care of the goods bailed with him. The extent of his duty is defined by sec. 151. Under the sec. a bailee, in absence of a contract to the contrary, is bound to take as much care of goods bailed, as a man of ordinary prudence would do of his own goods, of equal quality, bulk and value. In other words, he is bound to take the ordinary prudent man’s care of the goods bailed and if loss occurs inspite of such care the bailee is not liable for the loss (sec152).
Thus if an article bailed is kept unlocked by the bailee, while the locks of similar articles of his own, the bailee will be liable for the loss. Similarly if a servant of the bailee commits the theft of the article bailed and the bailee has been negligent in the selection of the servant, the bailee will be liable. It would be otherwise, if there was no negligence in the selection of servant. Want of skill usually associated with a particular class of work, would be evidence of negligence. Notice that where goods are bailed with another, the latter has no right to place the goods in the custody of a third person without the bailor’s authority.
If he does so he commits a breach of his contract with the bailor and is liable for all damages caused to the goods while in custody of third person. In a recent English case a railway company had received certain baggage from A in their cloak –room and had issued tickets in respect there of to A. Subsequently, through the negligence of their clerk, the baggage is allowed to be removed by B who had produced no ticket and who had given no satisfactory proof of loss of the tickets. One of the terms of the contract provided that the company will not be liable for miss delivery or for articles exceeding $5 in value if their value was not previously declared.
A had not made such declarations. Held the company was liable, because it had broken the fundamental term of the contract viz. that the company would deliver the articles to the person producing the ticket or in case of loss of the tickets, to the person satisfactory proving the ownership of the articles; that such being the case, the whole contract was terminated and therefore the rule as regards declaration of value ceased to been operative. Notice that the sec. makes no difference between a gratuitous and a non-gratuitous bailment with regard to this duty to take care.