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Bailment

&

Pledge

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Bailment

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Case: Goods and Contracts

A person gives his furniture to a person to transportto his new house in another town.

A person gives his jacket to a drycleaner.

A company hires out public address system to aperson organising a music function.

What is common to the contracts?

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Bailment

Owner gives the custody and possession of hisgoods to another person as a part of the contract.The goods would need to be returned back to him.

The owner who gives his goods is called Bailor

The person receiving the goods is called Bailee

The giving of goods is called Bailment

Essentials of Bailment:

1. Delivery of goods

2. Delivery for some purpose

3. Contract

4. Movable goods

5. Return of goods5

Kinds of Bailment:

1. Voluntary and Involuntary

Bailment

2. Gratuitous and non-

gratuitous Bailment

3. On the basis of benefit

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Rights of Bailor

1. Enforcement of Bailee’s duties

(i) Right to claim compensation for loss

caused to the goods by the negligence of

the bailee

(ii) Right to claim compensation for

unauthorized mixing of goods with the

bailee’s own goods

(iii)Right to claim damages for unauthorised

use of goods

(iv) Right to demand goods back after the

expiry of purpose or period

(v) Right to claim any accretion to the goods

bailed

2. Right to termination: Inconsistent act

3. Restoration of goods lent gratuitously

4. Right to file a suit against any wrongdoer

and claim compensation

Duties of Bailor

1. Duty to disclose known defects

(a) Gratuitous Bailment: Known defects

(b) Bailment for reward: Known & unknown

2. Duty to bear extraordinary expenses of

bailment

3. Duty to indemnify bailee: loss due to

imperfect title

4. Duty to receive back goods

5. Duty to bear normal risks

Rights of Bailee

1. Enforcement of rights

2. Bailment by several joint owners

3. Right to compensation: imperfect title

4. Right to remuneration:extraordinary damages

5. Right to claim damages: defects

6. Right to sue

7. Right of lein

Duties of Bailee

1. Duty of reasonable care

2. Duty not to make unauthorised use of

goods

3. Duty not to mix bailor’s goods with his

own

Section 155

Section 156

Section 157

4. Duty not set up any adverse title against

the bailor

5. Duty to return any accretion to the goods

6. Duty to return the goods

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Case: Washing for Repair

A person gave his washing machine for repairingto a shop. As the shop did not have space inside, itleft the washing machine outside in its corridor.There was no security or attendant for guarding thepremises. The washing machine was stolen.

Is the shop responsible for the loss of the washingmachine to the owner?

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… Cond

A person gave his washing machine for repairing.

The shop had stored it properly and safely.

However, an unprecedented rain created a deluge

and all the washing machines in the shop as well as

all the expensive testing equipment of the shop got

damaged.

Is the person responsible for the loss of the

washing machine?

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FactsR. S. Deboo: Drycleaner- M/s Leach and WaBomy

Customer: Hindlekar and family

There was a fire in the factory and the clothes gotdestroyed.

The drycleaner offered to pay 20 times thedrycleaning charges as this was stipulated on theback of the receipt limiting the liability of thedrycleaner.

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Judgement: High Court

Terms and conditions printed on the reverse of areceipt issued by the owner of the laundry or anyother bailee do not necessarily form part of thecontract of bailment in absence of the signature ofthe bailer on the document relied upon. In absenceof signature of the bailer on the document reliedupon, the onus is on the bailee to prove that theattention of the bailer was drawn by the bailee tothe alleged special conditions before the contractwas concluded and the bailee had consentedthereto expressly or by necessary implication as acontractual term.

Bailee’s Lein

(a)Particular Lein:

(b) General Lein: Bankers, factors,

wharfingers, attorney, policy brokers

Finder of Lost Goods

Rights of finder of goods

1. Right of lien

2. Right to sue for reward

3. Right of sale

(i) If owner can not be found

(ii) If charges are 2/3 rd of value of goods

and owner refuses to pay

(iii) If goods are perishable in nature

Obligations of finder of lost goods

1. Take reasonable care of goods

2. Not to use for his own purpose

3. Not to mix goods with his own goods

4. Try to find out the true owner of goods

Termination of Bailment

Pledge

• Special kind of bailment

• Bailment for security

• Bailor is known as pledger or pawner

and bailee is known as pledgee or

pawnees

Rights of Pawnee

• Right of retainer

• Right of retainer for subsequent advances

• Right to extraordinary expenses

• Pawnee’s rights where pawnor makes

default

Rights of Pawnor

• Right to get back goods

• Right to redeem debt

• Preservation or maintenance of the goods

• Rights of an ordinary debtor

Pledge by Non-Owners

• Pledge by mercantile agent

• Pledge by seller or buyer in possession

after sale

• Pledge where owner has a limited interest

• Pledge by co-owner in possession

• Pledge by person to possession under a

voidable contract

Pledge v/s Bailment

1. Scope

2. Right to sell

3. Right to use

Rights and duties of pawner and pawnee

THANK YOU

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