The Indian Contract Act defines some very essential rights and duties of the bailor and bailee because they benefit both resulting in mutual growth in business and relationship.
(1) What is Bailment?
As per section 148 of the Contract Act 1872, the bailment is a process of transferring the goods of one person to another person without altering the ownership of the goods in the form of an agreement is called bailment.
(2) What is Bailor?
A bailor is an individual who gives up the right to own his property for a short period without altering the ownership of the goods or property is known as a bailor.
(3) What is Bailee?
Bailee refers to a single person who receives the goods or the property from the bailor gaining the custody of change as a caretaker but not the ownership.
Since with the bailment agreement, they do have their rights and duties of bailor and bailee which we shall know below.
(4) DUTIES AND RIGHTS OF BAILOR:
DUTIES OF BAILOR :
1. Duty to Disclose Faults (section 150) :
It is the bailor’s responsibility to let the bailee know the faults in the goods or the property before the contract itself. If he fails to do then the bailor himself is responsible for the damage caused to the bailee.
Example :
A lends his car to B which has faults, but he does not give the information or the facts about the problematic car condition to B. Then B, rides it, he meets with an accident, and B is injured. In that situation, A is accountable for the injury of B.
2. Duty to Refund Bailee’s Expenses (section -158) :
A bailor has to bear the extraordinary expenses to the bailee for taking care of the goods which are required or kept or work done in the process of keeping it in good condition. The bailor has to pay the expenses that occurred by bailee by him.
3. Duty to Indemnify the Bailee (section 159) :
Bailor has always a right to terminate the agreement at any time even when it was for a specific period. But the bailor has to bear any loss that occurs to the bailee due to ending the agreement before time.
4. Duty to Back the Bailee for the defective title (section 164):
If the bailee suffers any loss or damage as a consequence of the misleading title or defective title by the bailor. The bailor is accountable for the whole damage and loss.
RIGHTS OF BAILOR :
1. Right to the enforcement of Performance:
When the bailor sends the goods to the bailee for a particular purpose, and in the instance of non-gratuitous bailment, the bailor has a primary right to acquire all the benefit through the latter on of such goods.
2. Right to Demand For Damages:
Bailor has the right to demand damages against the goods if they are caused by bailee carelessness.
3. Return of Goods (section 159):
When the goods are delivered under the agreement of bailment under section 159, the Bailor always holds a right to ask for the return of the goods before the time of agreement is completed. If the bailee will have any loss by this decision bailor, he has to pay for the loss.
4. Compensation from wrong Doer (section 180):
If a third person damages the goods bailed or deprives the right of the bailee to use goods, then both the bailor and bailee have the right to file suit against the third person and ask for compensation.
In the case of Morvi Mercantile Bank Ltd. v. Union of India, (AIR 1965 SC 1954), the supreme court held, Under this section, a pledge being a bailment of goods as security for payment of a debt, the pledgee will have the same remedies as the owner of the goods would have against a third person for deprivation of the said goods or injury to them.
(5) DUTIES AND RIGHTS OF BAILEE :
DUTIES OF BAILEE:
In the case of N.R. Srinivasa Iyer v. New India Assurance Co. Ltd. Madras. (AIR 1983 SC 899), the supreme court held “Once a man has taken charge of goods as a bailee for reward, he must take reasonable care to keep them safe; and he cannot escape that duty by delegating it to his servant. If the goods are lost or damaged, whilst they are in his possession, he is liable unless he can show the burden is on him to show that the loss or damage occurred without any neglect default, or misconduct of himself or of any of the servants to whom he delegated his duty.”
1. Reasonable care of the Goods (section -151):
The bailee holds the duty to take care of the goods received by the bailor and when he fails to return it in the same condition causing damage then the bailee is liable for the damage.
When the goods are damaged after taking the bailee’s proper care. Then the bailee is not chargeable for the loss under section 152.
2. Duty of Unofficial use of Goods:
The bailee has to make sure they use goods only under the bailment contract if he uses them illegally then the bailment agreement can be canceled by the bailor under section 154.
3. Not to Merge Bailor Goods with his Other Goods:
Bailee must keep the goods apart from his goods. He should not mix his goods with his own or any other goods without taking the permission of the bailor. If he indulges in the mixing of other goods Bailee must pay charges for damage to the bailor.
4. Not to keep an Adverse Title:
The bailee does the process of caretaker on behalf of the bailor. He has to return the goods once the contract comes to an end or if the bailor asks him to return the goods. According to section 117 in the Evidence Act 1872, Bailee can never hold the right of ownership for the goods as the bail.
5. Return The Benefit with the Goods:
Bailee has to give the profit which is acquired by the goods of the bailor at the time of returning the goods. Unless if it is mentioned in the bailment agreement.
6. Duty to Return the Goods:
Bailee has to give back or send back the goods to the bailor after finishing the bailment agreement, as well he has to send back the goods only on the directions of the bailor.
If goods tend to get damaged in the process. The bailee holds the responsibility even without his context. Duties can be considered as the key role in the rights and duties of bailor and bailee the whole process of bailment.
RIGHTS OF BAILEE:
1. Right to Transport the Goods to any one of the Joint Bailors:
If the goods of several joint owners (bailers) are being delivered, then the bailee has the right to send the goods to any one of the bailers, unless if there is a specific mention of a bailor in the agreement.
2. Right to Deliver the Goods to Bailor without Title (section -166):
According to section 166 of the act, If the bailor has no title to the goods and the bailee returns them to the bailor in good faith, the bailee is not liable to the owner.
3. Right of lien (section-170/171):
When the rightful charges are not accounted to the bailee, regarding the goods service which is done, then he earns the right to keep the goods with him until the charges are paid is called the right of lien.
4. Right to expenses or Remuneration:
The bailor has to pay the necessary expenses which were incurred on the goods for the work done to take care of them. Such an amount has to be compensated to the bailee under the conditions of the bailment agreement.
Rights are very essential in the rights and duties of bailor and bailee because it benefits both resulting in mutual growth in business and relationship.
(6) Reference:
(1) Section 148 of the Contract Act 1872.
(2) Morvi Mercantile Bank Ltd. v. Union of India, AIR 1965 SC 1954.
(3) N.R. Srinivasa Iyer v. New India Assurance Co. Ltd. Madras (AIR 1983 SC 899).
