chapter – 14 bailment & pledge€¦ · · 2017-09-01bailment & pledge list of sections...

Classes at I.G.P 171

Chapter – 14

Bailment & Pledge

LIST OF SECTIONS TO BE DISCUSSED IN THIS CHAPTER

SECTION NO. SECTION NAME

148 CONTRACT OF BAILMENT

150 BAILORS DUTY TO DISCLOSE FAULT IN THE GOODS

151 BAILEES DUTY TO TAKE CARE OF GOODS

153 TERMINATION OF BAILMENT ON INCONSISTENT USE OF GOODS BY BAILEE

154 BAILEES DUTY NOT TO MAKE UNAUTHORIZED USE OF THE GOODS ENTRUSTED

TO HIM

155 BAILEES DUTY NOT TO MIX GOOD



158 BAILORS DUTY TO PAY NECESSARY EXPENSES

159 PREMATURE TERMINATION OF GOODS

160 BAILEES DUTY TO RETURN THE GOODS

161 BAILEES DUTY TO RETURN THE GOODS

162 TERMINATION OF BAILMENT ON THE DEATH OF BAILOR OR BAILEE

163 BAILEES DUTY TO RETURN ANY ACCRETION TO GOODS

164 BAILORS RESPONSIBILITY TO BAILEE

168 FINDER OF GOODS

169 FINDER OF GOODS

171 CONCEPT OF LIEN

172 CONCEPT OF PLEDGE

173 PAWNEES RIGHT OF RETAINER

174 PAWNEES RIGHT OF RETAINER FOR SUBSEQUENT ADVANCES

175 PAWNEES RIGHT TO EXTRAORDINARY EXPENSES

176 PAWNEES RIGHT TO SUE THE PAWNOR OR SELL THE GOODS, ON DEFAULT BY

THE PAWNOR

177 RIGHTS OF PAWNOR

178 PLEDGE BY A MERCANTILE AGENT

178A PLEDGE BY A PERSON UNDER A VOIDABLE CONTRACT

179 PLEDGE BY A PERSON WITH LIMITED INTERST

14.1 Concept of Bailment section 148

Definition of

bailment

As per sec 148, Bailment is the delivery of goods by one person to another for some

purpose upon a contract that they shall when the purpose is accomplished, be

returned or otherwise disposed of according to the direction of the person

delivering them.

Parties under

bailment

There are namely two parties under Bailment, viz, the Bailor and the Bailee.

Bailor – The person delivering the goods to the other person for some purpose

Chapter 14 Bailment & Pledge


is called bailor.

Bailee – The person to whom the goods are delivered for some purpose is called

the bailee.

Examples of

Bailment

Delivery of cloth for stitching purpose

Delivery of goods for the purpose of repair.

Delivery of goods for the purpose of safe custody

PAST

ATTEMPT

QUESTIONS

Q1. The delivery of goods by one person to another for some specific purpose and time is

known as:

(a) Mortage

(b) Pledge

(c) Bailment

(d) Charge [CA IPCC MAY 2011]

14.2 Essential Features Of Bailment section 148

Delivery of goods. Bailment implies delivery of goods.

A mere agreement to deliver goods does not become bailment.

Delivery can be actual ,symbolic,contructive.

change in possession is not same as a mere shift in custody.

Delivery for some

purpose

There must be some purpose for which goods are delivered.

Where goods are delivered by mistake without any purpose there is no bailment.

Delivery with

contract

The delivery to bailee is with a contract that the goods shall be returned or disposed

off in the manner desired by the bailor.

Bailment of

movable goods

only

Goods shall have same meaning as in Sales of goods Act,1930.

Goods to be

returned in specie

or altered form

For bailment to be valid goods should be returned in the the same form as given or

may be altered as per bailers direction. It should be noted that exchange of goods

should not be allowed.

Bailee ultimate

control

When a person keeps his goods in the premises of another person but him self

continue to have the control over them there is not sufficient delivery for being

considered to be bailment [Kalia Porumal Pillai V Visalakshmi].

PAST

ATTEMPT

QUESTIONS

Q1. A, the bailor, pledges a cinema projector and other accessories with Cine Association

Co–operative Bank Limited, the bailee, for a loan. A requests the bank to allow the

pledged goods to remain in his possession and promises to hold the same in trust for

the bailee and also further promises to handover the possession of the same to the

bank whenever demanded. Examining the provisions of the Indian Contract Act, 1872

decide, whether a valid contract of pledge has been made between A, the bailor and

Bank, the bailee? [CA PCC JUNE 2009]

Q2. State the essential elements of a contract of bailment. Distinguish between the contract

of bailment and contract of pledge (8 Marks) [CA IPCC NOV. 2012]



14.3 Additional examples

Deposit of money

with Banker

A deposit of money with a banker does not become bailment because banker is

bound to return not the same currency notes but only an equivalent value.

Deposit of

valuables in bank

locker

It must be noted that deposit of valuables in a banker locker is not bailment because

bank does not have ultimate control over the goods.

Delivery under sale

or gift

Delivery of goods to a person under sale or gift or donation is also not bailment

becomes ownership is transferred in such cases.

Parking of a vehicle

in a parking lot

In this case if keys are handed off to the parking persons then it does not amounts

to bailment .

Seizure of goods by

custom department

It is bailment since it satisfies all essentials of bailment.

PAST

ATTEMPT

QUESTIONS

Q1. Examine whether the following constitute a contract of 'Bailment' under the provisions

of the Indian Contract Act, 1972:

(i) V parks his car at a parking lot, locks it, and keeps the keys with himself.

(ii) Seizure of goods by customs authorities [CA PE II MAY 2007]

Q2. Deposit of money in a Bank Amounts to Bailment. [CA PCC MAY 2007]

Q3. Depositing of ornaments in a bank locker is a bailment [CA Inter.(IPC) MAY

2015]

14.4 Types of bailment

Gratuitous Bailment The word gratuitous means free of charge. So a gratuitous bailment is one when the

provider of service does it gratuitously i.e. free of charge such bailment would be

either for the exclusive benefits of bailor or bailee.

Non-Gratuitous

Bailment

Non gratuitous bailment means where both the parties get some benefit i.e.

bailment for the benefit of both bailor & bailee.

14.5 Duties of Bailor section 150, 158, 159, 164

Duty to disclose

faults. Sec 150

The bailor must disclose to the bailee any faults or defects in the goods which can

harm to him.

A gratuitous bailor is bound to disclose to the bailee all those faults in the goods

bailed of which he is aware and if he fails to do so, he will be liable to pay such

damages to the bailee as may have resulted directly from faults.

A Non gratitous bailor is responsible for all defects in the goods bailed whether

he is aware of the defects or not .

Duty to pay

necessary expenses

Sec 158

In case of gratuitous bailment –In case of gratuitous bailment the bailor is liable

to reimburse to bailee :

all the necessary expenses incurred by bailee ; and



Any extraordinary expenses incurred by the bailee.

In case of non-gratuitous bailment – In case of non gratuitous bailment, the

bailor is liable to reimburse to bailee any extraordinary expenses incurred by the

bailee

Duty to indemnify

bailee Sec 164

A bailor is also bound to indemnify the bailee for any loss suffered by the bailee by

reason of fact that the bailor was not entitled to bail the goods because of his

defective title.

Duty to receive

back the goods Sec.

164

It is the duty of the bailor to receive back the goods when the bailee returns

them after the time of bailment has expired or the purpose of bailment has been

accomplished.

If the bailor refuses to take delivery of goods when it is offered at the proper

time the bailee can claim compensation for all necessary expenses incurred for

the safe custody.

Duty to compensate

in case of

premature

termination sec.159

Sec 159 states that if the bailor terminates a gratuitous bailment prematurely

causing loss to the bailee he will compensate the bailee for the loss caused, which is

in excess of the benefit received.

PAST

ATTEMPT

QUESTIONS

Q1. A hires a carriage of B an agrees to pay Rs. 500 as hire charges. The carriage is unsafe,

though B is unaware of it. A is injured and claims compensation for injuries suffered by

him. B refuses to pay. Discuss the liability of B. [CA PE II MAY 2005]

Q2. M delivers to N, a carrier, some explosives in a case without disclosing this fact to N. N

does not take any extraordinary care required for such type of goods. The case explodes

and as a result, a porter is injured and some other goods are damageed. Discuss the

liability of M in the light of the provisions of the Indian Contract Act,1872.

[CA PE II NOV. 2009]

Q3. If the pawnor makes a default in the payment of debt, or performance of duty, as

agreed, the pawnee has a right to sell the thing pledged for which no reasonable notice

of the sale is required. [CA IPCC NOV. 2009]

14.6 Duties of bailee section 151,154, 157,160,161,163

Duty to take care of

goods. Sec 151

Every bailee has duty to take a reasonable care of the goods ,as much care of the

goods bailed to him, as a man of ordinary prudence under similar

circumstances, take of his own goods

If in spite of bailee’s care goods are lost or damaged, bailee shall not be liable;

but the parties may increase the level of care expected from bailee through a

special term in the contract (Sec 151).

Duty not to make

unauthorized use

of goods entrusted

to him – Sec. 154.

Bailee is under duty to handle the bailed goods strictly according to the terms of

the contract. Any deviation in this respect will be an unauthorized use of the

goods.

In case of an unauthorized use of the goods, the bailee shall be liable for any

damage whatsoever arising to the goods from or during such use of them.

In addition to this, the bailor would have a right to terminate bailment in case of

unauthorized use.

Duty not to mix the It is the duty of the bailee not to mix his own goods with the goods bailed. If the



goods Sec. 155, 156,

157

bailee mixed his own goods with the goods of the bailor, the consequences shall be

as follows:

In case the goods are mixed with the permission of the bailor – In such a case

the goods of bailor & bailee need not be separated. The bailor & bailee shall be

entitled to receive their proportionate shares from the mixture.

In case the goods are mixed without the permission of the bailor -:

In case it is possible to separate the goods – If it is possible to separate

bailor’s goods & bailee goods, it shall be the duty of the bailee to make

such separation. Accordingly the bailee shall be liable to pay damages for

any loss caused to the bailor.

In case it is not possible to separate the goods – If it is not possible to

separate bailor’s goods then bailee shall be liable to compensate the bailor

for the loss caused to him. The damages shall be measured as per the

market value of the same quality of goods bailed by bailor.

Duty to return the

goods – Sec 160 &

161.

The bailee has a basic duty to return or deliver according to the bailor’s

direction i.e. the purpose for which they were bailed has been accomplished.

If bailee fails to return the goods at proper time his liability for loss or damage

to goods increases, he is responsible to the bailor for any loss or destruction

from that time [Sec 161].

Duty to return any

accretion to goods

Sec. 163

It is the duty of the bailee to deliver to the bailor any natural increase or profit

accruing from the goods bailed unless there is a contract to contrary.

PAST

ATTEMPT

QUESTIONS

Q1. Sunil delivered his car to Mahesh for repairs. Mahesh completed the work, but

did not return the car to Sunil within reasonable time, though Sunil repeatedly

reminded Mahesh for the return of car. In the meantime a big fire occurred in

the neighbourhood and the car was destroyed. Decide whether Mahesh can be

held liable under the provisions of the Indian Contract Act, 1872. [CA PE II

NOV. 2003]

Q2. M lends a sum of Rs. 5,000 to B, on the security of two shares of a Limited

Company on 1st April 2007. On 15th June. 2007, the company issued two bonus

shares. B returns the loan amount of Rs. 5,000 with interest but M returns only

two shares which were pledged and refuses to give the two bonus shares.

Advise B in the light of the provisions of the Indian Contract Act, 1872. [CA PE

II NOV. 2008]

Q3. Bailee has no right to mix the goods bailed with his own goods without the

consent of the bailor. [CA Inter.(IPC) NOV. 2014]

14.7 Rights of Bailor section 151,153, 156,159,160,163,180,181

Right to enforce

bailee’s duties

The duties of the bailee are the rights of the bailor. The bailor can enforce by suit all

the duties of the bailee as his rights.

Right to terminate

bailment

Bailor in entitled to terminate bailment even before expiry of the specified time or

completion of the purpose if bailee does any act with regard to the goods which is

inconsistent with the terms of bailment (Sec 153).

Right of premature In case of gratuitous bailment of goods, bailor is entitled to demand their return



termination even before the expiry of the specified time or completion of purpose. But if this

premature return causes loss to bailee, the bailor has to compensate bailee for

this loss.

The measurement of damages for bailee would be the excess of loss caused by

the premature return of goods over the benefits already derived from such

goods.

Right to sue

wrongdoer

If a third party has caused some damage to the bailed goods while they are in the

bailee’s possession, bailor may file a suit against the third party i.e. the wrong-doer

for compensation and will have a right to share the proceeds available according to

their interests

14.8 Right of Bailee section 150, 158, 164, 165, 167, 180, 181

Right to enforce

Bailor’s duties

The duties of the bailor are the rights of bailee. As such, the bailee can by a suit

enforce the duties of the bailor.

Right to deliver

goods to one of

several joint-bailors

If there are several joint-bailors of goods bailed then, the bailee has a right to

deliver the goods back to one of several joint-owner without the consent of. all in

the absence of any agreement to the contrary (Sec 165).

Right to deliver

goods back to

bailor

The bailee is entitled to return the goods to bailor in good faith even if during

the possession of goods by him, a third person comes forward claiming his title

over the bailed goods. (Sec 166).

The alternates upon to such a third person is that he may apply to the court to

stop delivery of the goods to the bailor & to decide the title of the goods (Sec

167).

Right of lien Lien means a right to retain the goods belonging to another person until the

expenses incurred in respect of such goods are paid for.

The bailee has the right to recover the extraordinary expenses (whether the

bailment is gratuitous or non gratuitous) & ordinary necessary expenses (in

case the bailment is gratuitous) incurred by him.

If the bailor refuses to reimburse to bailee such expenses, the bailee has a right

to exercise lien over the goods bailed.

Right to sue wrong-

doers

If a third party has caused some damage to the bailed goods while they are in

bailee’s possession bailee may file a suit against the third party i.e. the wrong-doer

for compensation and both will have a right to share the proceeds available

according to their interests (Sec 180 & 181).

14.9 Termination of Bailment: Section 153, 159, 162

Expiry of specified

period–

When the bailment was for a specific period, it terminates on the expiry of the time

period.

Accomplishment of

the purpose of

bailment –

If the bailment was for a specific purpose it terminates on the completion of the

purpose.

Inconsistent use of If bailee does any act with regard to goods which is inconsistent with the terms of



goods bailment, then bailor may terminate bailment immediately.

Death of bailor or

bailee

A gratuitous bailment is terminated by the death of either of the parties .The goods

would be returnable immediately.

Premature

termination by a

bailor

(Sec 159). A gratuitous bailment can be terminated by the bailor even before expiry

of time or completion of purpose. But the bailor will have liability for compensation

to bailee

14.10 Concept of Pledge section 172

Definition of

Pledge

The bailment of goods as security for payment of a debt or performance of a

promise is called pledge.

Parties Pawnor: The person delivering the goods to another for the purpose of security is

called the pawnor.

Pawnee: The person with whom the goods are deposited for the purpose of

security is called the pawnee.

PAST

ATTEMPT

QUESTIONS

Q1. The Delivery of goods by one person to another as security for the payment of a debt is

called

(a) Bailment (b) Pledge

(c) Mortgage (d) Hypothecation. [CA PCC MAY 2007]

14.11 Rights and duties of bailor and bailee

Duties of pawnor The pawnor, i.e. the borrower, has following duties:

The pawnor, as a borrower, has a duty to fulfill his obligations to the

pawnee in time and according to the terms of the contract.

He has all the duties of a bailor towards the bailee.

He has a duty to re-imburse to the pawnee extraordinary expenses

incurred by pawnee for the preservation of the goods pledged (Sec 175).

He has a liability to pay any deficiency to the pawnee in case of sale of

goods by the latter.

Duties of pawnee Pledge being a special kind of bailment, the duties of a pawnee are just like

a bailee. Thus a pawnee’s duties may be enumerated as following:

To take reasonable care of the goods pledged.

Not to make any unauthorized use of the goods pledged.

Not to mix the goods pledged with his own goods.

To return the goods pledged on receipt of his full dues.

To deliver any accretion to the goods ledged.

Rights Of Pawnor

section 177

The pawnor has following rights against the pawnee:

As a bailor of goods, pawnor has all the rights of the bailor.

Pawnor has a supreme right of redemption of the pledged goods. This

right to recover the goods by clearing his dues is available to the



borrower even after he default in the payment at the prescribed time.

This right comes to an end only by the sale of goods by the pawnee

made in a lawful manner.

Pawnor has a right to receive notice from the pawnee for intended sale

of the goods.

Pawnor has a right to demand any surplus that may be left with the

pawnee after sale of goods.

14.12 Rights of Pawnee section 173, 176

Right of retainer

Sec 173

The pawnee has the right to retain the goods pledged until his dues are paid.

He has the right to retain the goods pledged, not only for payment of the

debt but for the interest due on the debt and all necessary expenses incurred

by him in respect of the possession or for the preservation of the goods

pledged.

Right of retainer

for subsequent

advances Sec 174

When the pawnee lend money to the same debtor after the date of the

pledge without any further security, it shall be presumed that the right of

retainer over the pledged goods extends even to subsequent advances. This

presumption can be rebutted only by a contract to the contrary.

Right to

extraordinary

expenses Sec 175

The pawnee also has the right to recover from the pawnor extraordinary

expenses incurred by him for the preservation of the goods pledged. But he

cannot retain the goods, if such expenses are not paid. He has only a right to

sue the pawnor for recovery of such extraordinary expenses.

Right to sue the

pawnor or sell the

goods on default

of the pawnor Sec

176

Where a pawnor makes default in the payment of the debt the pawnee may

himself sell the thing pledged, after giving to the pawnor a reasonable notice

of his intention to sell.

14.13 Who Can Pledge? section 178, 178A, 179

General Rule Ordinarily, it is the owner of the goods, or any person authorized by him in

that behalf, who can pledge the goods. Following are exceptions.

mercantile agent

(Sec 178).

A mercantile agent having possession of the goods with the consent of the

owner but having no authority to pledge them can make a pledge provided

the pawnee is acting in good faith.

person in

possession under a

voidable contract

(Sec 178-A

A person who has obtained the possession of the goods under a voidable

contract, can make a pledge provided the pawnee is acting in good faith.

Pledge by a person where a person pledges goods in which he has only a limited interest,



with a limited

interest (Sec 179).

the pledge is valid to the extent of that interest.

In such a case, the pawnee’s right is limited to the pawnor’s interests in

the goods

Pledge by seller in

possession after

sale

if the seller after selling the goods, continues to have posseeion on the

goods pledges the same then such pledge shall be valid if pawnee is

acting in good faith.

Pledge by buyer in

possession before

sale

if the buyer before sale has possession over the goods and pledges the

same then such pledge shall be valid if pawnee is acting in good faith.

PAST ATTEMPT

QUESTIONS

Q1. Ravi sent a consignment of goods worth Rs. 60,000 by railway and got railway

receipt. He obtained an advance of Rs. 30,000 from the bank and endorsed and

delivered the railway receipt in favour of the bank by way of security. The railway

failed to deliver the goods at the destination. The bank filed a suit against the

railway for Rs. 60,000. Decide in the light of provisions of the Indian Contract Act,

1872, whether the bank would succeed in the said suit? [CA PE II MAY 2008]

Q2. A pledge of documents of title to goods by a mercantile agent is a valid pledge.

[CA PCC MAY 2008]

Q3. X sent a consignment of mobile phones worth Rs. 60,000 to Y and obtained a railway

receipt therefore. Later, he borrowed a loan of Rs. 40,000 from Star Bank and

endorsed the railway receipt in favour of the Bank as security. In transit the

consignment of mobile phones was lost. The Bank files a suit against the railway for

a claim of Rs.60,000, the value of the consignment. The railway contended that the

Bank is entitled to recover the amount of loan i.e. Rs. 40,000 only. Examining the

provisions of the Indian Contract Act, 1872, decide, whether the contention of the

railway is valid. [CA IPCC NOV. 2010]

Q4. X sent a consignment of goods worth Rs. 2,90,000 by railway and got railway receipt

for the same. He obtained an advance of Rs. 2,60,000 from the bank and endorsed

and delivered the railway receipt in favour of the bank by way of security for the

advance. The railway failed to delivered the goods at the destination. The bank filed

a suit against the railway for Rs. 2,90,000. Decide in the light of provisions of the

Indian Contract Act, 1872, whether the bank would succeed in the said suit? [CA Inter.(IPC) NOV. 2014]

14.14 Concept Of Lien section 171

Meaning of Lien Lien is a right of a person to retain the possession of goods of another person

so long as some claim upon that person is not satisfied by him.

Types of lien

Particular Lien Particular lien means the right granted by law to a person to detain only a

particular property or goods of the owner against a particular claim upon

the owner.

(B) General Lien General lien means the right granted by law to a person to detain any goods

whatsoever of a person against any general claim upon the owner.

Persons entitled to

general lien

The right of general lien has been conferred on the following kinds of

bailees:



1. Bankers, 2. Factors,

3. Wharfingers, 4. Attorneys of a High Court, and

5. Policy-brokers.

The right is available to the above categories of bailees only and none else, “unless there is an

express contract to that effect.” It means that the parties may, by an express contract between

themselves, confer the right of general lien on a bailee, who has otherwise got only a right of

particular lien .

Bankers . Every banker will have a general lien which attaches to all goods, securities

and papers entrusted to it as a bailee by its customer

Factors The word ‘factor’ is used for such mercantile agents who are entrusted with

principal’s goods for selling them. Sec 171 grants a general lien to a factor on

all goods received by him in his capacity as factor for his remuneration.

Wharfingers A ‘wharf’ is a place close to a seaport where goods are temporarily

placed during the loading or unloading operations to or form the ship.

A ‘wharfinger’ is the owner of a wharf.

Sec 171 grants to a wharfinger a general lien over goods bailed to him in

that capacity for the wharfage. i.e. his remuneration for allowing the use

of his wharf.

Attorneys of High

Court

An attorney or a solicitor of a High Court is granted a general lien over the

client’s documents and papers received by him in professional capacity from

the client until his professional fee and other legal costs incurred by him for

the client are paid.

Policy – brokers An insurance agent employed to affect a policy of marine insurance is

called a policy – broker.

He may detain any property or documents received from his clients for

any balance on any insurance account due to him from his client.

14.15 Finder of Goods section 71, 168, 169

Meaning of finder

of goods

Finder of goods means a person who finds the goods lost by some another

person.

Duties of finder:- The finder’s duties as a bailee are given below

To take reasonable

care of the goods

The finder will take a reasonable care of the goods he has chosen to take in

his possession. This would be the care that he would take of his own goods

of a similar type.

To search the true

owner

The finder must take initiative to search the true owner and make reasonable

efforts for the same.

Not to make

personal use of

goods

The finder is expected to keep the goods in his safe custody only without

misappropriating them or converting them to his own use. If personal use is

unavoidable, he will be liable to make a reasonable payment to owner for



this.

To return the goods

to true owner

On finding the true owner, finder must return the goods to him. This duty

has another aspect and that is that he must not hand over the goods to any

person other than the true owner.

Rights of Finder:- The rights of the finder of goods are given below

To keep possession

of goods

The finder has a right to keep possession of the goods against everybody

except the true owner.

To recover expenses

from true owner

The finder is entitled to get reimbursement from the owner for the expenses

incurred for preserving the goods and searching him.

To recover reward

from owner

The finder can demand from the owner the reward promised for the return

of the goods provided he was aware .

To exercise lien

over goods for

expenses and

reward

The finder may have claim upon the true owner for his expenses on search

for owner and maintenance of goods and also for the reward promised by

the owner. For both these claims, finder has a lien over the goods in his

possession.

To exercise right of

sale

finder a right to sell the goods in his possession but the right is available only

when

The true owner cannot ,with reasonable diligence be found: or

If the true owner has been found he refuses to pay the lawful charges

incurred by the finder of the goods; or

The goods are in the danger of perishing or losing a greater part of their

value ; or

The lawful charges of the finder in respect of the goods found amounts

to 2/3rd of their value.

PAST ATTEMPT

QUESTIONS Q1. What is the status of a "finder of goods" under the Indian Contract Act, 1872? What

are his rights? [CA PE II MAY 2003]

14.16 Some Important Distinctions

I. Distinction Between Bailment And Pledge

S.

No

Basis Bailment Pledge

1. Definition Bailment is the delivery of goods by

one person to another for some

purpose upon a contract that they shall

when the purpose is accomplished , be

returned or otherwise disposed of

according to the direction of the person

delivering them.

The bailment of goods as security for

payment of a debt or performance of a

promise is called pledge.

2. Meaning In simple words, bailment is delivery of

goods from one person to another for

some purpose upon a condition that

In simple words pledge is a delivery of

goods from one person to another for the

purpose of security for the repayment of



the recipient shall ultimately ,restore

them to the person delivering them or

he shall dispose them according to the

direction of the person delivering them.

a debt.

3. Scope Bailment is a wider term and

includes a large variety of

transaction.

But, pledge is a specific category of

bailment.

4. Purpose Bailment, as a wider concept, may

be for a large variety of purposes.

But, pledge is for one specific

purpose only, to make the goods

security for a loan.

5. Right of

personal use

The purpose of bailment may be to

enable the bailee to make use of the

bailed goods.

Such a personal use of goods is

denied to a pawnee.

6. Right of sale In general, bailees do not have the

right to sell bailor’s goods to serve

their own interests.

But, a pawnee would always have a

right to sell the pledged goods to

recover his money in case of default

by the pawnor.

II. Distinction between general lien and particular lien

S.

No

Basis General Lien Particular Lien

1. Meaning General lien means the right granted

by law to a person to detain any

goods whatsoever of a person against

any general claim upon the owner.

Particular lien means the right

granted by law to a person to detain

only a particular property or goods

of the owner against a particular

claim upon the owner.

2. Scope It is wider in scope as it entitles the

person to detain any property.

It is narrower in scope as compare

to particular lien because it entitles

the person to detain only a

particular property or goods of the

owner against a particular claim

upon the owner.

3. Persons

entitled to

The right of general lien has been

conferred on the following kinds of

bailees:- Bankers, Factors,

Wharfingers, Attorneys of a

HighCourt, and Policy-brokers.

The particular lien has been

conferred on the following: bailee,

finder of goods, pawnee, agent’s

lien, unpaid seller’s lien, partner’s

lien.

III. Distinction Between Gratuitous and Non Gratuitous Bailment

S.

No

Basis Gratuitous Bailment Non Gratuitous Bailment

1. Meaning The word gratuitous means free of

charge. So a gratuitous bailment is one

when the provider of service does it

Non gratuitous bailment means where

both the parties get some benefit i.e.

bailment for the benefit of both bailor &



gratuitously i.e. free of charge such

bailment would be either for the

exclusive benefits of bailor or bailee.

bailee.

2. Consideration In case of gratuitous bailment either

party (i.e. either bailor or bailee)

would not get consideration.

However, in case of non gratuitous

bailment both party will get

consideration.

3. Liability of

bailor

A gratuitous bailor will be liable to pay

such damages to the bailee as may

have resulted directly from faults. A

gratuitous bailor will not be liable for

damages arising to the bailee from

defects of which he was ignorant.

A non gratuitous bailor is responsible

for all defects in the goods bailed

whether he is aware of the defects or

not .If he does not disclose them to the

bailee unlike a gratuitous bailor

ignorance of the defects is no defence

for him.

4. Duty to pay

necessary

expenses

In case of gratuitous bailment the

bailor is liable to reimburse to bailee all

the necessary expenses incurred by

bailee.

In case of non gratuitous bailment the

bailor is not liable to reimburse to

bailee any necessary expenses incurred

by bailee.

5. Termination of

bailment

A gratuitous bailment is terminated on

the death of bailor or bailee.

A non gratuitous bailment is not

terminated on the death of bailor or

bailee.

chapter – 14 bailment & pledge€¦ · · 2017-09-01bailment & pledge list of sections...

Documents