Bailment is a legal relationship where one person (the bailor) hands over goods to another person (the bailee) for a specific purpose, under the condition that the goods will be returned once the purpose is fulfilled. This arrangement is common in everyday transactions, and both parties have specific rights and duties under the Indian Contract Act, 1872. Let’s take a brief look at the rights and responsibilities of the bailee and bailor, along with when and how bailment ends.
Rights of a Bailee
- Right to Compensation
According to Section 164, if the bailor was not legally allowed to bail the goods or receive them back, and the bailee suffers a loss because of this, the bailee has the right to claim compensation.
- Right to Terminate the Bailment
If the goods given by the bailor do not match the agreed terms of the contract, the bailee has the right to cancel or terminate the bailment.
- Right to Recover Expenses
If the bailee spends money on the goods (for example, maintaining or storing them), they have the right to be paid back for those expenses.
Duties of a Bailee
- Duty to Take Reasonable Care Under Section 151, the bailee must take care of the goods just like a reasonable person would care for their own belongings of similar kind and value.
- Duty to Return the Goods According to Sections 160 and 161, the bailee must return the goods to the bailor when the time is up or the purpose is completed. If the bailee fails to return the goods on time and any loss happens after that, the bailee will be held responsible.
- Proper Use of Goods Under Section 154, the bailee must use the goods only in the way mentioned in the agreement. If the bailee misuses the goods, they are liable to pay for any damage caused.
You can also read the Judgement of Mohori Bibee V. Dharmodas Ghose Case.
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Rights of a Bailor
- Right to Compensation for Negligence or Misuse If the bailee is careless or uses the goods wrongly, the bailor can claim compensation (Sections 152, 153, 154).
- Right to Separate Goods If the bailee mixes goods without permission, the bailor has the right to ask for separation and may also claim compensation (Section 156).
- Right to Get Goods Back and Their Accretion The bailor has the right to demand the return of goods once the bailment ends (Section 160) and can also claim anything that was added or grew from the goods during bailment (Section 163).
Duties of a Bailor
- Duty to Disclose Faults
Under Section 150, the bailor must inform the bailee of any known defects in the goods. If not, and the bailee suffers any damage, the bailor is responsible. This applies even if the goods were given for free.
- Duty to Compensate the Bailee
If the bailor takes the goods back early in a free bailment and it causes the bailee a loss, the bailor must pay compensation (Section 159).
- Duty to Cover Expenses
As per Section 170, if the bailee uses skill or effort on the goods, they have the right to hold the goods until they are paid for their service.
Termination of Bailment
Bailment can end in the following ways:
- When the fixed time period ends.
- When the purpose of the bailment is completed.
- If the bailee uses the goods in a way that violates the terms (Section 153).
- If the goods are destroyed.
- If either the bailor or bailee dies in the case of a free bailment (Section 162).
Conclusion
Bailment is a balanced legal relationship built on trust and responsibility. While the bailee has the right to compensation and reimbursement, they must also take care of the goods and use them properly. On the other hand, the bailor must disclose any defects and cover the bailee’s expenses when required. Understanding these rights and duties helps ensure smooth transactions and legal clarity in situations involving the transfer of goods for a temporary purpose.
