Bailment and Pledge (1).pptx

1. Bailment and Pledge
By: Anuj Aggarwal

2.  According to Sec 148 of the Contract Act - “A
bailment is a transaction whereby one person
delivers goods to another person for some
purpose, upon a contract that they shall,
when the purpose is accomplished, be
returned or otherwise disposed of according
to the directions of the person delivering
them.”

3. Examples of Bailment
 Lending a book to a friend.
 Delivering of cloth to tailor for stitching
 Delivering a bike or scooter for repair

4.  The person who delivers the goods is called
the Bailor and the person to whom they are
delivered is called the Bailee. The transaction
is called a Bailment.

5.  GRATUITOUS BAILMENT
 NON- GRATUITOUS BAILMENT

6.  GRATUITOUS BAILMENT
Bailment in which neither the bailor nor the
bailee is entitled to any remuneration.
eg- lending a book to friend
 BAILMENT- FOR REWARD
Bailment in which either the bailor or the
bailee is entitled to remuneration is called
Non-Gratitious Bailment.
eg- Motor Car let out for Hire.

7.  In sale, the ownership is transferred and he is
under no obligation to return the goods.
 In Bailment, only possession is transferred
and not the ownership of goods.

8. 1. Enforcement of Bailee’s Duties (Sec 151, 154,
155-156, 160, 163)
2. Right to terminate bailment if the bailee uses
the goods wrongfully (Sec 153)
3. Right to demand return of goods at any time
in case of gratuitous bailment (Sec 159)

9. 1.Duty to take reasonable care of goods delivered to him.
(Sec 151)
2.Duty not to make unauthorised use of goods entrusted to
him. (Sec 154)
3.Duty not to mix goods bailed with his own goods. (Sec 155)
– i) Goods can be separated ii) Goods can’t be separated
4. Duty to return the goods (Sec 160)
5.Duty to deliver any accretion (increase/ decrease) (Sec 163)

10. 1. Duty to disclose faults in goods bailed [sec 150].
(Gratuitous vs Non-Gratuitous)
2. Duty to repay necessary expenses in case of
gratuitous bailment [sec 158].( eg- horse and its
feeding expenses)
3. Duty to repay any extraordinary expenses in case of
non-gratuitous bailment.(eg- horse falls ill , then his
medical expenses)

11. 4. Duty to receive the goods back.
5. Duty to indemnify Bailee [sec 164] - due to defective
title.

12. 1. Enforcement of Bailor’s Duties [Sec 150, 158, 164).
2. Rights to deliver goods to one of the several joint
bailors [Sec 165].
3. Right to deliver goods, in good faith, to bailor
without title [Sec 166].
4. Right of lien.

14.  A finder of lost goods is under no obligation
to take charge of the goods when he comes
across them. But if he does take charge , he
becomes responsible for the goods like a
bailee in the gratuitous bailment.

15. 1. Right to retain posession of the goods until the
true owner is found.
2. Right of lien over the goods for the expenses
[Sec 168].
3. Right to sue for rewards [Sec 168].
4. Right of Sale [Sec 169] – when the thing is in
danger of perishing or lawful charges are two
third of its value.

16.  The finder must try to find out the true owner
of the goods and take reasonable care of the
goods as a bailee.

18.  Lien means the right to retain property until
all debt or claim is paid. It means that if the
lawful charges of the bailee are not paid, then
he has right to retain the goods till all
expenses are met.

19. There are two types of lien:-
1. General Lien
2. Particular Lien

20.  General Lien means the right to retain all the
goods of the other party until all claims of the
holder are paid.
 Eg- If there are two loans from bank by a
same person, then the bank has a right to
retain the collateral security of both the loans
even if the amount of first loan has been paid.

21.  A bailee has a particular lien when he has
rendered any service upon an article and is
entitled to some remuneration for it.
 Right to retain only those particular goods in
respect of which the charges are due.
 Generally, Bailee has this lien only.

22. (a) Bailee must have rendered some service in relation to the
thing bailed , must be entitled to some remuneration- and
must be unpaid
(b) Service rendered by the bailee must be one involving the
exercise of labour or skill in respect of the goods bailed.
(c) Services must have been performed in full directions of
bailor
(d) There must not be an agreement to perform the services
on credit.
(e) The goods must be in possession of the bailee. Bailee
loses the lien, if possession is lost
(f) Must not be any contract to contrary.

24. “ The bailment of goods as security for
payment of a debt or performance of a
promise is called a pledge”.

25.  The bailor in this case is called a pledger and
the bailee is called the pledgee.

26. BAILMENT PLEDGE
The delivery of goods may be for any
purpose.
The delivery is for specific purpose i.e. to
provide a security for a loan.
In case of default by a bailor, the bailee
may retain the goods or sue the bailor
for non-payment of the dues.
In case of default by the pledger, the
pledgee may retain the goods , he may
also sell the goods after giving a
reasonable notice of sale to the pledger.
The bailee may use the goods if the
contract of bailment so provides.
The pledgee can’t use the goods which are
pledged to him.

27. 1. Enforcement of pledgee’s duty: for instance
the pledgee makes an unauthorized sale
without giving notice.
2. Defaulting pledger right to redeem i.e right
to redeem the debt at any subsequent time
before the actual sale of goods pledged. (Sec
177)

28. 1. To compensate pledgee for any extraordinary
expenses incurred by him. (Sec 175)
2. To meet his obligations on stipulated date
and comply with the terms of the contract.

29. 1. Right of Retainer: right of particular lien (Sec 173)
2. Right of retainer for subsequent advances (Sec 174)
3. Right of extra ordinary expenses. (Sec 175)
4. Right to sue the pledger or sell the goods on default
of the pledger. (Sec 176)

30.  Similar to Bailee’s duties