Bailment and Pledge

5/27/2018 Bailment and Pledge

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BAILMENT and

PLEDGE

B

P


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Definition : 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 directions of the

person delivering them

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For Instance

Giving clothes to a launderer

Leaving car with an auto mechanic

Handing over cash or other valuable to a bank

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Essential features

of Bailment:

Delivery of goods

Contract (Express/written)

Return of goods in specie



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Classification of Bailment

Bailment on the basis of benefits:

Bailment for the benefit of Bailor only.

e.g.

a restaurant, the bailee, provides an attended

coatroom free of charge to its customer, the

bailor



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Bailment for the benefit of Bailee only(e.g., the loan of a book to a patron, the

bailee, from a library, the bailor).

Bailment for the mutual benefit of both

Bailor & Bailee e.g. a bailment for the

repair of an item



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Bailment on the basis of rewards

1. NonGratuitous bailment

A bailment for reward or hire is a non-

gratuitous bailment. For example, A gives his

watch for repair.



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2. Gratuitous bailment

A bailment without any reward or

consideration is called gratuitous bailment.For example,

A while going out of station, leaves his cycle

with his friend B. B is not to get any reward inthis case



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Rights of Bailor:

Right of termination.

Right to demand restoration of goods lent

gratuitously . Compensation from a wrong doer.

Right to get an increase or profit from goods bailed.

Right to sue the bailee for the enforcement of theduties imposed upon a bailee .



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Duties of Bailor :

Duty to disclose faults in goods bailed (Sec.150)

Liability for breach of warranty as to title (Sec.164)

To bear expenses in case of gratuitous bailment(Sec.158)

In case of non-gratuitous bailment Duty to indemnifythe bailee for loss

Duty to receive back the goods



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Rights of Bailee:

Delivery of goods to one of several joint

bailors of good

Delivery of goods to bailor withou title

Right to apply to court to stop delivery

Right of action against trespassers

Bailees lien



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Duties of the Bailee :

To take care of the goods bailed-Sec.151

Not to make unauthorized use of goods-Sec.154

Not to mix Bailors goods with his own-Sec.155-157 To return the goods bailed-Sec.160-161

To return any accretion to the goods bailed-Sec.163

Not to set up an adverse title



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Lienis the right of one person to retain that

which is in his possession, belonging to

another, until some debt or claim is paid

Bailees particular Lien :Sec.170

Bailees general Lien :Sec.171

Right against wrongful deprivation or injury

to goods: Sec.180-181

LIEN-(Sec.170-171):



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Termination of Bailment :

On the expiry of the stipulated period

On the accomplishment of the specified

purpose By bailees act inconsistent with conditions-

Sec.153

Destruction of the subject-matter Termination of Gratuitous bailment-Sec.159

Death of bailor or bailee



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Finder of lost Goods :

Finding is not keeping. A finder of lost goods is

treated as the bailee of the goods found assuch and is charged with the responsibilities

of a bailee, besides the responsibility of

exercising reasonable efforts in finding the

real owner.



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Rights :

Right to retain the goods-Sec.168.

Right to sue for reward

Right to sell-Sec.169.



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Obligation

He must take reasonable care of the goods

and if in spite of this, the goods are destroyed

he is not responsible for any loss

He must not use the goods for his own

purpose

He must not mix the goods with his own

goods

He must try the real owner of the goods

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Pledge or Pawn

According to Sec 172, Contract Act, 1872, The

bailment of goods for repayment of a debt or

performance of a promise is called pledge.

The bailor in this case is called the pawnor, the bailee

is called the pawnee.



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Parts of Pledge

Two separate parties.

A debt or obligation.

A contract of pledge.



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Pledge is a special type of bailment

where transfer of goods is for security of

something.

Pledges are a form of security to assure

that a person will repay a debt or

perform an act under contract. In a

pledge one person temporarily gives

possession of property to another party.



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Example

A Borrows Rs.1000 from B and Keeps his

watch as a Security for the Payment of theDebt.

The Bailment of Watch is Called a Pledge.



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Essential Features of a valid

pledge

Delivery of possession

Delivery should be upon a contract

Delivery should be for the purpose of

security

Delivery should be upon condition to return



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Uses of Pledge:-

Securing loans.

Pawning property for cash.

Guaranteeing that contracted work will be

done.



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Duties of a Pawnor:-

Duty to repay the loan

Duty to pay expenses in case of default



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Duties of a Pawnee

Duty not use of pledged goods

Duty to return the goods



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Right of Pawnor

Right to redeem the goods pledged

Right to receive the increase

Enforcement of pawnees duties

Rights of an ordinary debtors

Right to redeem debt



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Right of Pawnee

Right to retain the pledged goods

Right to extra ordinary expenses Right in case of default of the pawnor

Right against true owner, when the

pawnors title is defective



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Pledge by Non-OwnersOnly limited to

following:

Mercantile agent.

Possession under voidable contract.

Pledgor with limited interest.

Seller in possession after sale.

Buyer in possession before sale.

Pledge by co-owners.



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Distinction between Bailment & Pledge

Pledge

Pledge is the bailment for a

specific purpose ie to

provide security for a debtor for fulfillment of object.

The pledgee has right to

sale on default after giving

notice thereof to thePledger.

Bailment

Bailment is for a purpose of

delivery of goods, other

than two under pledge iefor repairs, safe custody etc.

No right to sale. The bailee

may either retain the goods

or the bailor for non-payment of his dues



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Contd.

Pledge

USE OF GOODS :There is no

such Restriction depends

upon the nature ofTransactions.

RETURN OF GOODS

Without Reward the Baillee

is bound to return theGoods on Demand by the

Bailor

Bailment

USE OF GOODSNo right of

Using the Goods

RETURN OF GOODSNot

bound to Return the Goods

Delivered



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