Understanding Bailment and Bailee
In everyday life, we often hand over our goods or belongings to others for safekeeping, repair, or transportation. This act is known as bailment, and the person who receives the goods is known as the bailee. The law governing bailment is found in Sections 148 to 181 of the Indian Contract Act, 1872.
According to Section 148, “A 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.”
The person who delivers the goods is called the bailor, and the person who receives them is called the bailee.
A bailee plays a crucial role in ensuring the safety, proper use, and return of goods. The law outlines specific rights and duties to protect both the bailor and the bailee, maintaining fairness and accountability in such transactions.
Rights of a Bailee (Sections 170–181)
A bailee’s rights are legal privileges provided to protect him while performing duties under the bailment. These rights ensure that the bailee is not unfairly burdened or exploited.
1. Right to Compensation (Section 164)
If the bailor’s title to the goods is defective or if the bailor’s directions lead to loss, the bailee is entitled to compensation from the bailor. This right safeguards the bailee against wrongful acts by the bailor.
Example:
If A bails a car to B, claiming ownership, and later it is discovered that A had stolen it, B can claim compensation for any loss or inconvenience caused by the true owner’s claim.
2. Right of Lien (Sections 170 and 171)
A bailee has the right to retain the goods until due charges are paid by the bailor. This is called the “bailee’s lien.”
- Particular Lien (Section 170): The bailee can retain specific goods for the charges related to those goods.
- General Lien (Section 171): Certain bailees like bankers, factors, wharfingers, and attorneys have a general right to retain any goods for the general balance due.
Example:
A jeweler repairs a necklace and can retain it until repair charges are paid (particular lien). A banker may retain securities for an unpaid loan (general lien).
3. Right to Recover Necessary Expenses (Section 158)
When bailment is gratuitous (without reward), the bailee has the right to recover expenses incurred for maintaining or preserving the goods.
Example:
If A leaves his horse with B for safekeeping without payment, and B spends money on feeding the horse, B can claim reimbursement.
4. Right to Indemnity (Section 159)
In a gratuitous bailment that can be terminated at any time, if early termination causes loss to the bailee, the bailor must indemnify him. This ensures that the bailee is not unfairly affected by sudden withdrawal.
Example:
If A lends his car to B for a week, but withdraws it after one day, causing B loss in his delivery business, B can claim compensation.
5. Right to Deliver Goods to One of Joint Bailors (Section 165)
If goods are bailed by joint owners, the bailee can deliver them back to any one of the joint owners unless otherwise agreed. This simplifies the return process and avoids confusion.
6. Right to Apply to Court for Directions (Section 167)
If a person other than the bailor claims ownership of the goods, the bailee can approach the court for direction on who should receive the goods. This protects the bailee from wrongful liability.
Example:
If A bails goods to B, and C later claims ownership, B can apply to the court to decide the rightful owner before delivering the goods.
Duties of a Bailee (Sections 151–165)
The duties of a bailee are equally important as they ensure that the property entrusted to him is handled with care, honesty, and responsibility.
1. Duty to Take Reasonable Care (Section 151)
The bailee must take as much care of the goods as a person of ordinary prudence would take of his own goods under similar circumstances. The bailee is liable for any negligence that leads to damage or loss.
Example:
If B, a dry cleaner, leaves A’s clothes unattended, resulting in theft, B is liable for negligence.
2. Duty Not to Make Unauthorized Use (Section 154)
The bailee must use the goods only for the purpose for which they were bailed. Unauthorized use makes him liable for damages, even if no harm results from such use.
Example:
If B borrows A’s car for personal use but uses it for racing instead, B is responsible for any damage caused.
3. Duty Not to Mix Goods (Sections 155–157)
The bailee must not mix the bailor’s goods with his own without consent. If he does:
- With consent → both share proportionate interest.
- Without consent and separation possible → must bear expenses.
- Without consent and separation impossible → must compensate for loss.
Example:
If B mixes A’s grain with his own without consent, and the mixture can’t be separated, B must compensate A.
4. Duty to Return Goods (Section 160)
When the purpose of bailment is completed, the bailee must return or dispose of the goods as per the bailor’s directions. Retaining goods after the purpose ends constitutes wrongful detention.
5. Duty to Deliver Increase or Profits (Section 163)
If the bailed goods generate profits or increase (e.g., offspring, interest, dividends), the bailee must return those to the bailor.
Example:
If A leaves a cow with B for care and the cow gives birth to a calf, B must return both the cow and the calf.
6. Duty to Return Goods in Time (Section 161)
If the bailee fails to return the goods on time and they are damaged or destroyed, he is liable, even if the loss was not his fault.
Real-Life Example: Bailee’s Liability in Practice
In Ultzen v. Nicolls (1894), a waiter in a restaurant took a customer’s coat to hang and failed to return it. The court held that the waiter was a bailee and was liable for negligence in taking care of the coat.
This case illustrates that once a person voluntarily takes possession of another’s property, they become a bailee and are bound by the duties of care, even if no formal contract exists.
Mnemonic to Remember Rights and Duties of Bailee — “LIC IRR DICR”
Use the mnemonic “LIC IRR DICR” to recall the key rights and duties of a bailee easily.
Rights – “LIC IRR”
- L – Lien (retain goods till payment)
- I – Indemnity for loss or termination
- C – Compensation for defective title
- I – Implied expenses recovery
- R – Right to deliver to one of joint bailors
- R – Right to apply to court for directions
Duties – “DICR”
- D – Duty to take care of goods
- I – Duty not to make unauthorized use
- C – Duty not to mix goods
- R – Return goods and profits in time
Mnemonic Sentence:
“A wise Bailee uses his LIC wisely and DICR with care.”
This memory trick helps law students and professionals quickly recall all key rights and duties under Sections 151–181 of the Indian Contract Act, 1872.
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