Unit II — Bailment & Pledge

“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.” — Section 148, definition of bailment

Bailment — Duties of Bailor & Bailee

A bailment (S.148) is the delivery of goods by one person (the bailor) to another (the bailee) for a purpose, on a contract that they be returned or disposed of as directed once the purpose is done. Its essentials are delivery of possession (actual or constructive), an underlying contract, and a purpose with an obligation to return the same goods (in specie or altered form) — this last feature distinguishes bailment from a sale or a loan of money.

flowchart LR
    A["BAILMENT (S.148)"]:::root
    A --> B["Gratuitous<br/>(no reward)"]:::leaf
    A --> C["Non-gratuitous<br/>(for reward)"]:::leaf
    A --> D["For bailor's benefit<br/>(safe custody)"]:::leaf
    A --> E["For bailee's benefit<br/>(loan of a book)"]:::leaf
    A --> F["Mutual benefit<br/>(repair, hire)"]:::leaf

    classDef root fill:#FFF8DC,stroke:#333,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

The standard of care (S.151) is the same for every bailee — that of an ordinarily prudent person over his own goods of the same description — and a special contract may raise (but the Act sets a floor on) it. For an unauthorised use or a mix of goods, the bailee is liable for any resulting loss (S.154, S.156–157).

Finder, Lien & Pledge

A finder of goods is treated as a bailee (S.71): he must take reasonable care and try to find the owner, and he enjoys a right of lien for expenses (S.168) and, in limited cases, a right to sell (S.169). A lien is the right to retain goods until dues are paid: a particular lien (S.170) lets a bailee who has bestowed labour or skill (a tailor, a repairer) retain those particular goods for that charge; a general lien (S.171) — enjoyed by bankers, factors, wharfingers, attorneys and policy-brokers — allows retention of any goods for a general balance of account.

A pledge (pawn) (S.172) is the bailment of goods as security for a debt or promise; the bailor is the pawnor and the bailee the pawnee. The pawnee has the right to retain the goods (S.173), recover extraordinary expenses (S.175), and on default either sue on the debt and retain the goods as collateral or sell them after reasonable notice (S.176). Under the nemo dat rule a non-owner generally cannot pledge, but valid pledges arise from a mercantile agent in possession with consent (S.178), a person in possession under a voidable contract not yet rescinded (S.178A), and a seller/buyer in possession after sale.

✏️ Sample Solved Problem (IRAC Method)

Problem: A lends his horse to B for riding. The horse is vicious and A knows it but says nothing. The horse throws B, who is injured. Is A liable?

I — Issue

Whether a gratuitous bailor is liable for injury caused by a known defect in the bailed goods which he failed to disclose.

R — Rule

Section 150 — a bailor must disclose to the bailee faults in the goods of which he is aware and which materially interfere with their use or expose the bailee to extraordinary risk. A gratuitous bailor who fails to disclose a known fault is liable for the resulting damage; a bailor for hire is liable even for faults he did not know of.

A — Analysis

This is a bailment for the bailee’s benefit (a gratuitous loan), so A’s duty is the lighter one — liability only for known faults. But A did know the horse was vicious; viciousness is exactly the kind of dangerous fault that exposes a rider to extraordinary risk. By staying silent A breached S.150. Had A been ignorant of the horse’s temper, a gratuitous bailor would escape — but knowledge converts silence into actionable non-disclosure, and the throw is a direct consequence of the undisclosed vice.

C — Conclusion

A is liable to compensate B for the injury. A gratuitous bailor who conceals a known dangerous defect is answerable for the damage it causes under S.150.

📄 The full bundle (₹199) has the complete Unit II — bailment, every duty of bailor and bailee, finder of goods, both kinds of lien and the whole law of pledge — plus the Question Bank’s model answers to the mixed-goods, pledge-by-mercantile-agent and pawnee’s-sale problems. Get Notes + Question Bank — ₹199