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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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