Summarization – Bailment and Pledge

Bailment means to deliver or to handover the goods. It is the delivery of goods by one person to another for specific purpose upon a contract that when the performance is accomplished, the goods shall be returned or disposed off according to the directions of the person delivering them. The person delivering the goods is called the bailor. The person to whom the goods are delivered is called the bailee. The transaction is called the bailment.

Essentials of bailment: (1) Delivery of goods is upon a contract. There is a change of possession of goods by delivery by one person to another for a temporary period. (2) Delivery may be actual or constructive. (3) Delivery of goods must be for specific purpose (4) Bailment can be only of lawful goods (5) The bailee must return the specific goods either to the bailor or to somebody according to his directions.

Kinds of bailment: (1) Gratuitous bailment i.e. bailment without any reward or remuneration (2) Bailment for reward or remuneration (3) Goods delivered as security for money borrowed called pawn or pledge.

Bailor’s rights: (1) to treat bailment as voidable; (2) to the return of the goods; (3) to claim compensations for wrongful use of goods by the bailee; (4) in case of mixture of the goods by the bailee – (a) where it is done with the consent of the bailor to a proportionate share in the mixed goods; (b) where it is done without the consent of the bailor to claim expenses of separation, if goods can be separated and goods cannot be separated, to claim compensation for the loss of goods (5) to receive any increase of profit from the goods bailed.

Duties and liabilities of the bailor: (1) to put the bailee into possession of the goods; (2) to disclose faults in the goods bailed; (3) to repay necessary expenses; (4) to indemnity gratuitous bailee; (5) to compensate for any loss to bailee due to defect in title; (6) to take back the goods

Bailee’s rights: (1) to a particular lien; (2) to know faults in the goods bailed to him; (3) to claim proportionate share in the goods mixed; (4) to claim expenses of bailment; (5) to claim loss for defect in the title of the bailor. If the bailee is gratuitous then to claim indemnity. If he is wrongfully deprived of the goods, then right action against third person.

Duties and liabilities of bailee: (1) to take reasonable care of the goods bailed; (2) to make compensation to the bailor for unauthorized use of the goods bailed (3) to return the goods to the bailor or according to his directions; (4) to deliver any increase or profit accrued on the goods; (5) to pay damages under certain circumstances; (6) if he mixes his goods with the bailor’s goods, with his consent, to give a proportionate interest in the mixture produced. If he mixes the goods without the consent of the bailor and if the goods can be separated, he is bound to bear the expenses of the separation and if the goods cannot be separated, he is liable to compensate the bailor of the loss of the goods.

Lien: It is a right of one person to retain that which is in his possession until certain demands of a person in possession are satisfied. In simple words, it is a right the possession of goods until the claim is paid. Lien may arise by statute or by express or implied contract in ordinary course of dealings. Lien is of two kinds — general lien and particular lien. General lien is a right of goods not only towards the demands arising out of the article in possession, but for general balance of account. It is available to, pawnors, factors, wharfingers, attorneys and policy brokers.

Particular lien is also called a special lien. It is a right of retaining the particular goods until claims arising on those goods are satisfied. Bailee’s right of lien is that which extends only in respect of the goods bailed to him. It can be exercised by the bailee only certain circumstances.

Finder of goods: a finder of goods is subject to the same responsibilities as the bailee. He is entitled to retain the goods against the whole world except the true owner thereof. He is entitled to the lien. He entitled to sue for the reward if the owner has offered a specific reward. He is also entitled to sell the goods under certain circumstances. He must, however, use reasonable diligence to find out the true owner and must take due care of the goods. He must not use the goods for his own purpose.

Pledge: When goods are bailed as security for payment of a debt or performance of a promise, it is called pledge. The bailor is called the pawnor, the bailee is called the pawnee. The transaction is called the pledge or pawn. The goods must be delivered as security. Delivery may be actual or constructive delivery. Pledge can be made of movable goods only. Transfer of possession of goods is essential.

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