Bailment

1. Definition: 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 delivering is the bailor, the person receiving is the bailee. The Explanation adds that if a person already in possession of another's goods contracts to hold them as bailee, he becomes the bailee though the goods were not delivered by way of bailment.

2. Essentials

• Contract. Express or implied. Courts have, however, treated persons who come into possession without a contract (the finder, the Government seizing goods) as bailees by operation of law.
• Delivery of possession. Actual or constructive. Section 149: delivery may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of a person authorised to hold them on his behalf. Ownership stays with the bailor.
• Movable goods only. Land and money as currency are not bailed.
• A purpose: repair, safe custody, carriage, use, security.
• Return of the specific goods, in the same or an altered form (cloth returned as a suit), or disposal as directed. Where the receiver may return an equivalent instead, as with money deposited in a bank, the relationship is debtor and creditor, not bailment.

In State of Bombay (now Gujarat) v. Memon Mahomed Haji Hasam, 1967 INSC 145, AIR 1967 SC 1885, vehicles seized by customs officers were disposed of while the confiscation proceedings were pending. When the confiscation order was set aside, the Supreme Court held that the State had been in the position of a bailee, bound to take reasonable care of the vehicles and return them, and was liable to pay their value since it could not return them.

3. Kinds of bailment

• Gratuitous (no consideration: lending a book to a friend) and non-gratuitous or for reward (hiring a car, leaving a watch for paid repair).
• By benefit, following the classification in Coggs v. Bernard (1703): for the exclusive benefit of the bailor (safe custody of a neighbour's goods free of charge); for the exclusive benefit of the bailee (a bicycle lent free for the bailee's use); for mutual benefit (hire, repair for reward, pledge).

The kind matters in places: section 150 makes the bailor for hire liable for faults he did not know of; section 158 lets a gratuitous bailee recover necessary expenses; section 159 lets the lender in a gratuitous loan call for the goods back at any time; and section 162 ends a gratuitous bailment on the death of either party.

4. Duties of the bailor

• Disclose known faults, section 150. The bailor must disclose faults in the goods known to him which materially interfere with their use or expose the bailee to extraordinary risks. If he does not, he is responsible for damage arising directly from the faults. In a bailment for hire, he is responsible whether or not he knew of the faults. Illustrations: A lends B a horse he knows to be vicious without saying so; B is thrown and injured; A is liable. A hires a carriage from B which is unsafe, though B does not know it; A is injured; B is liable.
• Bear necessary expenses in a gratuitous bailment (section 158).
• Indemnify the bailee for loss caused because the bailor was not entitled to make the bailment or to give directions about the goods (section 164).
• Take back the goods when the purpose is accomplished.

5. Duties of the bailee

• Reasonable care, sections 151 and 152. The bailee must take as much care of the goods as a man of ordinary prudence would, in similar circumstances, take of his own goods of the same bulk, quality and value. If he does so, he is not liable for loss, destruction or deterioration, in the absence of a special contract. The standard is the same whether the bailment is gratuitous or for reward. A bailee may by special contract take on a higher liability; the prevailing view in the High Courts is that he cannot contract below the section 151 standard.
• No inconsistent act, section 153. A bailment is voidable at the bailor's option if the bailee does any act inconsistent with its conditions.
• No unauthorised use, section 154. If the bailee makes any use of the goods not according to the conditions of the bailment, he is liable to the bailor for any damage arising from that use. This is strict liability: care is no defence.
• Not to mix the goods, sections 155–157. Mixed with the bailor's consent, the parties have a proportionate interest in the mixture (s.155). Mixed without consent but separable, the property remains in each, and the bailee bears the cost of separation and any damage (s.156). Mixed without consent and inseparable, the bailee must compensate the bailor for the loss (s.157).
• Return the goods, sections 160 and 161. The bailee must return or deliver the goods as directed, without demand, when the time expires or the purpose is accomplished. If by his default they are not returned at the proper time, he is responsible for any loss, destruction or deterioration from that time, even without negligence.
• Return any increase or profit from the goods (section 163): a cow lent that calves, the calf goes back too.

6. Rights of the bailee: lien

Particular lien, section 170. Where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labour or skill in respect of the goods, he may, in the absence of a contract to the contrary, retain them until he receives due remuneration for that service. Illustration: A delivers a rough diamond to B, a jeweller, to be cut and polished. B may retain it until he is paid. The lien is over the particular goods for the charges on those goods, and it is lost if possession is given up.

General lien, section 171. Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as security for a general balance of account any goods bailed to them. Others have a general lien only by express contract.

The bailee may also sue third parties who wrongfully deprive him of the goods or injure them (section 180), and recover necessary expenses in a gratuitous bailment (section 158).

7. Finder of goods

A finder who takes charge of goods stands in the position of a bailee (section 71), owing the section 151 standard of care. Under section 168 he has no right to sue the owner for compensation for trouble and expense voluntarily incurred, but he may retain the goods until he receives it, and may sue for any specific reward the owner has offered. Under section 169 he may sell the goods if they are commonly the subject of sale and the owner cannot with reasonable diligence be found, or refuses on demand to pay the lawful charges, and either the goods are in danger of perishing or losing the greater part of their value, or the lawful charges amount to two-thirds of their value. The finder's title is good against everyone except the true owner (Armory v. Delamirie, 1722).

8. Railways and carriers, briefly

Carriers are bailees of the goods they carry, but their liability is fixed by special statutes rather than by section 151. A railway administration is responsible for loss, destruction, damage or deterioration of goods entrusted to it, subject to excepted causes such as act of God, act of war and inherent vice: section 93 of the Railways Act, 1989. Common carriers by road are governed by the Carriage by Road Act, 2007, which replaced the Carriers Act, 1865. In each case the liability is heavier than that of an ordinary bailee.

9. Problem: the borrowed horse

A lends a horse to B for B's own riding only. B allows C to ride it. C rides carefully, but the horse accidentally falls and is injured. Is B liable to A?

Issue. Whether a bailee who has taken all due care is liable for accidental damage caused while the goods were being used outside the terms of the bailment.

Law. Sections 151 and 152 excuse a bailee who takes reasonable care. But section 154 makes a bailee who uses the goods not according to the conditions of the bailment liable for any damage arising from that use. Illustration (a) to section 154 is this very case: A lends a horse to B for his own riding only; B allows C, a member of his family, to ride; C rides with care but the horse accidentally falls and is injured; B is liable. Illustration (b) makes the same point: a horse hired to go to Benares is ridden with care to Cuttack instead and falls; the hirer is liable.

Application. The bailment was gratuitous and for B's exclusive benefit, on the condition that B alone would ride. Letting C ride was a use outside that condition. The injury occurred during that unauthorised use. C's care, and the accidental nature of the fall, are irrelevant under section 154; the reasonable-care defence in section 152 applies only while the bailee keeps to the terms. B's act may also make the bailment voidable by A under section 153.

Conclusion. B is liable to compensate A for the injury to the horse.

How this is examined

“Define bailment and explain its essentials” was set in January 2026, as was the horse problem. For the essay, give section 148, the essentials, the kinds, and then the duties of bailor and bailee in two lists; Memon Mahomed Haji Hasam is the Supreme Court case to cite. Short notes: bailee's lien (sections 170 and 171), finder of goods (sections 168 and 169), bailor's duty to disclose faults (section 150).