Bailment & Pledge

Bailment & Pledge: 

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The word bailment is derived from the French word bailer which means to deliver. Bailment is the delivery of goods by one person to another from some purpose, when the purpose is accomplished, the goods is returned to or otherwise disposed off according to the direction of the person delivering them.

Essentials and Legal Rules as to Bailment:

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Contract: A bailment is usually created by agreement b/w the bailer & bailee

Delivery of Goods: 

In bailment, the possession of goods must be delivered by the bailer to the bailee.

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No Transfer of Ownership: In bailment, possession is transferred from one person to another but ownership of goods remains with the bailer.

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Delivery of Goods for Some Purpose: The delivery of goods must be for some specific performance.

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Return of Specific Goods: Goods are delivered to the bailee with the condition that the same goods will be returned to the bailer after the accomplishment of purpose.

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Movable Goods: In bailment, the goods bailed must be movable.

  Movable Goods: In bailment, the goods bailed must be movable.

Deposit of Money Into Bank  It

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is Bailment: Deposit of money into bank by a customer is not a contract of bailment because the money deposited is not returned in identical coins and notes deposits.

Classification of Bailment:   On the basis of benefit  Bailor  Bailee 

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On the basis of Rewards:  Gratituous: Where neither the bailer nor the bailee get any remuneration, then, it gratuitous.  Non-Gratituous: When either the bailer or bailee get remuneration, then it is known as non-gratuitous bailment. 

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Right of Bailer: 

 

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Right of Termination: Bailer has right to terminate the contrite of bailment, if the bailee does any inconsistent act with regards to good

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Right to Demand Return of Goods: Any time in case of gratuitous bailment. The bailer can demand back goods bailed at any time even if he had lend it for a specific goods. Period or for a specified purpose.

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Enforcement of Rights: The duties of bailee are the rights of bailer & bailer can enforce those rights by filing a suit against bailee.

Duties of Bailer: 

 

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Duty to disclose known defects: A bailer is bound to disclose all the defects relating to goods of which he is known.

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Duty to Bear Extraordinary expenses: Where the bailment is gratuitous & the bailee is not to receive any remuneration, the bailer shall pay bailee all the necessary expenses.

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Bear Risk for Loss: Bailer is to bear risk of loss or destruction of the thing bailed if the bailee had taken prudent care of the goods.

Rights of Bailee:  Right

to Interplead: If the person other than bailer claims the goods, bailee may apply to court to stop the delivery.

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Right Against 3rd Party: If a 3rd person wrongfully deprive bailee to use the goods or cause any injury, then bailee is entitled to such remedies which are available to real owner.

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Right of Particular Lien: When the bailee has rendered some services or skills on the good he had right of particular lien unless he is paid.

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Right of General Lien: Banker, factors, attorney of High Court, policy broker will be entitled to retain as a security for a general balance of account any goods bailed to then.

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to Claim Compensation in Case of faulty Goods.

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to claim necessary expenses

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to return the goods to any of the joint bailer

Duties of Bailee:    

Duty of Reasonable care. Duty not to make unauthorized use of goods. Duty not to mix bailer’s goods with his own. Duty to return any profit out

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Particular Lien: It is available to the bailee against such goods in respect of which he has rendered some servicing involving the excise of labour or skills.

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General Lien: It entitles a person to retain the position of goods belonging to another for general balance of account.

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Finder of Goods: A person who comes by an article is not obliged to pick it up, but if he does so or take charge of it becomes a bailee. Such person is called finder of goods. Finder of goods is in position of bailee & enjoys all the rights & duties of bailee.

Rights of Finder of Goods: 

Right of Lien.

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Right of sue of reward. Exp. The finder of goods can sue to real owner for the reward, if any, has been offered by the owner of goods.

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Right to Sale. Exp. The finder of goods generally cannot sell the goods, he found but in following cases he can do so:

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When true owner of goods cannot be find after reasonable search. They where the true owner refuses to pay the lawful charges to finder of goods. When the goods are perishable in nature. Where the lawful charges exceeds 2/3rd of the value of goods

Duties of Finder of Goods:   To

take due care of the goods.  To find the true owner.  Must not use the goods of his personal purpose.  He should not mix the goods with his own goods.  Must return the goods to the real owner if he is found.  

  Pledge:   Bailment

of goods as a security for payment of debts or performance of promise is called pledge. The bailer is called pledger or pawner and the bailee is called Pawnee.

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Essential of Pledge:  

Delivery of Goods:  The

delivery of goods to pledgee is necessary to constitute a pledge.  Delivery of goods should be by way of security.  The security being for the payment of debt or the performance of a promise.  Goods must be movable.  An implied condition to return the goods. 

Contracts of Indemnity and Guarantee  

A contract of indemnity is one whereby a person promises to save the other from loss caused to him by the conduct of the promisor himself or of any third person.For example,a shareholder executes an indemnity bond favouring the company thereby agreeing to indemnify the company for any loss caused as a consequence of his own act.

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The person who gives the indemnity is called the 'indemnifier' and the person for whose protection it is given is called the 'indemnity-holder' or 'indemnified'.

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A contract of indemnity is restricted to cover the loss caused by the promisor himself or by a third person. The loss must be caused by some human agency. Loss arising from accidents like fire or perils of the sea are not covered by a contract of indemnity

A contract of ‘Guarantee'  A contract

of ‘Guarantee' is a contract, whether oral or written, to perform the promise, or discharge the liability, of a third person in case of his default.  A contract of guarantee is a conditional promise by the surety that if the principal debtor defaults he shall be liable to the creditor. 

 A contract

of guarantee involves three persons,viz. a person who gives the guarantee is called the 'surety'; the person in respect of whose default the guarantee is given called the 'principal debtor'; and the person to whom the guarantee is given is called the 'creditor'.

Difference between Indemnity and Guarantee:

In a contract of indemnity there are two parties i.e. indemnifier and indemnified. A contract of guarantee involves three parties i.e. creditor, principal debtor and surety.

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An indemnity is for reimbursement of a loss, while a guarantee is for security of the creditor.

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In a contract of indemnity the liability of the indemnifier is primary and arises when the contingent event occurs. In case of contract of guarantee the liability of surety is secondary and arises when the principal debtor defaults.

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The indemnifier after performing his part of the promise has no rights against the third party and he can sue the third party only if there is an assignment in his favour. Whereas in a contract of guarantee, the surety steps into the shoes of the creditor on discharge of his liability, and may sue the principal debtor.

Contracts of Bailment and Pledge 

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 disposed of according to the directions of the person delivering them.

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The person delivering the goods is called the 'bailor' and the person to whom the goods are delivered is called the 'bailee'.

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The examples of a contract of bailment are:- delivering a watch or radio for repair; leaving a car or scooter at a parking stand; leaving luggage in a cloak room; delivering gold to a goldsmith for making ornaments; leaving garments with a dry cleaner,etc.

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The essence of bailment is the transfer of possession. The ownership remains with the owner. There cannot be a bailment of immovable property.

Pledge 

A 'pledge' is a bailment of goods wherein the goods are delivered as a security for payment of a debt or performance of a promise.

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bailor is called the 'pledgor' or 'pawnor' and the bailee is called the 'pledgee' or 'pawnee'.

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pledge is a special kind of bailment. Pledge can be made only of movable properties.

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order to make the pledge legally valid it is essential that the pledgor has the legal right or title to retain the goods.

Difference between Bailment and Pledge:

Purpose:- A pledge is made for a specific purpose, while bailment can be made for any purpose.

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Property:- In bailment, the bailee gets only the possession of goods bailed. The ownership remains with the bailor. In the case of pledge, the pledgee acquires a special property in the goods pledged whereby he gets possession coupled with the power of sale, on default.

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Right of sale :- Bailee can exercise a lien on the goods bailed. He has no right of sale. But in case of a pledge, the pledge can sell the goods after due notice to pawner.

Contracts of Agency 

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An 'Agent' is a person employed to do any act or to represent another in dealings with third person. The person who employs the agent and for whom such act is done, or who is so represented, is called the 'principal'. The relation between the agent and the principal is called 'Agency'. It is only when a person acts as a representative of the other in the creation,modification or termination of contractual obligations,between that order and third persons, that he is an agent. The essence of a contract of agency is the agent's representative capacity coupled with a power to affect the legal relations of the principal with third persons.

Contracts of agency are based on two important principles: Whatever

a person can do personally shall also be allowed to be done through an agent except in case of contracts involving personal services such as painting, marriage, singing, etc.

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 He

who does an act through a duly authorized agent does it by himself i.e. the acts of the agent are considered the acts of the principal.

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Thank you……