Indian Contract Act - Bailment

What is a Bailment

Bailor refers to the original property owner, while bailee refers to the person who temporarily has possession of the property.

Bailment is different from a contract of sale. This is because the object of the contract of sale is to transfer the ownership of the property to one person from the other. In a bailment, ownership of the property does not get transferred, only the possession of the property gets transferred for a limited amount of time.

In order for a bailment to exist, the bailee must have the intent to possess the property, and thereafter actually possesses the property. The bailor expects that the property shall be returned to him at the end of a specified period of time, or after the purpose for which the property was given.

Elements of a Bailment

Most disputes arise because of the failure of the Bailee to safeguard the property of Bailor. In order to prove that a bailment existed, and therefore that the bailee had a duty to reasonably protect the property, three elements must be proven. These include:

• Delivery. The property must be delivered to the actual care and/or control of the bailee. Control of the property does not necessarily require actual physical possession in some cases, but by giving a means of access to the property, such as providing keys to a storage unit where the property is kept, the bailor engages in constructive delivery of the property.
• Acceptance. A bailee must knowingly accept possession and control the property. This means that no one can unintentionally become a bailee, as, because a bailment is a type of contract, knowledge, and acceptance of the bailment terms are essential elements.
• Consideration. There shall be a consideration in a bailment. When a bailment is created for the sole benefit of the bailee, such as when one party loans the use of his car to another, just to be a good friend, a bailment is created, even though the bailor receives nothing of value.

Termination of a Bailment

Termination of a Bailment occurs when its intended purpose has been achieved, or when the parties agree that the object of bailment is completed. If a bailment is created for an undefined period of time, it may be terminated at will by either party by providing the other party with due notice of the intent to terminate. Following the completion of the purpose of the bailment, the bailee has a responsibility to return the property to its owner.

In some cases, if the return of the property is impossible, due to no fault of the bailee, the bailee is not held liable for non-delivery. This might occur if the property was destroyed in a fire that was not the bailee’s fault, etc.

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