Bailment

INTRODUCTION

Bailment is a very nuanced and technical term in common law. It essentially signifies a ‘delivery or transfer of possession’[1] of goods from one person to another. According to Dempster, the intentional conferring of a legal right of exclusive possession by the bailor (who has the legal right to exclusive possession) through a legal act to the bailee and reserving the reversionary interest in the bailor himself.[2]The Indian Contract Act defines it as “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.”[3] On transfer of possession, the bailee then has a duty of care to look after the goods until his period of possession is over, and he then has to return the goods to the bailor. In case the bailee defaults in returning or there is a defect in the goods, the bailor has to be compensated by the bailee. However, this duty of care does not necessarily arise out of a contract.[4] While the Contract Act deals with only the kind of bailment which necessarily arises from contract, it should not be assumed that bailment is only present when there is a predetermined contract. As Lord Denning says, “at Common Law, bailment is often associated with a contract, but this is not always the case.”[5]

Bailment can arise dehors a contract[6] and therefore, there can be a bailor and bailee relationship without the presence of an enforceable contract. Keeping this in mind, the purpose of this paper is to explore bailment not only as a contractual obligation, but also as a tortuous concept and one in property law.

The Trustees of the Port of Bombay v. The Premier Automobiles Ltd is the landmark case in India that deals with the presence of bailment independent of a contract. In this case, the Board of the Port Trust, the appellants, took responsibility of the respondents machinery that they had imported from Italy. While they were carrying this machinery in a trolley, it fell down and got damaged due to the negligence of the board. In this case, the Supreme Court emphasized the importance of bailment without a contract. It was held that ‘a bailment is not therefore technically and essentially subject to the limitations of an agreement, and the notion of privity need not be introduced in an area where it is unnecessary, for bailment, as we have said, arises out of possession, and essentially connotes the relationship between a person and the thing in his charge.’ Even the remedies that come out of it may not be of a contractual nature.

BAILMENT AS A CONCEPT IN LAW OF TORTS

A majority of non-contractual bailments give rise to remedies in tort. Reported cases on bailment usually tend to be for the breach of duty of care by the bailee, thus causing liability for negligence. The contentious question here is whether the duty of care of the bailee is solely to the bailor or to the world at large. Here we use the analysis of Winfield and Professor Tay, who state that contract and tort can essentially be divided on the basis of the degree of care required. A contractual duty is owed to one particular person who the bailee has an agreement with whereas a tortious duty is owed to the world at large. Based on the view, the duty of a bailee is tortious in nature since the bailee and the bailor do not need to have an agreement, and the bailee does not even have to have knowledge of who the bailor is.[7] Even though the most popular tort under which bailment is pursued is negligenc, here are other torts which can provide remedies to the bailor in certain circumstances. A very common one is detinue, which essentially means unlawfully returning goods. This may take place when the bailee unnecessarily keeps goods of the bailor as lien. Another very common tortious remedy for bailment is under the tort of conversion. Conversion takes place when the bailee interferes with the rights of the bailor with respect to the goods. The fourth, but not very common ground for a bailor to sue a bailee under is trespass. Trespass essentially refers to an ‘unauthorised interference with possession’[8] of the owner of the goods. This is usually hard to prove as possession is transferred from the bailor to the bailee voluntarily right at the beginning. However, in some situations, a claim can arise.

BAILMENT AS A CONCEPT IN PROPERTY LAW

Bailment is most commonly a concept in the law of torts or contracts, but that is inadequate to explain its position in the legal system.[9] Bailment, according to a number of scholars is more a concept in the law of property than law of contract or law of tort. This is because of the importance of possession in bailment, ‘the transfer of which is a salient feature of bailment’[10]A bailment gives rise to a form of property because in bailment, there is a temporary transfer of possession from the bailor to the bailee. As is commonly said that no matter in which way we try to define bailment, the focal point is always transfer of possession to the bailee. This makes it a very important component of property law as pure analysis would prove that bailment is more similar to lease than it is to any contract. That is because an interest in the property, that is less than the ownership of the goods is transferred to the bailee. In Indian law, it is very similar to Section 105 of the Transfer of Property Act[11], the only difference being that bailment can take place for moveable goods whereas lease is a concept solely for immoveable commodities.

EXAMPLES OF NON CONTRACTUAL BAILMENT

1.      GRATUTIOUS BAILMENT

Chief Justice Holt laid down the six different kinds of bailment.[12] Out of these six, one was ‘Mandatus’ or gratuitous bailment, doing ‘something about them gratis, without any rewards.[13]Gratuitous bailments take place when goods are given gratuitously to be kept by the bailee and to be returned when the bailor demands. Gratuitous bailments are independent of the law of contract [14], they impose a duty of care on the bailee independent of an agreement. Thus, in gratuitous bailments, there is no contract under which the bailor can sue the bailee in case of any default. The remedies available to the bailor in such a situation are tortious remedies. ‘When a bailee undertakes to perform a gratuitous act, from which the bailor alone is to receive benefit, then the bailee is only liable for gross negligence’[15]In English law, the responsibility of a bailee depends on whether it is a gratuitious bailment or a bailment for reward. In Indian Law, however, the responsibility is the same for both.

2.      FINDER OF GOODS

In case of a Finder of Goods, there is again, no contract between the bailor and the finder of goods. However, under the Indian Contract Act, the finder of goods has the same duty as that of a bailee. Section 71 states, ‘A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.’[16]. The finder of goods does not even know the identity of the bailor and the liability they take on themselves is voluntary. Nonetheless, in English law, they have the duty to look after the goods they have found and they cannot even ask to be reimbursed for the expenses incurred in looking after the goods. In Binstead v Buck, the court held that the finder of the dog could not claim compensation from the dog’s master as he had taken up the responsibility of looking after the dog by himself, voluntarily.[17]In Newman v Bourne and Hollingsworth,[18] a customer dropped her coat in the shopand forgot to take it. The shop owner’s assistant found it and kept it in the shop. Thereafter, it could not be found. The shopowner was held liable as a finder of goods has the same duty of care as that of a gratuitous bailee.Therefore, like gratuitous bailment, the case of finder of goods is a form of bailment that does not depend on a pre-existing contract.

In the Indian Contract Act, however, a finder of goods has the same rights of lien as that of a bailee under Sections 186 and 187. Thus, they can claim reward and even sell the goods found in a few particular circumstances.[19]

SUB BAILMENT

Sub-bailment takes place when the bailor transfers possession of goods to the bailee and the bailee then gives it to the sub bailee with the consent of the bailor. Sub-bailment can be contractual or ‘on-terms’, but it may also be present without a contract. In Scruttons Ltd v Midland Silicones[20], it was contended before the court that since there was no privity of contract between the sub-bailee and the bailor, However, it was held that while there was no relationship of bailment in that particular case, privity of contract between the bailor and the sub-bailee are not required. There continues to be a relationship of bailment independent of a contract. The rule for sub-bailment was laid down in Morris v Martin[21] where Lord Denning overruled previous decisions to state that all sub-bailees have a general duty of care to look after goods which are in their possession.


References 

[1] Pollock and Mulla, Indian Contract Act, (Volume 2), pp. 1210

[2] Hamish Dempster, ‘Clearing the Confusion Surrounding Bailment: Bailment as an exercise of legal power of the Bailor’, pp. 314

[3] Indian Contract Act. 1872, s. 148

[4] Supra 1.

[5] Building and Civil Engineering Holiday scheme management Ltd. v. Post Office  [1966] 1 QB 247

[6] Palmer, On Bailment  (1st Edn, 1979), pp. 2

[7] Palmer, On Bailment  (1st Edn, 1979), pp. 47

[8] Peter Gillies, Business Law, pp. 32

[9] Percy H. Winfield, The Province of the Law of Tort, pp. 101

[10] A.R. Carnegie, ‘Bailment and Contract in English Law Today’, Adelaide Law Review

[11] Transfer of Property Act, 1882, s. 105

[12] Coggs v Bernard (1703) 2 Ld Raym 909

[13] Ibid.

[14] China Pacific S.A. v Food Corporation of India (1982) AC 939

[15] Shields vs. Blackburne

[16] Indian Contract Act, 1872, s. 172

[17] Binstead v Buck (1776) 2 Blackstone W. 1117

[18] Newman v Bourne and Hollingsworth (1915) 31 TLR 209

[19] Pollock and Mulla, Indian Contract Act, (Volume 2), pp. 1099

[20] Scruttons Ltd v Midland Silicones [1962] AC 446,

[21] Morris v CW Martin & Sons Ltd [1966] 1 QB 716

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