What do you mean by bailment? What are the requisites of a contract of bailment? -MBA Notes

Answer:

Definition of bailment (Sec.148):

Bailment is defined as the “delivery of goods by one to another person 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 person delivering them”. The person delivering the goods is called the “bailor” and the person to whom the goods are delivered is called the “bailee”.

The explanation to the above Section points out that delivery of possession is not necessary, where one person, already in possession of goods contracts to hold them as bailee. The bailee is under an obligation to re-deliver the goods, in their original or altered form, as soon as the time of use for, or condition on which they were bailed, has elapsed or been performed”.

 
Let’s illustrate,
(i) A delivers some clothes to B, a dry cleaner, for dry cleaning.
(ii) A delivers a wrist watch to B for repairs.
(iii) A lends his book to B for reading.

Characteristics of bailment contract:

1. Delivery of goods.

a. The essence of bailment is delivery of goods by one person to another for some temporary purpose. Delivery of goods may, however, be actual or constructive. Actual delivery may be made by handing over goods to the bailee. Constructive delivery may be made by doing something which has the effect of putting the goods in the possession of the intended bailee or any person authorized to hold them on his behalf (Sec.149). Example: A holding goods on behalf of B, agrees to hold them on behalf of C, there is a constructive transfer of possession from C to A.

2. Bailment is based on a contract.

a. In bailment, the delivery of goods is upon a contract that when the purpose is accomplished, they shall be returned to the bailor. For example, where a watch is delivered to a watch repairer for repair, it is agreed that it will be returned, after repair, on the receipt of the agreed or reasonable charges.

3. Return of goods in specie.

a. The goods are delivered for some purpose and it is agreed that the specific goods shall be returned. Return of specific goods (in specie) is an essential characteristic of bailment. Thus, where an equivalent and not the same is agreed to be returned, there is no bailment.

4. Ownership of goods.

a. In a bailment, it is only the possession of goods which is transferred and not the ownership thereof, therefore the person delivering the possession of goods need not be the owner; his business is to transfer possession and not ownership.

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