Chapter 14 Bailment & Pledge

Transcription

1 LIST OF SECTIONS TO BE DISCUSSED IN THIS CHAPTER Chapter 14 SECTION NO. SECTION NAME 148 CONTRACT OF BAILMENT 150 BAILORS DUTY TO DISCLOSE FAULT IN THE GOODS 151 BAILEES DUTY TO TAKE CARE OF GOODS 153 TERMINATION OF BAILMENT ON INCONSISTENT USE OF GOODS BY BAILEE 154 BAILEES DUTY NOT TO MAKE UNAUTHORIZED USE OF THE GOODS ENTRUSTED TO HIM 155 BAILEES DUTY NOT TO MIX GOOD 156 BAILEES DUTY NOT TO MIX GOOD 157 BAILEES DUTY NOT TO MIX GOOD 158 BAILORS DUTY TO PAY NECESSARY EXPENSES 159 PREMATURE TERMINATION OF GOODS 160 BAILEES DUTY TO RETURN THE GOODS 161 BAILEES DUTY TO RETURN THE GOODS 162 TERMINATION OF BAILMENT ON THE DEATH OF BAILOR OR BAILEE 163 BAILEES DUTY TO RETURN ANY ACCRETION TO GOODS 164 BAILORS RESPONSIBILITY TO BAILEE 168 FINDER OF GOODS 169 FINDER OF GOODS 171 CONCEPT OF LIEN 172 CONCEPT OF PLEDGE 173 PAWNEES RIGHT OF RETAINER 174 PAWNEES RIGHT OF RETAINER FOR SUBSEQUENT ADVANCES 175 PAWNEES RIGHT TO EXTRAORDINARY EXPENSES 176 PAWNEES RIGHT TO SUE THE PAWNOR OR SELL THE GOODS, ON DEFAULT BY THE PAWNOR 177 RIGHTS OF PAWNOR 178 PLEDGE BY A MERCANTILE AGENT 178A PLEDGE BY A PERSON UNDER A VOIDABLE CONTRACT 179 PLEDGE BY A PERSON WITH LIMITED INTERST 14.1 Concept of Bailment section 148 Definition of bailment Parties under bailment As per sec 148, 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 direction of the person delivering them. There are namely two parties under Bailment, viz, the Bailor and the Bailee. Bailor The person delivering the goods to the other person for some purpose Classes at I.G.P 171

2 Examples of Bailment PAST ATTEMPT is called bailor. Bailee The person to whom the goods are delivered for some purpose is called the bailee. Delivery of cloth for stitching purpose Delivery of goods for the purpose of repair. Delivery of goods for the purpose of safe custody Q1. The delivery of goods by one person to another for some specific purpose and time is known as: (a) Mortage (b) Pledge (c) Bailment (d) Charge [CA IPCC MAY 2011] 14.2 Essential Features Of Bailment section 148 Delivery of goods. Delivery for some purpose Delivery with contract Bailment of movable goods only Goods to be returned in specie or altered form Bailee ultimate control PAST ATTEMPT Bailment implies delivery of goods. A mere agreement to deliver goods does not become bailment. Delivery can be actual,symbolic,contructive. change in possession is not same as a mere shift in custody. There must be some purpose for which goods are delivered. Where goods are delivered by mistake without any purpose there is no bailment. The delivery to bailee is with a contract that the goods shall be returned or disposed off in the manner desired by the bailor. Goods shall have same meaning as in Sales of goods Act,1930. For bailment to be valid goods should be returned in the the same form as given or may be altered as per bailers direction. It should be noted that exchange of goods should not be allowed. When a person keeps his goods in the premises of another person but him self continue to have the control over them there is not sufficient delivery for being considered to be bailment [Kalia Porumal Pillai V Visalakshmi]. Q1. A, the bailor, pledges a cinema projector and other accessories with Cine Association Co operative Bank Limited, the bailee, for a loan. A requests the bank to allow the pledged goods to remain in his possession and promises to hold the same in trust for the bailee and also further promises to handover the possession of the same to the bank whenever demanded. Examining the provisions of the Indian Contract Act, 1872 decide, whether a valid contract of pledge has been made between A, the bailor and Bank, the bailee? [CA PCC JUNE 2009] Q2. State the essential elements of a contract of bailment. Distinguish between the contract of bailment and contract of pledge (8 Marks) [CA IPCC NOV. 2012] Classes at I.G.P 172

3 14.3 Additional examples Deposit of money with Banker Deposit of valuables in bank locker Delivery under sale or gift Parking of a vehicle in a parking lot Seizure of goods by custom department PAST ATTEMPT A deposit of money with a banker does not become bailment because banker is bound to return not the same currency notes but only an equivalent value. It must be noted that deposit of valuables in a banker locker is not bailment because bank does not have ultimate control over the goods. Delivery of goods to a person under sale or gift or donation is also not bailment becomes ownership is transferred in such cases. In this case if keys are handed off to the parking persons then it does not amounts to bailment. It is bailment since it satisfies all essentials of bailment. Q1. Examine whether the following constitute a contract of 'Bailment' under the provisions of the Indian Contract Act, 1972: (i) V parks his car at a parking lot, locks it, and keeps the keys with himself. (ii) Seizure of goods by customs authorities [CA PE II MAY 2007] Q2. Deposit of money in a Bank Amounts to Bailment. [CA PCC MAY 2007] Q3. Depositing of ornaments in a bank locker is a bailment [CA Inter.(IPC) MAY 2015] 14.4 Types of bailment Gratuitous Bailment Non-Gratuitous Bailment The word gratuitous means free of charge. So a gratuitous bailment is one when the provider of service does it gratuitously i.e. free of charge such bailment would be either for the exclusive benefits of bailor or bailee. Non gratuitous bailment means where both the parties get some benefit i.e. bailment for the benefit of both bailor & bailee Duties of Bailor section 150, 158, 159, 164 Duty to disclose faults. Sec 150 Duty to pay necessary expenses Sec 158 The bailor must disclose to the bailee any faults or defects in the goods which can harm to him. A gratuitous bailor is bound to disclose to the bailee all those faults in the goods bailed of which he is aware and if he fails to do so, he will be liable to pay such damages to the bailee as may have resulted directly from faults. A Non gratitous bailor is responsible for all defects in the goods bailed whether he is aware of the defects or not. In case of gratuitous bailment In case of gratuitous bailment the bailor is liable to reimburse to bailee : all the necessary expenses incurred by bailee ; and Classes at I.G.P 173

4 Duty to indemnify bailee Sec 164 Duty to receive back the goods Sec. 164 Duty to compensate in case of premature termination sec.159 PAST ATTEMPT Any extraordinary expenses incurred by the bailee. In case of non-gratuitous bailment In case of non gratuitous bailment, the bailor is liable to reimburse to bailee any extraordinary expenses incurred by the bailee A bailor is also bound to indemnify the bailee for any loss suffered by the bailee by reason of fact that the bailor was not entitled to bail the goods because of his defective title. It is the duty of the bailor to receive back the goods when the bailee returns them after the time of bailment has expired or the purpose of bailment has been accomplished. If the bailor refuses to take delivery of goods when it is offered at the proper time the bailee can claim compensation for all necessary expenses incurred for the safe custody. Sec 159 states that if the bailor terminates a gratuitous bailment prematurely causing loss to the bailee he will compensate the bailee for the loss caused, which is in excess of the benefit received. Q1. A hires a carriage of B an agrees to pay Rs. 500 as hire charges. The carriage is unsafe, though B is unaware of it. A is injured and claims compensation for injuries suffered by him. B refuses to pay. Discuss the liability of B. [CA PE II MAY 2005] Q2. M delivers to N, a carrier, some explosives in a case without disclosing this fact to N. N does not take any extraordinary care required for such type of goods. The case explodes and as a result, a porter is injured and some other goods are damageed. Discuss the liability of M in the light of the provisions of the Indian Contract Act,1872. [CA PE II NOV. 2009] Q3. If the pawnor makes a default in the payment of debt, or performance of duty, as agreed, the pawnee has a right to sell the thing pledged for which no reasonable notice of the sale is required. [CA IPCC NOV. 2009] 14.6 Duties of bailee section 151,154, 157,160,161,163 Duty to take care of goods. Sec 151 Duty not to make unauthorized use of goods entrusted to him Sec Duty not to mix the Every bailee has duty to take a reasonable care of the goods,as much care of the goods bailed to him, as a man of ordinary prudence under similar circumstances, take of his own goods If in spite of bailee s care goods are lost or damaged, bailee shall not be liable; but the parties may increase the level of care expected from bailee through a special term in the contract (Sec 151). Bailee is under duty to handle the bailed goods strictly according to the terms of the contract. Any deviation in this respect will be an unauthorized use of the goods. In case of an unauthorized use of the goods, the bailee shall be liable for any damage whatsoever arising to the goods from or during such use of them. In addition to this, the bailor would have a right to terminate bailment in case of unauthorized use. It is the duty of the bailee not to mix his own goods with the goods bailed. If the Classes at I.G.P 174

5 goods Sec. 155, 156, 157 Duty to return the goods Sec 160 & 161. Duty to return any accretion to goods Sec. 163 PAST ATTEMPT bailee mixed his own goods with the goods of the bailor, the consequences shall be as follows: In case the goods are mixed with the permission of the bailor In such a case the goods of bailor & bailee need not be separated. The bailor & bailee shall be entitled to receive their proportionate shares from the mixture. In case the goods are mixed without the permission of the bailor -: In case it is possible to separate the goods If it is possible to separate bailor s goods & bailee goods, it shall be the duty of the bailee to make such separation. Accordingly the bailee shall be liable to pay damages for any loss caused to the bailor. In case it is not possible to separate the goods If it is not possible to separate bailor s goods then bailee shall be liable to compensate the bailor for the loss caused to him. The damages shall be measured as per the market value of the same quality of goods bailed by bailor. The bailee has a basic duty to return or deliver according to the bailor s direction i.e. the purpose for which they were bailed has been accomplished. If bailee fails to return the goods at proper time his liability for loss or damage to goods increases, he is responsible to the bailor for any loss or destruction from that time [Sec 161]. It is the duty of the bailee to deliver to the bailor any natural increase or profit accruing from the goods bailed unless there is a contract to contrary. Q1. Sunil delivered his car to Mahesh for repairs. Mahesh completed the work, but did not return the car to Sunil within reasonable time, though Sunil repeatedly reminded Mahesh for the return of car. In the meantime a big fire occurred in the neighbourhood and the car was destroyed. Decide whether Mahesh can be held liable under the provisions of the Indian Contract Act, [CA PE II NOV. 2003] Q2. M lends a sum of Rs. 5,000 to B, on the security of two shares of a Limited Company on 1st April On 15 th June. 2007, the company issued two bonus shares. B returns the loan amount of Rs. 5,000 with interest but M returns only two shares which were pledged and refuses to give the two bonus shares. Advise B in the light of the provisions of the Indian Contract Act, [CA PE II NOV. 2008] Q3. Bailee has no right to mix the goods bailed with his own goods without the consent of the bailor. [CA Inter.(IPC) NOV. 2014] 14.7 Rights of Bailor section 151,153, 156,159,160,163,180,181 Right to enforce bailee s duties Right to terminate bailment Right of premature The duties of the bailee are the rights of the bailor. The bailor can enforce by suit all the duties of the bailee as his rights. Bailor in entitled to terminate bailment even before expiry of the specified time or completion of the purpose if bailee does any act with regard to the goods which is inconsistent with the terms of bailment (Sec 153). In case of gratuitous bailment of goods, bailor is entitled to demand their return Classes at I.G.P 175

6 termination Right to sue wrongdoer even before the expiry of the specified time or completion of purpose. But if this premature return causes loss to bailee, the bailor has to compensate bailee for this loss. The measurement of damages for bailee would be the excess of loss caused by the premature return of goods over the benefits already derived from such goods. If a third party has caused some damage to the bailed goods while they are in the bailee s possession, bailor may file a suit against the third party i.e. the wrong-doer for compensation and will have a right to share the proceeds available according to their interests 14.8 Right of Bailee section 150, 158, 164, 165, 167, 180, 181 Right to enforce Bailor s duties Right to deliver goods to one of several joint-bailors Right to deliver goods back to bailor Right of lien Right to sue wrongdoers The duties of the bailor are the rights of bailee. As such, the bailee can by a suit enforce the duties of the bailor. If there are several joint-bailors of goods bailed then, the bailee has a right to deliver the goods back to one of several joint-owner without the consent of. all in the absence of any agreement to the contrary (Sec 165). The bailee is entitled to return the goods to bailor in good faith even if during the possession of goods by him, a third person comes forward claiming his title over the bailed goods. (Sec 166). The alternates upon to such a third person is that he may apply to the court to stop delivery of the goods to the bailor & to decide the title of the goods (Sec 167). Lien means a right to retain the goods belonging to another person until the expenses incurred in respect of such goods are paid for. The bailee has the right to recover the extraordinary expenses (whether the bailment is gratuitous or non gratuitous) & ordinary necessary expenses (in case the bailment is gratuitous) incurred by him. If the bailor refuses to reimburse to bailee such expenses, the bailee has a right to exercise lien over the goods bailed. If a third party has caused some damage to the bailed goods while they are in bailee s possession bailee may file a suit against the third party i.e. the wrong-doer for compensation and both will have a right to share the proceeds available according to their interests (Sec 180 & 181) Termination of Bailment: Section 153, 159, 162 Expiry of specified period Accomplishment of the purpose of bailment When the bailment was for a specific period, it terminates on the expiry of the time period. If the bailment was for a specific purpose it terminates on the completion of the purpose. Inconsistent use of If bailee does any act with regard to goods which is inconsistent with the terms of Classes at I.G.P 176

7 goods Death of bailor or bailee Premature termination by a bailor bailment, then bailor may terminate bailment immediately. A gratuitous bailment is terminated by the death of either of the parties.the goods would be returnable immediately. (Sec 159). A gratuitous bailment can be terminated by the bailor even before expiry of time or completion of purpose. But the bailor will have liability for compensation to bailee Concept of Pledge section 172 Definition of Pledge Parties PAST ATTEMPT The bailment of goods as security for payment of a debt or performance of a promise is called pledge. Pawnor: The person delivering the goods to another for the purpose of security is called the pawnor. Pawnee: The person with whom the goods are deposited for the purpose of security is called the pawnee. Q1. The Delivery of goods by one person to another as security for the payment of a debt is called (a) Bailment (b) Pledge (c) Mortgage (d) Hypothecation. [CA PCC MAY 2007] Rights and duties of bailor and bailee Duties of pawnor Duties of pawnee Rights Of Pawnor section 177 The pawnor, i.e. the borrower, has following duties: The pawnor, as a borrower, has a duty to fulfill his obligations to the pawnee in time and according to the terms of the contract. He has all the duties of a bailor towards the bailee. He has a duty to re-imburse to the pawnee extraordinary expenses incurred by pawnee for the preservation of the goods pledged (Sec 175). He has a liability to pay any deficiency to the pawnee in case of sale of goods by the latter. Pledge being a special kind of bailment, the duties of a pawnee are just like a bailee. Thus a pawnee s duties may be enumerated as following: To take reasonable care of the goods pledged. Not to make any unauthorized use of the goods pledged. Not to mix the goods pledged with his own goods. To return the goods pledged on receipt of his full dues. To deliver any accretion to the goods ledged. The pawnor has following rights against the pawnee: As a bailor of goods, pawnor has all the rights of the bailor. Pawnor has a supreme right of redemption of the pledged goods. This right to recover the goods by clearing his dues is available to the Classes at I.G.P 177

8 borrower even after he default in the payment at the prescribed time. This right comes to an end only by the sale of goods by the pawnee made in a lawful manner. Pawnor has a right to receive notice from the pawnee for intended sale of the goods. Pawnor has a right to demand any surplus that may be left with the pawnee after sale of goods Rights of Pawnee section 173, 176 Right of retainer Sec 173 Right of retainer for subsequent advances Sec 174 Right to extraordinary expenses Sec 175 Right to sue the pawnor or sell the goods on default of the pawnor Sec 176 The pawnee has the right to retain the goods pledged until his dues are paid. He has the right to retain the goods pledged, not only for payment of the debt but for the interest due on the debt and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged. When the pawnee lend money to the same debtor after the date of the pledge without any further security, it shall be presumed that the right of retainer over the pledged goods extends even to subsequent advances. This presumption can be rebutted only by a contract to the contrary. The pawnee also has the right to recover from the pawnor extraordinary expenses incurred by him for the preservation of the goods pledged. But he cannot retain the goods, if such expenses are not paid. He has only a right to sue the pawnor for recovery of such extraordinary expenses. Where a pawnor makes default in the payment of the debt the pawnee may himself sell the thing pledged, after giving to the pawnor a reasonable notice of his intention to sell Who Can Pledge? section 178, 178A, 179 General Rule mercantile agent (Sec 178). person in possession under a voidable contract (Sec 178-A Ordinarily, it is the owner of the goods, or any person authorized by him in that behalf, who can pledge the goods. Following are exceptions. A mercantile agent having possession of the goods with the consent of the owner but having no authority to pledge them can make a pledge provided the pawnee is acting in good faith. A person who has obtained the possession of the goods under a voidable contract, can make a pledge provided the pawnee is acting in good faith. Pledge by a person where a person pledges goods in which he has only a limited interest, Classes at I.G.P 178

9 with a limited interest (Sec 179). Pledge by seller in possession after sale Pledge by buyer in possession before sale PAST ATTEMPT the pledge is valid to the extent of that interest. In such a case, the pawnee s right is limited to the pawnor s interests in the goods if the seller after selling the goods, continues to have posseeion on the goods pledges the same then such pledge shall be valid if pawnee is acting in good faith. if the buyer before sale has possession over the goods and pledges the same then such pledge shall be valid if pawnee is acting in good faith. Q1. Ravi sent a consignment of goods worth Rs. 60,000 by railway and got railway receipt. He obtained an advance of Rs. 30,000 from the bank and endorsed and delivered the railway receipt in favour of the bank by way of security. The railway failed to deliver the goods at the destination. The bank filed a suit against the railway for Rs. 60,000. Decide in the light of provisions of the Indian Contract Act, 1872, whether the bank would succeed in the said suit? [CA PE II MAY 2008] Q2. A pledge of documents of title to goods by a mercantile agent is a valid pledge. [CA PCC MAY 2008] Q3. X sent a consignment of mobile phones worth Rs. 60,000 to Y and obtained a railway receipt therefore. Later, he borrowed a loan of Rs. 40,000 from Star Bank and endorsed the railway receipt in favour of the Bank as security. In transit the consignment of mobile phones was lost. The Bank files a suit against the railway for a claim of Rs.60,000, the value of the consignment. The railway contended that the Bank is entitled to recover the amount of loan i.e. Rs. 40,000 only. Examining the provisions of the Indian Contract Act, 1872, decide, whether the contention of the railway is valid. [CA IPCC NOV. 2010] Q4. X sent a consignment of goods worth Rs. 2,90,000 by railway and got railway receipt for the same. He obtained an advance of Rs. 2,60,000 from the bank and endorsed and delivered the railway receipt in favour of the bank by way of security for the advance. The railway failed to delivered the goods at the destination. The bank filed a suit against the railway for Rs. 2,90,000. Decide in the light of provisions of the Indian Contract Act, 1872, whether the bank would succeed in the said suit? [CA Inter.(IPC) NOV. 2014] Concept Of Lien section 171 Meaning of Lien Types of lien Particular Lien (B) General Lien Persons entitled to general lien Lien is a right of a person to retain the possession of goods of another person so long as some claim upon that person is not satisfied by him. Particular lien means the right granted by law to a person to detain only a particular property or goods of the owner against a particular claim upon the owner. General lien means the right granted by law to a person to detain any goods whatsoever of a person against any general claim upon the owner. The right of general lien has been conferred on the following kinds of bailees: Classes at I.G.P 179

10 1. Bankers, 2. Factors, 3. Wharfingers, 4. Attorneys of a High Court, and 5. Policy-brokers. The right is available to the above categories of bailees only and none else, unless there is an express contract to that effect. It means that the parties may, by an express contract between themselves, confer the right of general lien on a bailee, who has otherwise got only a right of particular lien. Bankers. Every banker will have a general lien which attaches to all goods, securities and papers entrusted to it as a bailee by its customer Factors The word factor is used for such mercantile agents who are entrusted with principal s goods for selling them. Sec 171 grants a general lien to a factor on all goods received by him in his capacity as factor for his remuneration. Wharfingers A wharf is a place close to a seaport where goods are temporarily placed during the loading or unloading operations to or form the ship. A wharfinger is the owner of a wharf. Sec 171 grants to a wharfinger a general lien over goods bailed to him in that capacity for the wharfage. i.e. his remuneration for allowing the use of his wharf. Attorneys of High Court An attorney or a solicitor of a High Court is granted a general lien over the client s documents and papers received by him in professional capacity from the client until his professional fee and other legal costs incurred by him for the client are paid. Policy brokers An insurance agent employed to affect a policy of marine insurance is called a policy broker. He may detain any property or documents received from his clients for any balance on any insurance account due to him from his client Finder of Goods section 71, 168, 169 Meaning of finder of goods Finder of goods means a person who finds the goods lost by some another person. Duties of finder:- The finder s duties as a bailee are given below To take reasonable care of the goods To search the true owner Not to make personal use of goods The finder will take a reasonable care of the goods he has chosen to take in his possession. This would be the care that he would take of his own goods of a similar type. The finder must take initiative to search the true owner and make reasonable efforts for the same. The finder is expected to keep the goods in his safe custody only without misappropriating them or converting them to his own use. If personal use is unavoidable, he will be liable to make a reasonable payment to owner for Classes at I.G.P 180

11 this. To return the goods On finding the true owner, finder must return the goods to him. This duty to true owner has another aspect and that is that he must not hand over the goods to any person other than the true owner. Rights of Finder:- The rights of the finder of goods are given below To keep possession of goods To recover expenses from true owner To recover reward from owner To exercise lien over goods for expenses and reward To exercise right of sale PAST ATTEMPT The finder has a right to keep possession of the goods against everybody except the true owner. The finder is entitled to get reimbursement from the owner for the expenses incurred for preserving the goods and searching him. The finder can demand from the owner the reward promised for the return of the goods provided he was aware. The finder may have claim upon the true owner for his expenses on search for owner and maintenance of goods and also for the reward promised by the owner. For both these claims, finder has a lien over the goods in his possession. finder a right to sell the goods in his possession but the right is available only when The true owner cannot,with reasonable diligence be found: or If the true owner has been found he refuses to pay the lawful charges incurred by the finder of the goods; or The goods are in the danger of perishing or losing a greater part of their value ; or The lawful charges of the finder in respect of the goods found amounts to 2/3 rd of their value. Q1. What is the status of a "finder of goods" under the Indian Contract Act, 1872? What are his rights? [CA PE II MAY 2003] Some Important Distinctions I. Distinction Between Bailment And Pledge S. No Basis Bailment Pledge 1. Definition 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 direction of the person delivering them. 2. Meaning In simple words, bailment is delivery of goods from one person to another for some purpose upon a condition that The bailment of goods as security for payment of a debt or performance of a promise is called pledge. In simple words pledge is a delivery of goods from one person to another for the purpose of security for the repayment of Classes at I.G.P 181

12 the recipient shall ultimately,restore them to the person delivering them or he shall dispose them according to the direction of the person delivering them. 3. Scope Bailment is a wider term and includes a large variety of transaction. 4. Purpose Bailment, as a wider concept, may be for a large variety of purposes. 5. Right of personal use The purpose of bailment may be to enable the bailee to make use of the bailed goods. 6. Right of sale In general, bailees do not have the right to sell bailor s goods to serve their own interests. a debt. II. Distinction between general lien and particular lien S. No Basis General Lien Particular Lien 1. Meaning General lien means the right granted by law to a person to detain any goods whatsoever of a person against any general claim upon the owner. 2. Scope It is wider in scope as it entitles the person to detain any property. 3. Persons entitled to The right of general lien has been conferred on the following kinds of bailees:- Bankers, Factors, Wharfingers, Attorneys of a HighCourt, and Policy-brokers. But, pledge is a specific category of bailment. But, pledge is for one specific purpose only, to make the goods security for a loan. Such a personal use of goods is denied to a pawnee. But, a pawnee would always have a right to sell the pledged goods to recover his money in case of default by the pawnor. Particular lien means the right granted by law to a person to detain only a particular property or goods of the owner against a particular claim upon the owner. It is narrower in scope as compare to particular lien because it entitles the person to detain only a particular property or goods of the owner against a particular claim upon the owner. The particular lien has been conferred on the following: bailee, finder of goods, pawnee, agent s lien, unpaid seller s lien, partner s lien. III. Distinction Between Gratuitous and Non Gratuitous Bailment S. No Basis Gratuitous Bailment Non Gratuitous Bailment 1. Meaning The word gratuitous means free of charge. So a gratuitous bailment is one when the provider of service does it Non gratuitous bailment means where both the parties get some benefit i.e. bailment for the benefit of both bailor & Classes at I.G.P 182

13 gratuitously i.e. free of charge such bailment would be either for the exclusive benefits of bailor or bailee. 2. Consideration In case of gratuitous bailment either party (i.e. either bailor or bailee) would not get consideration. 3. Liability of bailor 4. Duty to pay necessary expenses 5. Termination of bailment A gratuitous bailor will be liable to pay such damages to the bailee as may have resulted directly from faults. A gratuitous bailor will not be liable for damages arising to the bailee from defects of which he was ignorant. In case of gratuitous bailment the bailor is liable to reimburse to bailee all the necessary expenses incurred by bailee. A gratuitous bailment is terminated on the death of bailor or bailee. bailee. However, in case of non gratuitous bailment both party will get consideration. A non gratuitous bailor is responsible for all defects in the goods bailed whether he is aware of the defects or not.if he does not disclose them to the bailee unlike a gratuitous bailor ignorance of the defects is no defence for him. In case of non gratuitous bailment the bailor is not liable to reimburse to bailee any necessary expenses incurred by bailee. A non gratuitous bailment is not terminated on the death of bailor or bailee. Classes at I.G.P 183