PPT - Law of Bailment & Pledge | Business Law - B Com PDF Download

 Page 1


BAILMENT
BAILMENT
 AND 
 AND 
PLEDGE
PLEDGE
BUSINESS LAW
BUSINESS LAW
Page 2


BAILMENT
BAILMENT
 AND 
 AND 
PLEDGE
PLEDGE
BUSINESS LAW
BUSINESS LAW
?
BAILMENT BAILMENT
?
Bailment is another type of special contract. Since it is a ‘contract’, naturally all basic 
requirements of contract are applicable. 
?
 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 
otherwise disposed of according to the directions of the person delivering them. The 
person delivering the goods is called the “bailor”. The person to whom they are 
delivered is called the “bailee” [section 148]. 
?
Bailment means act of delivering goods for a specified purpose on trust. The goods 
are to be returned after the purpose is over.
?
In bailment, possession of goods is transferred, but property i.e. ownership is not 
transferred. 
?
Bailment can be only of ‘goods’.  As per section 2(7) of Sale of Goods Act, ‘goods’ 
means every kind of movable property other than money and actionable claim. Thus, 
keeping money in bank account is not ‘bailment’. 
Page 3


BAILMENT
BAILMENT
 AND 
 AND 
PLEDGE
PLEDGE
BUSINESS LAW
BUSINESS LAW
?
BAILMENT BAILMENT
?
Bailment is another type of special contract. Since it is a ‘contract’, naturally all basic 
requirements of contract are applicable. 
?
 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 
otherwise disposed of according to the directions of the person delivering them. The 
person delivering the goods is called the “bailor”. The person to whom they are 
delivered is called the “bailee” [section 148]. 
?
Bailment means act of delivering goods for a specified purpose on trust. The goods 
are to be returned after the purpose is over.
?
In bailment, possession of goods is transferred, but property i.e. ownership is not 
transferred. 
?
Bailment can be only of ‘goods’.  As per section 2(7) of Sale of Goods Act, ‘goods’ 
means every kind of movable property other than money and actionable claim. Thus, 
keeping money in bank account is not ‘bailment’. 
?
ESSENTIALS AND LEGAL RULES AS TO BAILMENT: ESSENTIALS AND LEGAL RULES AS TO BAILMENT:
?
Contract:  A bailment is usually created by agreement b/w the bailor & bailee.
?
Delivery of Goods:  In bailment, the possession of goods must be delivered by the 
bailor to the bailee. 
?
No Transfer of Ownership:  In bailment, possession is transferred from one person 
to another but ownership of goods remains with the bailor.   
?
Delivery of Goods for Some Purpose:  The delivery of goods must be for some 
specific performance.  
?
Return of Specific Goods:  Goods are delivered to the bailee with the condition that 
the same goods will be returned to the bailor after the accomplishment of purpose.   
?
Movable Goods:  In bailment, the goods bailed must be movable.   
?
Deposit of Money Into Bank: 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. 
Page 4


BAILMENT
BAILMENT
 AND 
 AND 
PLEDGE
PLEDGE
BUSINESS LAW
BUSINESS LAW
?
BAILMENT BAILMENT
?
Bailment is another type of special contract. Since it is a ‘contract’, naturally all basic 
requirements of contract are applicable. 
?
 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 
otherwise disposed of according to the directions of the person delivering them. The 
person delivering the goods is called the “bailor”. The person to whom they are 
delivered is called the “bailee” [section 148]. 
?
Bailment means act of delivering goods for a specified purpose on trust. The goods 
are to be returned after the purpose is over.
?
In bailment, possession of goods is transferred, but property i.e. ownership is not 
transferred. 
?
Bailment can be only of ‘goods’.  As per section 2(7) of Sale of Goods Act, ‘goods’ 
means every kind of movable property other than money and actionable claim. Thus, 
keeping money in bank account is not ‘bailment’. 
?
ESSENTIALS AND LEGAL RULES AS TO BAILMENT: ESSENTIALS AND LEGAL RULES AS TO BAILMENT:
?
Contract:  A bailment is usually created by agreement b/w the bailor & bailee.
?
Delivery of Goods:  In bailment, the possession of goods must be delivered by the 
bailor to the bailee. 
?
No Transfer of Ownership:  In bailment, possession is transferred from one person 
to another but ownership of goods remains with the bailor.   
?
Delivery of Goods for Some Purpose:  The delivery of goods must be for some 
specific performance.  
?
Return of Specific Goods:  Goods are delivered to the bailee with the condition that 
the same goods will be returned to the bailor after the accomplishment of purpose.   
?
Movable Goods:  In bailment, the goods bailed must be movable.   
?
Deposit of Money Into Bank: 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: CLASSIFICATION OF BAILMENT:  
?
On the basis of benefit
?
Bailment exclusive for Bailor’s benefit.
?
Bailment exclusive for Bailee’s benefit
?
Bailment for mutual benefit.
?
On the basis of willingness
?
Voluntary Bailment : Express contract between the parties.
?
Involuntary bailment: Arises as per the operation of law.  
?
On the basis of Rewards:   
?
Gratituous Bailment :   Where neither the bailor nor the bailee get any 
remuneration, then, it gratuitous.   
?
Non-Gratituous Bailment :  When either the bailor or bailee get remuneration, then 
it is known as non-gratuitous bailment. 
Page 5


BAILMENT
BAILMENT
 AND 
 AND 
PLEDGE
PLEDGE
BUSINESS LAW
BUSINESS LAW
?
BAILMENT BAILMENT
?
Bailment is another type of special contract. Since it is a ‘contract’, naturally all basic 
requirements of contract are applicable. 
?
 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 
otherwise disposed of according to the directions of the person delivering them. The 
person delivering the goods is called the “bailor”. The person to whom they are 
delivered is called the “bailee” [section 148]. 
?
Bailment means act of delivering goods for a specified purpose on trust. The goods 
are to be returned after the purpose is over.
?
In bailment, possession of goods is transferred, but property i.e. ownership is not 
transferred. 
?
Bailment can be only of ‘goods’.  As per section 2(7) of Sale of Goods Act, ‘goods’ 
means every kind of movable property other than money and actionable claim. Thus, 
keeping money in bank account is not ‘bailment’. 
?
ESSENTIALS AND LEGAL RULES AS TO BAILMENT: ESSENTIALS AND LEGAL RULES AS TO BAILMENT:
?
Contract:  A bailment is usually created by agreement b/w the bailor & bailee.
?
Delivery of Goods:  In bailment, the possession of goods must be delivered by the 
bailor to the bailee. 
?
No Transfer of Ownership:  In bailment, possession is transferred from one person 
to another but ownership of goods remains with the bailor.   
?
Delivery of Goods for Some Purpose:  The delivery of goods must be for some 
specific performance.  
?
Return of Specific Goods:  Goods are delivered to the bailee with the condition that 
the same goods will be returned to the bailor after the accomplishment of purpose.   
?
Movable Goods:  In bailment, the goods bailed must be movable.   
?
Deposit of Money Into Bank: 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: CLASSIFICATION OF BAILMENT:  
?
On the basis of benefit
?
Bailment exclusive for Bailor’s benefit.
?
Bailment exclusive for Bailee’s benefit
?
Bailment for mutual benefit.
?
On the basis of willingness
?
Voluntary Bailment : Express contract between the parties.
?
Involuntary bailment: Arises as per the operation of law.  
?
On the basis of Rewards:   
?
Gratituous Bailment :   Where neither the bailor nor the bailee get any 
remuneration, then, it gratuitous.   
?
Non-Gratituous Bailment :  When either the bailor or bailee get remuneration, then 
it is known as non-gratuitous bailment. 
?
RIGHTS OF BAILOR:   RIGHTS OF BAILOR:   
?
Right of Termination:   bailor has right to terminate the contract of bailment, if the 
bailee does any inconsistent act with regards to goods.   
?
Right to Demand Return of Goods:  Any time in case of gratuitous bailment. The 
bailor can demand back goods bailed at any time even if he had lend it for a specific 
goods. 
?
Right to file a suit against a wrong doer.   
?
Enforcement of Rights:  The duties of bailee are the rights of bailor & bailor can 
enforce those rights by filing a suit against bailee.   
?
DUTIES OF BAILOR:   DUTIES OF BAILOR:   
?
Duty to disclose known defects:  A bailor is bound to disclose all the defects 
relating to goods of which he is known.   
?
Duty to Bear Extraordinary expenses: Where the bailment is gratuitous & the 
bailee is not to receive any remuneration, the bailor shall pay bailee all the necessary 
expenses.    
?
Bear Risk for Loss:  bailor is to bear risk of loss or destruction of the thing bailed if 
the bailee had taken prudent care of the goods.   
?
Duty to indemnify bailee: bailor has to indemnify bailee for any loss due to imperfect 
title in the goods bailed.
?
Duty to receive back the goods: on the expiry of the term of bailment.