ICAI Notes- Unit 8: Bailment and Pledge | Business Laws for CA Foundation PDF Download

 Page 1


  
 
BUSINESS LAWS  
 2.176 
 
 
 
 
LEARNING OUTCOMES 
UNIT–8: BAILMENT AND PLEDGE
 
 
 
After studying this unit, you would be able to understand: 
?
The general principles underlying contracts of bailment and pledge. 
?
Duties and rights of the parties to the contracts. 
 
 
 
 
 
8.1 WHAT IS BAILMENT? 
The word “Bailment” has been derived from the French word “ballier” which means “to 
deliver”. Bailment etymologically means ‘handing over’ or ‘change of possession’.  
As per Section 148 of the Act, bailment is the delivery of goods by one person to another for 
some purpose, upon a contract, that the goods shall, when the purpose is accomplished, be 
returned or otherwise disposed of according to the directions of the person delivering them.   
Bailment and Pledge
Bailment 
Duties 
and 
Rights of 
Bailor
Duties 
and 
Rights of 
Bailee
Finder of 
Goods
General lien 
and 
particular 
lien
Pledge
Pawnee 
Rights 
Pawnor 
Rights
Pledge by 
Mercantile 
Agent
Distinction 
between 
bailment and 
pledge
UNIT OVERVIEW
© The Institute of Chartered Accountants of India
Page 2


  
 
BUSINESS LAWS  
 2.176 
 
 
 
 
LEARNING OUTCOMES 
UNIT–8: BAILMENT AND PLEDGE
 
 
 
After studying this unit, you would be able to understand: 
?
The general principles underlying contracts of bailment and pledge. 
?
Duties and rights of the parties to the contracts. 
 
 
 
 
 
8.1 WHAT IS BAILMENT? 
The word “Bailment” has been derived from the French word “ballier” which means “to 
deliver”. Bailment etymologically means ‘handing over’ or ‘change of possession’.  
As per Section 148 of the Act, bailment is the delivery of goods by one person to another for 
some purpose, upon a contract, that the goods shall, when the purpose is accomplished, be 
returned or otherwise disposed of according to the directions of the person delivering them.   
Bailment and Pledge
Bailment 
Duties 
and 
Rights of 
Bailor
Duties 
and 
Rights of 
Bailee
Finder of 
Goods
General lien 
and 
particular 
lien
Pledge
Pawnee 
Rights 
Pawnor 
Rights
Pledge by 
Mercantile 
Agent
Distinction 
between 
bailment and 
pledge
UNIT OVERVIEW
© The Institute of Chartered Accountants of India
 
 
    
 2.177 
THE INDIAN CONTRACT ACT, 1872 
Parties to bailment:  
(a) Bailor: The person delivering the goods. 
(b) Bailee: The person to whom the goods are delivered.  
Example 1: Where ‘X’ delivers his car for repair to ‘Y’, ‘X’ is the bailor and ‘Y’ is the bailee. 
Example 2: X delivers a piece of cloth to Y, a tailor, to be stitched into a suit. It is contract 
for bailment. 
Example 3: Goods given to a friend for his own use, without any charge. 
Example 4: X delivers goods to blue dart for carriage. 
Essential Elements: 
The essential elements of a contract of bailment are— 
(a) Contract: Bailment is based upon a contract.  The contract may be express or 
implied. No consideration is necessary to create a valid contract of bailment. 
(b) Delivery of goods: It involves the delivery of goods from one person to another for 
some purposes. Bailment is only for moveable goods and never for immovable goods 
or money. The delivery of the possession of goods is of the following kinds: 
i. Actual Delivery: When goods are physically handed over to the bailee by the 
bailor. Eg: delivery of a car for repair to workshop 
ii. Constructive Delivery: Where delivery is made by doing anything that has 
the effect of putting goods in the possession of the bailee or of any person 
authorized to hold them on his behalf. Eg: Delivery of the key of car to a 
workshop dealer for repair of the car. 
(c) Purpose: The goods are delivered for some purpose. The purpose may be express or 
implied.  
(d) Possession: In bailment, possession of goods changes. Change of possession can 
happen by physical delivery or by any action which has the effect of placing the 
goods in the possession of bailee. The change of possession does not lead to change 
of ownership. In bailment, bailor continues to be the owner of goods. Where a 
person is in custody without possession he does not become a bailee.   
 For example, servant of a master who is in custody of goods of the master does not 
become a bailee. 
 Similarly, depositing ornaments in a bank locker is not bailment, because ornaments 
are kept in a locker whose key are still with the owner and not with the bank. The 
ornaments are in possession of the owner though kept in a locker at the bank. 
© The Institute of Chartered Accountants of India
Page 3


  
 
BUSINESS LAWS  
 2.176 
 
 
 
 
LEARNING OUTCOMES 
UNIT–8: BAILMENT AND PLEDGE
 
 
 
After studying this unit, you would be able to understand: 
?
The general principles underlying contracts of bailment and pledge. 
?
Duties and rights of the parties to the contracts. 
 
 
 
 
 
8.1 WHAT IS BAILMENT? 
The word “Bailment” has been derived from the French word “ballier” which means “to 
deliver”. Bailment etymologically means ‘handing over’ or ‘change of possession’.  
As per Section 148 of the Act, bailment is the delivery of goods by one person to another for 
some purpose, upon a contract, that the goods shall, when the purpose is accomplished, be 
returned or otherwise disposed of according to the directions of the person delivering them.   
Bailment and Pledge
Bailment 
Duties 
and 
Rights of 
Bailor
Duties 
and 
Rights of 
Bailee
Finder of 
Goods
General lien 
and 
particular 
lien
Pledge
Pawnee 
Rights 
Pawnor 
Rights
Pledge by 
Mercantile 
Agent
Distinction 
between 
bailment and 
pledge
UNIT OVERVIEW
© The Institute of Chartered Accountants of India
 
 
    
 2.177 
THE INDIAN CONTRACT ACT, 1872 
Parties to bailment:  
(a) Bailor: The person delivering the goods. 
(b) Bailee: The person to whom the goods are delivered.  
Example 1: Where ‘X’ delivers his car for repair to ‘Y’, ‘X’ is the bailor and ‘Y’ is the bailee. 
Example 2: X delivers a piece of cloth to Y, a tailor, to be stitched into a suit. It is contract 
for bailment. 
Example 3: Goods given to a friend for his own use, without any charge. 
Example 4: X delivers goods to blue dart for carriage. 
Essential Elements: 
The essential elements of a contract of bailment are— 
(a) Contract: Bailment is based upon a contract.  The contract may be express or 
implied. No consideration is necessary to create a valid contract of bailment. 
(b) Delivery of goods: It involves the delivery of goods from one person to another for 
some purposes. Bailment is only for moveable goods and never for immovable goods 
or money. The delivery of the possession of goods is of the following kinds: 
i. Actual Delivery: When goods are physically handed over to the bailee by the 
bailor. Eg: delivery of a car for repair to workshop 
ii. Constructive Delivery: Where delivery is made by doing anything that has 
the effect of putting goods in the possession of the bailee or of any person 
authorized to hold them on his behalf. Eg: Delivery of the key of car to a 
workshop dealer for repair of the car. 
(c) Purpose: The goods are delivered for some purpose. The purpose may be express or 
implied.  
(d) Possession: In bailment, possession of goods changes. Change of possession can 
happen by physical delivery or by any action which has the effect of placing the 
goods in the possession of bailee. The change of possession does not lead to change 
of ownership. In bailment, bailor continues to be the owner of goods. Where a 
person is in custody without possession he does not become a bailee.   
 For example, servant of a master who is in custody of goods of the master does not 
become a bailee. 
 Similarly, depositing ornaments in a bank locker is not bailment, because ornaments 
are kept in a locker whose key are still with the owner and not with the bank. The 
ornaments are in possession of the owner though kept in a locker at the bank. 
© The Institute of Chartered Accountants of India
  
 
BUSINESS LAWS  
 2.178 
(e) Return of goods: Bailee is obliged to return the goods physically to the bailor. The 
goods should be returned in the same form as given or may be altered as per bailor’s 
direction. It should be noted that exchange of goods should not be allowed. The 
bailee cannot deliver some other goods, even not those of higher value.  
 Deposit of money in a bank is not bailment since the money returned by the bank 
would not be identical currency notes. 
Types of bailment 
1.  On the basis of benefit, bailment can be classified into three types: 
a.  For the exclusive benefit of bailor:  
Example 5: The delivery of some valuables to a neighbour for safe custody, without 
charge. 
b.  For the exclusive benefit of bailee:  
Example 6: The lending of a bicycle to a friend for his use, without charge. 
c.  For mutual benefit of bailor and bailee:  
Example 7: Giving of a watch for repair. 
2.  On the basis of reward, bailment can be classified into two types: 
a. 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. 
b. Non-Gratuitous Bailment: Non gratuitous bailment means where both the parties 
get some benefit i.e. bailment for the benefit of both bailor & bailee 
8.2 DUTIES OF A BAILOR 
Duties of Bailor: The duties of bailor are spelt out in a number of Sections [Section 150, 
158, 159, 164].  These are categorized under the following headings: 
 
Duties of 
Bailor
• Disclose known facts
• Bear necessary expenses
• Indemnify bailee
• Bound to accept the goods
© The Institute of Chartered Accountants of India
Page 4


  
 
BUSINESS LAWS  
 2.176 
 
 
 
 
LEARNING OUTCOMES 
UNIT–8: BAILMENT AND PLEDGE
 
 
 
After studying this unit, you would be able to understand: 
?
The general principles underlying contracts of bailment and pledge. 
?
Duties and rights of the parties to the contracts. 
 
 
 
 
 
8.1 WHAT IS BAILMENT? 
The word “Bailment” has been derived from the French word “ballier” which means “to 
deliver”. Bailment etymologically means ‘handing over’ or ‘change of possession’.  
As per Section 148 of the Act, bailment is the delivery of goods by one person to another for 
some purpose, upon a contract, that the goods shall, when the purpose is accomplished, be 
returned or otherwise disposed of according to the directions of the person delivering them.   
Bailment and Pledge
Bailment 
Duties 
and 
Rights of 
Bailor
Duties 
and 
Rights of 
Bailee
Finder of 
Goods
General lien 
and 
particular 
lien
Pledge
Pawnee 
Rights 
Pawnor 
Rights
Pledge by 
Mercantile 
Agent
Distinction 
between 
bailment and 
pledge
UNIT OVERVIEW
© The Institute of Chartered Accountants of India
 
 
    
 2.177 
THE INDIAN CONTRACT ACT, 1872 
Parties to bailment:  
(a) Bailor: The person delivering the goods. 
(b) Bailee: The person to whom the goods are delivered.  
Example 1: Where ‘X’ delivers his car for repair to ‘Y’, ‘X’ is the bailor and ‘Y’ is the bailee. 
Example 2: X delivers a piece of cloth to Y, a tailor, to be stitched into a suit. It is contract 
for bailment. 
Example 3: Goods given to a friend for his own use, without any charge. 
Example 4: X delivers goods to blue dart for carriage. 
Essential Elements: 
The essential elements of a contract of bailment are— 
(a) Contract: Bailment is based upon a contract.  The contract may be express or 
implied. No consideration is necessary to create a valid contract of bailment. 
(b) Delivery of goods: It involves the delivery of goods from one person to another for 
some purposes. Bailment is only for moveable goods and never for immovable goods 
or money. The delivery of the possession of goods is of the following kinds: 
i. Actual Delivery: When goods are physically handed over to the bailee by the 
bailor. Eg: delivery of a car for repair to workshop 
ii. Constructive Delivery: Where delivery is made by doing anything that has 
the effect of putting goods in the possession of the bailee or of any person 
authorized to hold them on his behalf. Eg: Delivery of the key of car to a 
workshop dealer for repair of the car. 
(c) Purpose: The goods are delivered for some purpose. The purpose may be express or 
implied.  
(d) Possession: In bailment, possession of goods changes. Change of possession can 
happen by physical delivery or by any action which has the effect of placing the 
goods in the possession of bailee. The change of possession does not lead to change 
of ownership. In bailment, bailor continues to be the owner of goods. Where a 
person is in custody without possession he does not become a bailee.   
 For example, servant of a master who is in custody of goods of the master does not 
become a bailee. 
 Similarly, depositing ornaments in a bank locker is not bailment, because ornaments 
are kept in a locker whose key are still with the owner and not with the bank. The 
ornaments are in possession of the owner though kept in a locker at the bank. 
© The Institute of Chartered Accountants of India
  
 
BUSINESS LAWS  
 2.178 
(e) Return of goods: Bailee is obliged to return the goods physically to the bailor. The 
goods should be returned in the same form as given or may be altered as per bailor’s 
direction. It should be noted that exchange of goods should not be allowed. The 
bailee cannot deliver some other goods, even not those of higher value.  
 Deposit of money in a bank is not bailment since the money returned by the bank 
would not be identical currency notes. 
Types of bailment 
1.  On the basis of benefit, bailment can be classified into three types: 
a.  For the exclusive benefit of bailor:  
Example 5: The delivery of some valuables to a neighbour for safe custody, without 
charge. 
b.  For the exclusive benefit of bailee:  
Example 6: The lending of a bicycle to a friend for his use, without charge. 
c.  For mutual benefit of bailor and bailee:  
Example 7: Giving of a watch for repair. 
2.  On the basis of reward, bailment can be classified into two types: 
a. 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. 
b. Non-Gratuitous Bailment: Non gratuitous bailment means where both the parties 
get some benefit i.e. bailment for the benefit of both bailor & bailee 
8.2 DUTIES OF A BAILOR 
Duties of Bailor: The duties of bailor are spelt out in a number of Sections [Section 150, 
158, 159, 164].  These are categorized under the following headings: 
 
Duties of 
Bailor
• Disclose known facts
• Bear necessary expenses
• Indemnify bailee
• Bound to accept the goods
© The Institute of Chartered Accountants of India
 
 
    
 2.179 
THE INDIAN CONTRACT ACT, 1872 
These are enumerated hereunder: 
(i) Bailor’s duty to disclose faults in goods bailed [Section 150]:  
a. In case of gratuitous bailment: The bailor is bound to disclose to the bailee 
faults in the goods bailed, of which the bailor is aware, and which materially 
interfere with the use of them, or expose the bailee to extraordinary risks; and 
if he does not make such disclosure, he is responsible for damage arising to 
the bailee directly from such faults.  
Example 8: A lends a horse, which he knows to be vicious, to B. He does not 
disclose the fact that the horse is vicious. The horse runs away. B is thrown 
and injured. A is responsible to B for damage sustained.  
b. In case of non- gratuitous bailment: If the goods are bailed for hire, the 
bailor is responsible for such damage, whether he was or was not aware of the 
existence of such faults in the goods bailed. 
Example 9: A hires a carriage of B. The carriage is unsafe, though B is not 
aware of it, and A is injured. B is responsible to A for the injury.
 In Hyman & Wife v. Nye & Sons (1881), A hired from B a carriage along with a 
pair of horses and a driver for a specific journey. During the journey a bolt in 
the under-part of the carriage broke away. As a result of this, the carriage 
became upset and A was injured. It was held that B was liable to pay damages 
to A for the injury sustained by him. The court observed that it was the bailor’s 
duty to supply a carriage fit for the purpose for which it was hired. 
 Sometimes, the goods bailed are of dangerous nature (e.g., explosives). In 
such cases it is the duty of the bailor to disclose the nature of goods. [Great 
Northern Ry’ case (1932)] 
(ii) Duty to pay necessary expenses [Section 158]:  
a. In case of Gratuitous bailment: Where, by the conditions of the bailment, the 
goods are to be kept or to be carried, or to have work done upon them by the 
bailee for the bailor, and the bailee is to receive no remuneration (gratuitous 
bailment), the bailor shall repay to the bailee the necessary expenses incurred by 
him and any extraordinary expenses incurred by him for the purpose of the 
bailment.  
b. In case of non-gratuitous bailment the bailor is liable to pay the 
extraordinary expenses incurred by the bailee. 
Example 10: A hired a taxi from B for the purpose of going to Gurgaon from Noida. 
During the journey, a major defect occurred in the engine. A had to pay 
`
 5000 as 
© The Institute of Chartered Accountants of India
Page 5


  
 
BUSINESS LAWS  
 2.176 
 
 
 
 
LEARNING OUTCOMES 
UNIT–8: BAILMENT AND PLEDGE
 
 
 
After studying this unit, you would be able to understand: 
?
The general principles underlying contracts of bailment and pledge. 
?
Duties and rights of the parties to the contracts. 
 
 
 
 
 
8.1 WHAT IS BAILMENT? 
The word “Bailment” has been derived from the French word “ballier” which means “to 
deliver”. Bailment etymologically means ‘handing over’ or ‘change of possession’.  
As per Section 148 of the Act, bailment is the delivery of goods by one person to another for 
some purpose, upon a contract, that the goods shall, when the purpose is accomplished, be 
returned or otherwise disposed of according to the directions of the person delivering them.   
Bailment and Pledge
Bailment 
Duties 
and 
Rights of 
Bailor
Duties 
and 
Rights of 
Bailee
Finder of 
Goods
General lien 
and 
particular 
lien
Pledge
Pawnee 
Rights 
Pawnor 
Rights
Pledge by 
Mercantile 
Agent
Distinction 
between 
bailment and 
pledge
UNIT OVERVIEW
© The Institute of Chartered Accountants of India
 
 
    
 2.177 
THE INDIAN CONTRACT ACT, 1872 
Parties to bailment:  
(a) Bailor: The person delivering the goods. 
(b) Bailee: The person to whom the goods are delivered.  
Example 1: Where ‘X’ delivers his car for repair to ‘Y’, ‘X’ is the bailor and ‘Y’ is the bailee. 
Example 2: X delivers a piece of cloth to Y, a tailor, to be stitched into a suit. It is contract 
for bailment. 
Example 3: Goods given to a friend for his own use, without any charge. 
Example 4: X delivers goods to blue dart for carriage. 
Essential Elements: 
The essential elements of a contract of bailment are— 
(a) Contract: Bailment is based upon a contract.  The contract may be express or 
implied. No consideration is necessary to create a valid contract of bailment. 
(b) Delivery of goods: It involves the delivery of goods from one person to another for 
some purposes. Bailment is only for moveable goods and never for immovable goods 
or money. The delivery of the possession of goods is of the following kinds: 
i. Actual Delivery: When goods are physically handed over to the bailee by the 
bailor. Eg: delivery of a car for repair to workshop 
ii. Constructive Delivery: Where delivery is made by doing anything that has 
the effect of putting goods in the possession of the bailee or of any person 
authorized to hold them on his behalf. Eg: Delivery of the key of car to a 
workshop dealer for repair of the car. 
(c) Purpose: The goods are delivered for some purpose. The purpose may be express or 
implied.  
(d) Possession: In bailment, possession of goods changes. Change of possession can 
happen by physical delivery or by any action which has the effect of placing the 
goods in the possession of bailee. The change of possession does not lead to change 
of ownership. In bailment, bailor continues to be the owner of goods. Where a 
person is in custody without possession he does not become a bailee.   
 For example, servant of a master who is in custody of goods of the master does not 
become a bailee. 
 Similarly, depositing ornaments in a bank locker is not bailment, because ornaments 
are kept in a locker whose key are still with the owner and not with the bank. The 
ornaments are in possession of the owner though kept in a locker at the bank. 
© The Institute of Chartered Accountants of India
  
 
BUSINESS LAWS  
 2.178 
(e) Return of goods: Bailee is obliged to return the goods physically to the bailor. The 
goods should be returned in the same form as given or may be altered as per bailor’s 
direction. It should be noted that exchange of goods should not be allowed. The 
bailee cannot deliver some other goods, even not those of higher value.  
 Deposit of money in a bank is not bailment since the money returned by the bank 
would not be identical currency notes. 
Types of bailment 
1.  On the basis of benefit, bailment can be classified into three types: 
a.  For the exclusive benefit of bailor:  
Example 5: The delivery of some valuables to a neighbour for safe custody, without 
charge. 
b.  For the exclusive benefit of bailee:  
Example 6: The lending of a bicycle to a friend for his use, without charge. 
c.  For mutual benefit of bailor and bailee:  
Example 7: Giving of a watch for repair. 
2.  On the basis of reward, bailment can be classified into two types: 
a. 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. 
b. Non-Gratuitous Bailment: Non gratuitous bailment means where both the parties 
get some benefit i.e. bailment for the benefit of both bailor & bailee 
8.2 DUTIES OF A BAILOR 
Duties of Bailor: The duties of bailor are spelt out in a number of Sections [Section 150, 
158, 159, 164].  These are categorized under the following headings: 
 
Duties of 
Bailor
• Disclose known facts
• Bear necessary expenses
• Indemnify bailee
• Bound to accept the goods
© The Institute of Chartered Accountants of India
 
 
    
 2.179 
THE INDIAN CONTRACT ACT, 1872 
These are enumerated hereunder: 
(i) Bailor’s duty to disclose faults in goods bailed [Section 150]:  
a. In case of gratuitous bailment: The bailor is bound to disclose to the bailee 
faults in the goods bailed, of which the bailor is aware, and which materially 
interfere with the use of them, or expose the bailee to extraordinary risks; and 
if he does not make such disclosure, he is responsible for damage arising to 
the bailee directly from such faults.  
Example 8: A lends a horse, which he knows to be vicious, to B. He does not 
disclose the fact that the horse is vicious. The horse runs away. B is thrown 
and injured. A is responsible to B for damage sustained.  
b. In case of non- gratuitous bailment: If the goods are bailed for hire, the 
bailor is responsible for such damage, whether he was or was not aware of the 
existence of such faults in the goods bailed. 
Example 9: A hires a carriage of B. The carriage is unsafe, though B is not 
aware of it, and A is injured. B is responsible to A for the injury.
 In Hyman & Wife v. Nye & Sons (1881), A hired from B a carriage along with a 
pair of horses and a driver for a specific journey. During the journey a bolt in 
the under-part of the carriage broke away. As a result of this, the carriage 
became upset and A was injured. It was held that B was liable to pay damages 
to A for the injury sustained by him. The court observed that it was the bailor’s 
duty to supply a carriage fit for the purpose for which it was hired. 
 Sometimes, the goods bailed are of dangerous nature (e.g., explosives). In 
such cases it is the duty of the bailor to disclose the nature of goods. [Great 
Northern Ry’ case (1932)] 
(ii) Duty to pay necessary expenses [Section 158]:  
a. In case of Gratuitous bailment: Where, by the conditions of the bailment, the 
goods are to be kept or to be carried, or to have work done upon them by the 
bailee for the bailor, and the bailee is to receive no remuneration (gratuitous 
bailment), the bailor shall repay to the bailee the necessary expenses incurred by 
him and any extraordinary expenses incurred by him for the purpose of the 
bailment.  
b. In case of non-gratuitous bailment the bailor is liable to pay the 
extraordinary expenses incurred by the bailee. 
Example 10: A hired a taxi from B for the purpose of going to Gurgaon from Noida. 
During the journey, a major defect occurred in the engine. A had to pay 
`
 5000 as 
© The Institute of Chartered Accountants of India
  
 
BUSINESS LAWS  
 2.180 
repair charges. These are the extraordinary expenses and it is the bailor’s duty to 
bear such expenses. However, the usual and ordinary expenses for petrol, toll tax etc. 
are to be borne by the bailee itself.
(iii) Duty to indemnify the Bailee for premature termination [Section 159]: The bailor 
must compensate the bailee for the loss or damage suffered by the bailee that is in 
excess of the benefit received, where he had lent the goods gratuitously and decides 
to terminate the bailment before the expiry of the period of bailment. 
(iv)  Bailor’s responsibility to bailee [Section 164]: The bailor is responsible to the 
bailee for the following: 
a. Indemnify for any loss which the bailee may sustain by reason that the bailor 
was not entitled to make the bailment, or to receive back the goods or to give 
directions, respecting them (defective title in goods).  
b. 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.  
Example 11: X delivered his car to S for five days for safe keeping. However, X 
did not take back the car for one month. In this case, S can claim the 
necessary expenses incurred by him for the custody of the car. 
8.3 DUTIES OF A BAILEE 
 
1. Take reasonable care of the goods (Section 151 & 152): In all cases of bailment, 
the bailee is bound to take as much care of the goods bailed to him as a man of 
ordinary prudence would, under similar circumstances, take care of his own goods of 
the same bulk, quality and value, as the goods bailed. 
Take 
reasonable 
care of goods 
bailed
No 
unauthorized 
use of goods
No mixing of 
bailor’s goods 
with his own
Return the 
goods
To return any 
extra profit 
accruing from 
goods bailed.
© The Institute of Chartered Accountants of India