Page 106 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes 3. Return of goods in specie: 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: 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.

Note In United Breweries Ltd v/s State of Andhra Pradesh (1997), 3 SCC 530: 1997 AIR SCW
1414, the appellants sold beer in bottles to the customers. The customers were required to
pay cost of beer and to deposit a sum for bottle which was refundable. The customers were
advised to collect empty bottles from the consumers and return them to the appellants and
get back their deposit for the bottles. Supreme Court held that there was no sale of bottles
but in clear terms it was bailment.

8.1.2 Kinds of Bailments

Bailments may be, classified into six kinds as follows:
1. Deposit: Delivery of goods by one person to another for the use of the former, i.e., bailor;
2. Commodatum: Goods lent to a friend gratis to be used by him;

3. Hire: Goods lent to the bailee for hire, i.e., in return for payment of money;
4. Pawn or Pledge: Deposit of goods with another by way of security for money borrowed;
5. Delivery of goods for being transported, or something to be done about them, by the bailee
for reward.

6. Delivery of goods as in (5) above, but without reward.

8.2 Duties and Rights of Bailor and Finder of Goods

After understanding term bailment, let us start with duties and right of parties involved in
bailment. These parties are bailor and bailee. Bailee is also termed as finder of goods.

8.2.1 Duties of a Bailor

1. To disclose know faults in the goods (s.150): 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. If he does not make such
disclosure, he is responsible for the damage arising to the bailee directly from such faults.
If the goods are bailed for hire or reward, the bailor is responsible for such damage whether
he was or was not aware of the existence of such faults in goods bailed.

Example:
(i) 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.
(ii) A hires a carriage of B. The carriage is unsafe though B is not aware of it. A is injured.
B is responsible to A for injury.

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