Page 107 - DMGT102_MERCANTILE_LAWS_I

Unit 8: Contract of Bailment and Pledge

2. Liability for breach of warranty as to title: The bailor is responsible to the bailee for any Notes
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 (s.164).

Example: A gives B’s car to C without B’s knowledge and permission. B sues C and
receives compensation. A, the bailor, is responsible to make good this loss to C, the bailee.
3. To bear expenses in case of gratuitous bailments: Regarding bailments under which bailee
is to receive no remuneration, s.158 provides that in the absence of a contract to the contrary,
the bailor must repay to the bailee all necessary expenses incurred by him for the purpose
of the bailment.
In case of non-gratuitous bailments, the bailor is held responsible to bear only extraordinary
expenses.

Example: A car is lent for a journey. The ordinary expenses like petrol, etc., shall be borne
by the bailee but in case the car goes out of order, the money spent in its repair will be regarded
as an extraordinary expenditure and borne by the bailor.

8.2.2 Duties of a Finder of Goods

Duties of a finder of goods are as follow:
1. To take care of the goods bailed (s.151): 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 of his own goods of the same bulk, quality and value as the
goods bailed.
In case, bailee has taken the amount of care as described above, he shall not be responsible,
in the absence of any special contract, for the loss, destruction or deterioration of the thing
bailed (s.152).

2. Not to make unauthorized use of goods (s.154): In case the bailee makes unauthorized use
of goods, i.e., uses them in a way not warranted by the terms of bailment, he is liable to
make compensation to the bailor for any damages arising to the goods from or during such
use of them.

Examples:

(i) A lends a car to B for his own driving only. B allows C, his wife, to drive the car. C
drives with care, but the car is damaged in an accident. A is liable to make compensation
to B for the damage done to the car.

(ii) A hires a car in Calcutta from B expressly to drive to Varanasi. A drives with due care,
but drives to Cuttack instead. The car meets with an accident and is damaged. B is liable
to make compensation to A for the damage to the car.
3. Not to mix bailor’s goods with his own (Ss. 155-157): If the bailee without the consent of
the bailor, mixes the goods of the bailor with his own goods and the goods can be separated
or divided, the bailee shall be bound to bear the expense of separation or division and any
damages arising from the mixture.

Example: A bails 100 bales of cotton marked with a particular mark to B.B., without A’s
consent, mixes the 100 bales with other bales of his own bearing a different mark. A is entitled to
have his 100 bales returned and B is bound to bear all expenses incurred in the separation of the
bales and any other incidental damage.

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