Page 108 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes But in case goods are mixed in such a manner that it is impossible to separate the goods
bailed from the other goods and deliver them back, the bailor is entitled to be compensated
by the bailee for the loss of the goods.

Example: A bails a barrel of fl our worth ` 450 to B. B without A’s consent mixes the fl our

with flour of his own, worth only ` 250 a barrel. B must compensate A for the loss of his fl our.
4. To return the goods bailed without demand (s.160): It is the duty of the bailee to return, or
deliver according to the bailor’s directions, the goods bailed, without demand, as soon as
the time for which they were bailed has expired, or the purpose, for which they were bailed
has been accomplished.
If bailee fails to return the goods at the proper time, he is responsible to the bailor for any
loss, destruction or deterioration of the goods from that time (s.161).

5. To return any accretion to the goods bailed (s.163): In the absence of any contract to the
contrary, the bailee is bound to deliver to the bailor, or according to his directions, any
increase or profit which may have accrued from the goods bailed.

Example: A leaves a cow in the custody of B to be taken care of. The cow gives birth to
a calf. B is bound to deliver the cow as well as the calf to A.

6. Not to question the title of bailor (s.167): In cases of conflicting claims as to title to the
goods are to be decided by the court and unless the court grants an injunction against the
delivery of goods to the bailor, the bailee is under duty to return it to bailor at proper time
or within the reasonable time.

Task A customer entrusts certain important documents for safe custody to his bank. The
bank keeps the documents in a wooden box. Later it is found that the documents were
destroyed by white ants. What is the bank’s liability to the customer? [Hint: Ss. 151-152.]

8.2.3 Rights of a Bailee

Following are the rights of a Bailee:
1. The duties of the bailor are, in fact, if looked from the point of view of bailee, the bailee’s
rights. Thus, a bailee can sue bailor for (a) claiming compensation for damages resulting
from non-disclosure of faults in the goods; (b) for breach of warranty as to the title and
the damage resulting therefrom; and (c) for extraordinary expenses. Thus in the case of
wrongful deprivation the bailee has a right to use the same remedies which the owner
might have used in the like case.
2. Another right of bailee is the right of lien (Ss. 170-171): Lien is a right in one person to retain
that which is in his possession, belonging to another, until some debt or claim is paid, Lien,
thus presupposes two things; (i) The person vested with the right of lien is in possession
of the goods or securities in the ordinary course of business. (ii) The owner (bailor in this
case) has a lawful debt due or obligation to discharge to the person in possession of the
said goods or securities (bailee in this case). Since, lien is available only until the debt or

claim is satisfied, once the debt is satisfied or obligation discharged, the right of lien is
extinguished. The property so retained has, then, to be returned to or kept at the disposal of
the owner (i.e., bailor). Lien may be of two types: (i) General Lien and (ii) Particular Lien.

102 LOVELY PROFESSIONAL UNIVERSITY