Page 55 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes From the definition of bailment, the following characteristics should be noted:
1. Delivery of goods: The essence of bailment is delivery of goods by one person to another
for some temporary purpose. Delivery of goods may, however, be actual or constructive.
Actual delivery may be made by handing over goods to the bailee. Constructive delivery
may be made by doing something which has the effect of putting the goods in the possession
of the intended bailee or any person authorised to hold them on his behalf (s.149).

Examples:
(a) A, holding goods on behalf of B, agrees to hold them on behalf of C, there is a
constructive transfer of possession from C to A.
(b) A an owner of a scooter, sells it to B, who leaves the scooter in the possession of A.
A becomes a bailee, although originally he was the owner.

It needs to be noted that bailment is concerned with goods only. Current money, i.e., the
legal tender (but not old and rare coins) is not goods. A ‘deposit of money’, therefore, is
not bailment.

2. Bailment is based on a contract: In bailment, the delivery of goods is upon a contract that
when the purpose is accomplished, they shall be returned to the bailor. For example,
where a watch is delivered to a watch repairer for repair, it is agreed that it will be
returned, after repair, on the receipt of the agreed or reasonable charges.

Though bailment is usually based on a contract, there are certain exceptions, e.g., the case
of a finder of lost goods. The finder of lost goods is treated as a bailee of the lost article,
though obviously, there is no contract between the finder and the real owner (s.168).

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.

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Caution 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.

3.1.2 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.

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