Page 56 - DMGT407Corporate and Business Laws

Unit 3: Contracts of Bailment and Agency

3.1.3 Duties and Rights of Bailor and Bailee Notes

Duties of a Bailor
1. To disclose known 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.

Examples:
(a) 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) 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.
2. Liability for breach of warranty as to title: The bailor is responsible to the bailee 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 (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.
4. 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.
Duties of a Bailee

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 unauthorised use
of goods, i.e., uses them in a way not warranted by the terms of bailment, he is liable to

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