Page 58 - DMGT407Corporate and Business Laws

Unit 3: Contracts of Bailment and Agency

2. Another right of bailee is the right of lien (Ss. 170-171): Lien is a right in one person to Notes
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.
General Lien means the right to retain goods not only for demands arising out of the
goods retained but for a general balance of account in favour of certain persons. Particular
Lien, on the other hand, means the right to retain the particular goods in respect of which
the claim is due. Bailee’s right of lien is particular in certain cases whereas general in other
cases. Particular Lien is conferred upon a bailee by virtue of the provisions of s. 170. It
reads: “Where the bailee has, in accordance with the purpose of the bailment, rendered
any service involving the exercise of labour or skill in respect of the goods bailed, he has,
in the absence of a contract to the contrary, a right to retain such goods until he receives
due remuneration for the service he has rendered in respect of them”.

Examples:

(a) A delivers a rough diamond to B, a jeweller, to be cut and polished, which is
accordingly done. B is entitled to retain the stone till he is paid for the services he has
rendered.

(b) A gives cloth to B, a tailor, to make into a coat. B promises A to deliver the coat as
soon as it is finished and to give a three months’ credit for the price. B is not entitled
to retain the coat until he is paid.
The provisions of s.171 empower certain categories of bailees to exercise a general lien.
These include: bankers, factors, wharfingers, attorneys of High Court and policy brokers.
These bailees can retain all goods of the bailor so long as anything is due to them, unless
there is a contract to the contrary.

3. Right against wrongful deprivation of or injury to goods (Ss.180-181). If a third person
wrongfully deprives the bailee of the use or possession of the goods bailed, or causes
them any injury, the bailee is entitled to use such remedies as the owner might have used
in the like case if no bailment had been made and either the bailor or the bailee may bring
a suit against the third person for such deprivation or injury. Now, whatever is obtained
by way of relief or compensation in such a suit shall, as between the bailor and the bailee,
be dealt with according to their respective interest (s.181).

Rights of a Bailor

1. The bailor can enforce, by suit, all duties or liabilities of the bailee.
2. In case of gratuitous bailment (i.e., bailment without reward), the bailor can demand their
return whenever he pleases, even though he lent it for a specified time or purpose. But if,
on the faith of such bailment, the borrower has acted in such a manner that the return of
the thing before the specified time would cause him (i.e., the bailee) loss exceeding the
benefit derived by him from the bailment, the bailor must indemnify the borrower for the
loss if he compels an immediate return (s.159).

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