Introduction. Bailment and pledge are two important concepts under the Indian Contract Act, 1872. Bailment involves the delivery of goods for some purpose, while pledge (or pawn) is a special type of bailment where goods are delivered as security for payment of a debt. To ensure fairness, the Act lays down detailed rights and duties for both the bailor and bailee (in bailment) and for the pawnor and pawnee (in pledge).
Rights and Duties of the Bailor
Duties of the Bailor
- Duty to disclose faults (Section 150): Bailor must reveal defects in the goods. If failure causes loss, bailor is liable.
- Duty to bear necessary expenses (Section 158): In non-gratuitous bailment, bailor must repay extraordinary expenses.
- Duty to indemnify (Section 159): If bailor terminates gratuitous bailment before time, he must compensate the bailee for loss.
- Duty to receive goods back: Bailor must accept goods once bailment ends.
- Duty to compensate for defective title (Section 164): If bailee suffers due to defective title, bailor is liable.
Rights of the Bailor
- Right to demand return: Bailor may demand goods after purpose is achieved or time expires.
- Right to terminate bailment: If bailee misuses goods, bailor may end the bailment.
- Right to sue for damages: Bailor may claim compensation for unauthorised use or negligence.
- Right to increase safety obligations: Bailor may impose reasonable conditions for safekeeping.
Rights and Duties of the Bailee
Duties of the Bailee
- Duty of reasonable care (Section 151–152): Bailee must take care of goods like a prudent person.
- Duty to use goods only for agreed purpose: Unauthorised use makes bailee liable.
- Duty not to mix goods (Section 155–157): Mixing with or without consent has legal consequences.
- Duty to return goods (Section 160): Goods must be returned after bailment ends.
- Duty to return accretions (Section 163): Any increase (e.g., offspring) must be returned.
Rights of the Bailee
- Right to claim reimbursement: Bailee may recover extraordinary expenses.
- Right to lien (Section 170–171): Bailee may retain goods until dues are paid.
- Right to compensation: Bailee may sue for loss caused by bailor’s defects.
- Right to recover damages for premature termination: Applies in gratuitous bailments.
Pledge: Rights and Duties of Pawnor and Pawnee
Duties of the Pawnor
- Duty to disclose defects: Pawnor must reveal defects in goods pledged.
- Duty to repay debt: Pawnor must pay the loan and interest to redeem goods.
- Duty to compensate Pawnee: For extraordinary expenses spent on preservation.
Rights of the Pawnor
- Right of redemption (Section 177): Pawnor may redeem goods even after due date if Pawnee has not sold them.
- Right to claim damages: If Pawnee wrongfully retains or sells goods.
Duties of the Pawnee
- Duty of reasonable care: Same as bailee — must protect goods.
- Duty not to misuse goods: Only hold as security, not for personal use.
- Duty to return goods & accretions: Must return goods and any increase.
Rights of the Pawnee
- Right to retain goods (Section 173–174): Pawnee may retain goods until debt, interest, and expenses are paid.
- Right to recover extraordinary expenses (Section 175): Can recover money spent on preservation.
- Right to sell goods (Section 176): After reasonable notice, Pawnee may sell pledged goods if Pawnor defaults.
Extended Explanation
The law of bailment and pledge ensures smooth commercial and personal transactions involving temporary transfer of goods. Duties protect the owner (bailor/pawnor) from misuse, while rights safeguard the interests of the bailee/pawnee who expends effort or money. The concept of lien, right of redemption, and obligation to disclose defects strengthens fairness in these relationships.
Conclusion: Bailment and pledge impose balanced rights and duties on both parties. While the bailor and pawnor must disclose defects and compensate expenses, the bailee and pawnee must take care of goods and return them properly. These principles ensure reliability, fairness, and legal clarity in transactions involving movable goods.