In a contract of bailment, once the goods are delivered, the Bailee (the person receiving the goods) assumes specific legal obligations and acquires certain rights under the Indian Contract Act, 1872.
Duties of the Bailee
The duties of a bailee are intended to protect the bailor’s property while it is out of their possession.
1. Duty to Take Reasonable Care (Section 151 & 152)
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.
Case Law: Blount v. The War Office (1953). The court held that the standard of care required is that of a "reasonable man." If the bailee fails to provide adequate security and the goods are stolen, they are liable for negligence.
2. Duty Not to Make Unauthorized Use (Section 154)
The bailee must use the goods only for the purpose for which they were bailed. If the bailee uses the goods in a manner not authorized by the contract, they are liable for any damage arising from such use, even if they were not negligent.
Example: If you borrow a horse for riding but use it for pulling a heavy carriage, you are liable if the horse is injured.
3. Duty Not to Mix Goods (Section 155–157)
The bailee must keep the bailor’s goods separate from their own.
If mixed with consent, the parties have a proportional interest.
If mixed without consent and the goods can be separated, the bailee bears the cost of separation.
If they cannot be separated, the bailee must compensate the bailor for the loss.
4. Duty to Return the Goods (Section 160 & 161)
It is the bailee’s duty to return or deliver the goods according to the bailor’s directions without demand, as soon as the time for which they were bailed has expired or the purpose has been accomplished.
Case Law: Shaw & Co. v. Symmons & Sons (1917). The bailee failed to return books to the bailor after the work was done. A fire broke out and destroyed the books. The bailee was held liable for the loss because they were in "default" for not returning the goods on time.
5. Duty to Return Increase/Profit (Section 163)
In the absence of any agreement to the contrary, the bailee is bound to deliver to the bailor any increase or profit which may have accrued from the goods bailed.
Example: If a cow is bailed and gives birth to a calf, the bailee must return both the cow and the calf.
Rights of the Bailee
While the bailee has many responsibilities, the law also provides them with protections to ensure they are not unfairly burdened.
1. Right to Deliver Goods to One of Several Joint Owners (Section 165)
If several joint owners bail goods, the bailee may deliver them back to, or according to the directions of, one joint owner without the consent of all, in the absence of an agreement to the contrary.
2. Right to Indemnity (Section 164)
The bailee has a right to be compensated by the bailor for any loss which the bailee may sustain because the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions respecting them.
3. Right of Particular Lien (Section 170)
If the bailee has rendered any service involving the exercise of labor or skill regarding the goods bailed, they have a right to retain such goods until they receive due remuneration for their services.
Case Law: Eduljee v. Cafe John Bros (1943). The court clarified that the right of lien exists only as long as the bailee has continuous possession. If the bailee voluntarily parts with the goods, the lien is lost.
4. Right to Sue a Third Party (Section 180)
If a third person wrongfully deprives the bailee of the use or possession of the goods, or does them any injury, the bailee is entitled to use such remedies as the owner might have used in the like case.
Rights and Duties in brief
| Duties | Rights |
| Take reasonable care of goods. | Receive compensation for expenses. |
| Use goods only for authorized purpose. | Exercise a Lien for unpaid services. |
| Keep bailor's goods separate. | Sue third parties for interference. |
| Return the goods on time. | Return goods to any one joint owner. |
| Return any profits/increase. | Be indemnified for the bailor's lack of title. |
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