Business Law

Rights Of Bailee Under Provisions Of Indian Contract Act

Rights of Bailee – As a matter of fact, the duties of the bailor are the rights of bailee. The bailee can, by law, enforce the bailor to honour his commitment in the case of a default. Under the provisions of the Indian Contract Act, the rights of the bailee are as under:

Rights of Bailee

(1) Right to compensation for loss on account of fault in goods bailed – According to Section 150, the bailee has the right to recover such loss from the bailor that he has incurred because of some fault or faults in the goods bailed that was not disclosed to the bailee at the time of bailment.

(2) Right to receive necessary expenses – If the bailee has to keep something in his custody, to transport it or to do any repair on it, and does not receive any compensation for the expense incurred by him on such acts from anybody, he has the right to claim such expense from the bailor for acts done for the maintenance of goods under bailment. For example, if A leaves his horse with B, B is entitled to receive any expense he might have to incur on feeding the horse. The bailee is also entitled to receive extraordinary expenses that he might incur on the maintenance of goods. For ple, if A’s horse falls sick and B has to incur extraordinary expense on its treatment, he is entitled to recover such expenses from A.

(3) Right against premature termination of bailment – According to Section 159, when the goods are lent gratuitously, if the bailor demands the return of goods before the expiry of the period of bailment, and the bailee suffers a loss in such return that exceeds the benefit actually derived by him from the use of such goods, the bailee has the right to claim such expense from the bailor. The bailee has this right only when he has acted as per the directions of the bailor for the duration of bailment, and the loss to him by premature termination is greater than the profit he has made during the period the goods were in his custody.

(4) Right to compensation in case of defective title – According to Section 164, if the title of the bailor on the goods under bailment is defective, i.e., the bailor does not have the right to keep the goods in bailment, to receive them back or to give any directions of any kind about the goods, and bailee is put to a loss on this account, the bailee has the right to damages from the bailor.

(5) Delivery of goods to one of the joint owners – According to Section 165, if the goods have bailed by several joint owners, the bailee may deliver them back to, or according to the directions been of, one joint owner without the consent of all, if there is no agreement to the contrary.

(6) Right to inter-plead – Under the provisions of Sections 166 and 167, if the title of the bailor to the goods is defective, and the bailee, in good faith, delivers them back to, or according to the directions of, the bailor, the bailee is not responsible to the owner of goods for such delivery. If a person other than the bailor claims the goods bailed, the bailee may apply to the court to stop the delivery of goods to the bailor and to decide the title of goods.

(7) Right of particular lien – According to Section 170, where the legal charges of the bailee in respect of the goods bailed have not been paid, the bailee may retain the goods. The right of the bailee to retain the goods is known as ‘particular lien’. It is important to point out here that the bailee can only retain the goods-he cannot sell the goods. For example, A gives a diamond to B to be cut, and B cuts it as per the directions, B can retain the diamond till such time that he is paid for his labour, but he cannot sell the diamond to realise his changes.

(8) Right to general lien – According to Section 171, some specific types of bailees have the right the goods or property (which is in their possession) until all their claims are satisfied, even if the claims are not with respect to the goods or property being held under bailment. General lien is available only to banks, factors, wharfingers, attorneys of the High Court and brokers of insurance policies.

(9) Right against third parties – If a third person wrongfully deprives the bailee of the use or ion of the goods held under bailment, the bailee has the right to bring an action against that respect of the goods bailed. The damages received from such person. The bailor can also bring a suit in suit are shared by the bailee and the bailor according to their rights.

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