by When a customer hires a safe deposit locker from the bank, the relation between the bank and the customer is lessor and lessee. The bank is the lessor (licensor) and the hirer of safe deposit locker is the lessee (licensee/tenant).
Bailor and Bailee
Bailment refers to delivery of goods by one person to another for some purpose under a condition that the goods to be returned to depositor when the purpose is accomplished or otherwise disposed of according to the directions of the person while delivering the goods (Sec 148 of contract act). The person delivering the goods is known as bailor and the person to whom goods are delivered is called bailee.
Ex.
- The articles, valuables, securities deposited in the safe deposit vault of the bank are also an example of bailment. In this case, the customer and banker relationship is bailor and bailee, besides their relationship as trustee and beneficiary. The bailor is still the rightful owner of the item though the item is in bailee’s possession. As a bailee, the bank has to take care of the goods bailed.
- A car parked in a parking area where parking charge is collected. The car owner is the bailor and the contractor who collected the charge is the bailee. As a bailee, the contractor has to take care of the car parked at his parking area.
- Relationship of Pledger and pledgee is also a type of bailment in which goods are delivered by one person to another as a security for payment of a debt or performance of a promise (Sec 172, Contract Act, 1872). For example, the borrower delivers the gold jewel to the bank as a security for the loan granted by the bank. In this case, the borrower who pledged the gold to the bank is the bailor (pledger) and the bank is the bailee (pledgee).
Trustee and Beneficiary
When a banker accepts items like securities or documents for safe custody or maintains escrow accounts of the customers, the relation between the banker and customer is a Trustee and the Beneficiary (Trustier). The bank is the Trustee and the customer is the beneficiary.
(Escrow is a separate type of bank account generally opened for various business deals like acquisition, transfer of shares and debentures of a company, where money deposited in banks will be released only under fulfillment of certain conditions of a contract).
Agent and Principal
When a bank collects cheques, bills and other instruments for customers, the relation between the bank and customer is that of Principal and Agent. The bank also makes regular payments of insurance premium rent etc. as per standing instruction received from the customer. In the above cases also the relation between the bank and the customer is of Principal and agent. The bank act as the agent and customer the principal.
Advisor and Client
When a customer invests in securities, the banker acts as an advisor. The advice can be given officially or unofficially. While giving advice the banker has to take maximum care and caution. Here, the banker is an Advisor, and the customer is a Client.
| Type of Transaction | Bank | Customer |
| Deposit in bank | Debtor | Creditor |
| Loan from bank | Creditor | Debtor |
| Safe Deposit Vault (SDV Locker) | Lessor | Lessee |
| Safe Custody | Bailee | Bailor |
| Issue of Draft | Debtor | Creditor |
| Payee of a Draft | Trustee | Beneficiary |
| Collection of Cheque | Agent | Principal |
| Pledge | Pledgee (Pawnee) | Pledger (Pawnor) |
| Mortgage | Mortgagee | Mortgagor |
| Hypothecation | Hypothecatee | Hypothecator |
| Sale/purchase of security on behalf of customer | Agent | Principal |
| Money deposited, but no instructions for its disposal | Trustee | Beneficiary |
| Article/Goods left by mistake by customer | Trustee | Beneficiary |
Relationship of Bailor and Bailee
When Customer deliver goods to bank for purpose of safekeeping under a condition that goods will be returned to depositor when purpose is completed. In this case, Customer becomes bailor and bank becomes bailee. The process is known as Bailment. Example of Bailment is; Articles, Securities and valuables kept in safe deposit locker. In this case, relationship between banker and customer is Bailee and Bailor.
