by BAILOR: A bailor is an individual who temporarily give up the possession but not ownership of a good or other property under a bailment. The bailor gives the possession of the good or property to another individual, known as the bailee.
BAILEE: A bailee is an individual who gains possession, but not ownership, of a good or other property. The bailee is also known as a custodian, is given with the possession of the good or property by another individual known as the bailor.
Bailment is a legal relationship between both parties and it should follow the essentials of bailment. Now, we are going to discuss the Rights of bailor and bailee and duties of bailor and bailee. In the contract of bailment, the good’s ownership remains with the bailor and only the possession is transferred to the Bailee. The delivery of goods may be actual or constructive. For example, if A gives his house keys to B, it amounts to the delivery of goods in the house. Here A and B are bailor and bailee.
Rights of Bailor and bailee under Bailment
There are various rights of bailor and bailee given under the Indian contract act. During the contract of bailment, the rights of the bailor and bailee perform a major role. They both can enjoy their legal rights.
Rights of Bailor
Right to claim compensation against unauthorized use
It comes under the right of the bailor to claim compensation from the bailee if he uses the bailed goods without any authorization. The bailor can sue him to get compensation.
Right to get compensation
If there is any loss or damages occurred to the bailed goods, due to the negligence of the bailee, the bailor has the right to get compensation for that loss.
Rights of bailor to get increase or profit
It is the right of the bailor to get an increase or profit made by bailed goods to the bailee. The bailor can sue the bailee if he refuses to give the same.
Right to demand the return of goods
It is the right of the bailor to demand the return of bailed goods in good condition after the achievement of the purpose or after the expiry of the bailment time period.
Right to terminate the contract
The bailor can terminate the contract if he found that the bailee has failed to perform his duty and he shall be competent to recover the losses that occurred due to Bailee.
Rights of bailee
Right to compensation
It is the right of bailee to get compensation for the loss or damage done to him by the act of bailor.
Right to terminate the contract
The bailee can also use his right to terminate the contract if he found that the contract is not fulfilling the terms and conditions decided by the parties while making the contract.
Right to get expenses
The bailor is bound to pay the expenses incurred by the bailee for the contract.
Right of lien
A lien is a legal right against the assets that are used as collateral to satisfy the debt and it also comes under the Rights of Unpaid Seller. If the bailor refuses to repay the expenses incurred by the bailee for the contract, it is the right of the bailee to retain the goods and securities in his possession until the bailor pays the expenses.
Duties of Bailor and Bailee
Duties of Bailor
Duty to disclose all faults
It is the duty of the bailor to disclose all the faults and defects which are known to him. If the bailor fails to do so, he will be responsible for the losses caused by goods to the bailee.
To pay extraordinary expenses
It is the duty of the bailor to pay the expenses incurred by the bailee for the contract.
To accept goods after expiry
It is the duty of the bailor to accept the good after the expiry of time or after the purpose accomplished for which those goods were given. If he refuses to take the good without any proper reasonable ground, he will be responsible for any loss to the goods.
Indemnify the bailee
The bailor has to indemnify the bailee for the loss incurred due to the defective title of bailed goods.
Pawnor and Pawnee
Key features of Pledge are:
- The property under pledge shall be delivered to the Pawnee.
- Such delivery shall be in the pursuance of the contract.
- This delivery shall be for the purpose of security.
- Also, delivery of articles shall be upon a condition to return.
Rights of Pawnee
Pawnee has the following rights:
- Pawnee has a right to retain the goods pledged until payment of debt, interest and any other expense incurred for maintenance of such goods. For example, X pledges his gold jewelry for some loan from a bank. In such a case bank has all the rights to retain the gold jewelry not only for adjustment of loan amount but also for payment of interest accrued on such loan amount.
- Pawnee has a right to file a suit for recovery of debt while retaining the goods pledged as security.
- He has a right to sue for the sale of goods pledged and the payment of money due to him.
- Pawnee has a right to seek reimbursement of extraordinary expenses incurred. However, he cannot retain goods with him in such a case.
- Pawnee has a right to sell the goods after giving reasonable notice and time to pawnor. Pawnee can sue pawnor for deficiency, if any, after the sale of such goods. Also, if there is any surplus on sale of goods pawnee must return it to pawnor.
Rights of Pawnor
In case pawnee makes any unauthorized sale of goods pledged without giving proper notice and time to pawnor than pawnor has following rights:
- Right to file a suit for redemption of goods by making payment of debt.
- Right to claim for damages and loss on the ground of conversion.
