Bailee: Definition, Relationship to Bailor and Bailment, Examples
According to Section 148 of the Indian Contract Act of 1872, "Bailment" is the term used legally to describe the distribution of goods by one person to another for a specific purpose, with the understanding that the goods must be returned or otherwise disposed of in accordance with the instructions of the person who delivered them after the goal has been accomplished. The individual who distributes the goods is referred to as a "bailor," and the one who receives them as a "bailee."
In this article, we will explore the terms "Bailment", "Bailee" and "Bailor" in depth.
What is a Bailee?
A bailee is a person or organization that accepts items or cash for a temporary period of time. The Bailee receives possession of the property from the bailor but not ownership A bailee has received possession of a vehicle, for instance, when the bailor valet parks his or her vehicle. The property is not available for use by the Bailee, and the bailor has the right to request its return at any moment. A charge of robbery or another type of theft offense may be brought against the Bailee if they abuse the property, use it in a way that the bailor did not intend, or fail to return it. A few other examples can be a bailee may be designated to monitor a portfolio of investments for a specific amount of time or to oversee the management of a rental property while the owner is far away.
The Bailee is not entitled to use the assets at any point for personal advantage and is responsible for ensuring that they are kept secure until the owner can resume management. The Bailee shall at all times take reasonable care.
Relationship to Bailor and Bailment
Definition of Bailor: A bailor is a person who renounces ownership of commodities or property in exchange for a temporary transfer of possession. The bailor gives another individual, known as the Bailee, temporary custody of the commodities or property. According to a contract known as a bailment in law, a bailor gives the bailee possession of a good but not ownership as part of a bailment. However, the bailor is still the legitimate owner while the good is in Bailee's care.
Definition of Bailment: "The delivery of goods by one person to another for some purpose, upon a contract that they shall, upon the accomplishment of the purpose, be returned or otherwise disposed of according to the directions of the person delivering them," is how the Indian Contract Act, 1872 (Section 148) defines Bailment. The Bailment may be required for a number of reasons, including storage, delivery, maintenance, or lending.
Rights of the Bailee
Several rights of the Bailee are outlined in the Indian Contract Act of 1872, including the following:
Possession Rights: The property that is the subject of the Bailment is possessed by the Bailee. This authority, however, is constrained by the objectives for which the Bailee was given the goods. Only the precise purpose for which they were supplied may be used by the Bailee; any other use requires the bailor's permission.
Right to Expense Reimbursement: The Bailee is entitled to receive reimbursement for any expenses spent throughout the usual course of the Bailment. The bailor must reimburse the Bailee for any costs incurred, for instance, if the Bailee needs to pay for the preservation or upkeep of the items.
Right to Sue for Compensation for Damages: The Bailee has the right to sue for compensation if the goods are damaged as a result of the bailor's or a third party's negligence. Although the Bailee is required to treat the goods with reasonable care, the Bailee is not responsible for any damages that may arise even after taking reasonable precautions.
Right to Lien: The Bailee has the power to place a lien on the goods, which entitles him or her to keep them in his or her possession until the bailor pays the fees or compensation owed to him or her for the services given in connection with the commodities. However, the right of lien cannot be used if the Bailee gained the items by theft, fraud, or any other criminal methods; rather, it may only be used if the Bailee holds possession of the commodities legally.
Right to Compensation for Bailor's Fault: The Bailee has the right to seek reimbursement from the bailor for any losses sustained as a result of the bailor failing to reveal any flaws in the products that would influence Bailee's possession or use of the items.
Responsibilities of Bailee
The additional responsibilities placed on the Bailee in a contract of Bailment by the Indian Contract Act of 1872 are as follows:
Duty to act with Reasonable Care: The Bailee has a duty to exercise reasonable care with regard to the property that has been entrusted to him or her. In order to protect the commodities, the Bailee must take the same amount of care as a prudent person would take in a similar situation. In addition to using the goods strictly for the precise purpose for which they were given over, the Bailee is required to take all reasonable steps to prevent any loss or damage to the items.
Duty to Return the Goods: The Bailee has a responsibility to return the goods to the bailor after the intended purpose of the Bailment has been met, or to dispose of them in line with the bailor's instructions.With the bailor's approval, the Bailee can keep the goods after the duration of the Bailment or use them in any other way.
Duty to Render Accounts: The Bailee is responsible for providing the bailor with accurate accounts of all transactions pertaining to the Bailment, as well as any information requested by the bailor regarding the state and condition of the goods. In all business involving the Bailment, the Bailee is required to keep accurate records and act honestly.
Duty not to Mix commodities: If the Bailee has been given certain commodities that must be kept apart from his or her own goods, the Bailee has an obligation not to mix those specified goods with his or her own goods. Confusion and difficulty locating and returning the commodities to the bailor may occur from mixing up the goods.
Obligation to Avoid Unauthorized Use: The subject of the Bailment, the goods, are not to be used in any way that is not authorized by the Bailor. In order to avoid violating the bailor's rights, the Bailee must only use the commodities for the purpose for which they were given to them and cannot use them for any other reason.
Duty to Make Reimbursement for Losses: The Bailee is responsible for making restitution to the bailor for any losses or damages the goods sustain as a result of their negligence. In order to avoid any loss or damage to the goods, Bailee must use due diligence and take the required safeguards.
Refusal to Question Bailor's Title: The Bailee is not permitted to contest the goods' ownership by the bailor. The bailor's ownership rights in the goods must be acknowledged by the Bailee, who is also forbidden from asserting any claim to ownership rights in the products that are in conflict with the bailor's title.
Here are some examples of the contract of Bailment and who's the Bailee and Bailor. These examples will make a more clear understanding of the term's bailor and Bailee.
We come into the idea of a bailee in the complicated realm of duty and trust. A bailee is a person who temporarily manages another's property. They take on the duties of temporary custodians, guarding the property and returning it to its rightful owner. It's similar to when you lend a buddy a book or store anything of value. The value of responsibility and trust is demonstrated through these exchanges.