Bailment and Pledge under Indian Contract Act, 1872
📜 Bailment and Pledge under Indian Contract Act, 1872
1. Bailment
🔹 Definition (Section 148):
Bailment means the delivery of goods by one person to another for some purpose, under the condition that the goods will be returned or otherwise disposed of as per the owner’s instructions once the purpose is fulfilled.
Example: You give your car to a mechanic to repair it.
🔹 Key Elements:
Delivery of goods by one person (called Bailor) to another (called Bailee).
Goods must be movable property.
Purpose of bailment is for some service or safekeeping.
Goods are to be returned or disposed of as per the owner’s instructions.
Contractual relationship (express or implied).
🔹 Duties of Bailee:
Take reasonable care of goods.
Return or deliver goods as agreed.
Not use goods for own purpose unless allowed.
2. Pledge
🔹 Definition (Section 172):
Pledge is a special kind of bailment where goods are delivered as security for payment of a debt or performance of a promise.
Example: You give your gold jewelry to a pawnbroker as security for a loan.
🔹 Key Features of Pledge:
It is bailment plus security.
Goods are movable property.
Delivered to the pledgee (the person holding the pledge).
The pledgee has a right to retain the goods until the debt is paid.
If the debt is not paid, the pledgee may sell the goods to recover the amount.
3. Differences Between Bailment and Pledge
| Aspect | Bailment | Pledge |
|---|---|---|
| Definition | Delivery of goods for some purpose with return | Delivery of goods as security for debt |
| Purpose | Service, safekeeping, repair etc. | Security for loan or obligation |
| Right to retain goods | No right to retain beyond contract | Right to retain until debt/payment made |
| Right to sell goods | No right to sell | Right to sell if debt not paid |
| Parties involved | Bailor and Bailee | Pledgor and Pledgee |
4. Relevant Case Law
Lala Ram Lal v. Radha Krishna (1960)
Explains the essentials of bailment and that the bailee must take reasonable care of goods.
Nair Service Society Ltd. v. K.C. Alexander (1968)
While mainly about contract interpretation, it also touches upon the duties in bailment relationships.
5. Summary
| Term | Definition | Key Feature | Right to Retain/Sell |
|---|---|---|---|
| Bailment | Delivery for safekeeping or service | Goods to be returned or disposed | No right to retain or sell |
| Pledge | Delivery as security for debt | Security interest in goods | Right to retain and sell |
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