TERMINATION OF BAILMENT
I. Termination of every Contract of Bailment (whether Gratuitous or not)
Every contract of bailment comes to end under the following circumstances:
a) On the Expiry of Fixed Period
A bailment is terminated on the expiry of fixed period if the goods are bailed for a fixed period.
b) On fulfillment of the Purpose
A bailment is terminated on the fulfillment of the purpose if the goods are bailed for a specific purpose.
c) Inconsistent Use of Goods
A bailment may be terminated if the bailee does not use the goods according to the conditions of the bailment.
d) Destruction of the subject Matter of Bailment
A bailment is terminated if the subject matter of the bailment
- Is destroyed
- Becomes incapable of being used for bailment because of some change in the nature of goods.
II. Termination of Gratuitous Bailment
A contract of gratuitous bailment is terminated in the following circumstances also.
a) Before the Expiry of fixed Period
A gratuitous may be terminated by the bailor at any time even though the bailment was for a fixed period.However,the bailor is required to indemnify the bailee in case the loss due to premature termination exceeds the benefit actually derived by the bailee.
b) On Death of Bailor/Bailee
A gratuitous bailment is terminated by the death of either the bailor or bailee.
Meaning of pledge (or pawn) [Section 172]
The bailment of goods as security for payment of a debt or performance of a premise is called pledge (or pawn).
Meaning of A pawner (or pledgor) [Section 172)
The person who delivers the goods as security for payment of a debt or performance of promise is called the pawnor or pledgor. In aforesaid example X is pawnor
Meaning of Pawnee (or pledge) [Section 172)
The person to whom the goods are delivered as security for payment of a debt or performance of promise is called the Pawnee or Pledgee
Rights of Pawnee
- Right of retainer [Section 173]
The pawnee may retain the goods pledged
- For payment of the debt of the performance of the promise,
- For the interest of the debt,
- All necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged.
- Right to claim reimbursement of extraordinary expenses [Section 173]
The pawnee is entitled to receive from the pawnor extraordinary expenses incurred by him for the preservation of the goods.
- Right to sue pawnor [Section 176]
If the pawnor makes default in payment of the debt or performance of the promise,the pawnee has a right to sue the pawnor for the recovery of the amount due or for the performance of the promise sand to retain the goods pledged as collateral security.
- Right to sell [Section 176]
If the pawnor makes default in payment of the debt or performance of the promise,the pawnee has a right to sell the goods pledged after giving a reasonable notice of the intended sale,to the pawnor.Any loss from such sale is recoverable from the pawnor but profits resulting therefrom is returnable to the pledgor.
- Right against true owner [Section 178A]
When the pawnor has obtained possession of the goods pledged by him under a contract voidable under Section 19 or 19A but the contract has not been rescinded at the time of the pledge,the pawnee acquired a good title to the goods provided he acts in good faith and without notice of the pawnor’s defect of title.
Duties of a Pawnee
- Duty to take reasonable care of the goods pledged
- Duty not to make unauthorized use of goods
- Duty not to mix pawnor’s goods with his own goods
- Duty to return goods
- Duty to return accretion to the goods
Rights of Pawnor
- Right to get pawnee’s duties duly enforced
The pawnor has the right to get pawnee’s duties duly enforced(for example,right to get back the goods pledged,right to receive any accretions to the goods pledged).
- Right to redeem [Section 177]
- If a time time is stipulated for the payment of the debt,or performance of the promise,for which the pledge is made and the pawnor makes default in payment of the debt or performance of the promise at stipulated time,he may redeem the goods pledged at any subsequent time before the actual sale of them;but he must;in case’ pay’in addition ,any expenses which have arisen from his default.
Duties of Pawnor
- Duty to comply with the terms of pledge
- Duty to compensate the Pawnee for extraordinary expenses [Section 185]
Distinction between Pledge and Bailment