Duties of Bailee and Bailor for CLAT - Practice Questions & MCQ

The concept of "Duties of Bailee and Bailor" in Indian Contract Law is fundamental in the context of bailment agreements. 

It outlines the responsibilities and obligations of both parties when goods are temporarily transferred from the bailor to the bailee. 

Duties of Bailee:

To Take Reasonable Care:

• The bailee is obligated to exercise reasonable care and diligence in handling the goods. This includes ensuring the safety and security of the goods entrusted to them.
• Failure to take reasonable care can make the bailee liable for any damage or loss incurred during the bailment.
• Example: If you lend your smartphone to a friend (the bailee) for a few days, the friend must take care not to damage or lose the phone during this time.

To Use for Specified Purpose:

• The bailee must use the goods only for the specific purpose for which they were delivered. Any use beyond this purpose without the bailor's consent may constitute a breach of duty.
• Unauthorized use may lead to legal consequences, including liability for damages.
• Example: If you entrust your car to a family member (the bailee) for a grocery shopping trip, they should not use it for an unplanned road trip without your permission.

To Return the Goods:

• The primary duty of the bailee is to return the goods to the bailor once the purpose of the bailment is fulfilled or when the agreed-upon time elapses.
• This ensures that the bailor regains possession of the goods as per the terms of the bailment.
• Example: If you leave your gardening tools with a neighbor (the bailee) to use for a specific landscaping project, they should return the tools promptly once the project is complete.

Duties of Bailor:

To Disclose Known Defects:

• The bailor is responsible for informing the bailee of any known defects or hidden dangers associated with the goods. Failure to do so may result in liability if the bailee is harmed.
• This duty ensures that the bailee is aware of any potential risks related to the goods.
• Example: If you lend your bicycle (the goods) to a friend (the bailee) and the brakes are faulty, you should inform your friend of this defect to prevent accidents.

To Compensate for Necessary Expenses:

• The bailor must reimburse the bailee for any reasonable expenses incurred in connection with the bailment. This includes expenses related to the care and maintenance of the goods.
• Reimbursement ensures that the bailee is not financially burdened by fulfilling their duties.
• Example: If you lend your pet dog (the goods) to a neighbor (the bailee) and they incur expenses for the dog's food and grooming, you should reimburse them for these costs.

To Indemnify Against Loss:

• The bailor should indemnify the bailee against any losses resulting from defects in the goods or from actions taken in accordance with the bailor's instructions.
• This duty protects the bailee from financial losses incurred due to circumstances beyond their control.
• Example: If you lend a car with a known mechanical issue to a friend (the bailee) and the car breaks down, you may be responsible for the cost of repairs to indemnify your friend.

Case Law Example: Taylor vs. Caldwell:

• The case of Taylor vs. Caldwell is a significant legal precedent in contract law, particularly regarding the doctrine of frustration of contract. 
• Imagine a scenario where Company A contracts with Company B to rent an event venue for a high-profile music concert scheduled for a specific date. Company A is the concert organizer (bailor), and Company B owns the event venue (bailee).
• Initial Contract: Company A enters into a contract with Company B to rent the venue for a music concert scheduled for a particular date in six months. The terms specify the date, duration, and rental fee.
• Change in Circumstances: Three months before the concert date, the event venue, which was crucial for the concert, is severely damaged in a fire accident, rendering it unsuitable for hosting the concert.
• Doctrine of Frustration: Company B, the venue owner (bailee), invokes the doctrine of frustration, citing that the unforeseen fire accident has made it impossible to fulfill the contract. They argue that the contract should be discharged due to this unforeseen event, relying on the precedent set by Taylor vs. Caldwell.
• Legal Implications: In this scenario, the court may apply the doctrine of frustration, following the principles established in Taylor vs. Caldwell. The court may discharge the contract because the fire accident was an unforeseen event beyond the control of either party, making it impossible to fulfill the contract's original terms.
• Company A (the concert organizer) would not be held liable for breaching the contract due to the impossibility of performing the concert at the damaged venue.
• Company B (the venue owner) would not be held liable for failing to provide the venue as per the contract terms, as the fire accident rendered this impossible.
• Consequences: In such a case, the parties might negotiate alternative solutions, such as rescheduling the concert at a different venue, seeking compensation for any costs incurred, or mutually agreeing to terminate the contract without liability.