SP Services
Latest News

What is the Contract of Bailment and Types Involved in it?

Contract of Bailment

Bailment mainly referred to as the Transfer of the Personal property to a person for the complete safekeeping purpose only. Normally, the Contract of bailment is a contractual relationship for a specific period of time. The person receiving property would have the possession as well as control on the property.

Further, in this article, we would be focusing more on Contract of Bailment.

What is the Contract of Bailment?

A bailment of the personal property mainly includes the Bailor (party having possession but not ownership) and the bailee (for a kind of particular purpose). Normally, the transfer would be made based on the way of expressing or implement of the contract to the highest extent so that the Property would be conveniently redelivered for bailor to complete purpose.

In fact, during this period of time, the person signed would be responsible for the whole property. However, the original owner for the property would mainly retain the ownership with the interest on time. For exploring these aspects, you could conveniently consider with Bailment to the extent.

Personal property in the bailment would be made in the custody of the person with payment of the money. Based on the custody of the property to the person would be bound with the due care for keeping as well as preserving property that is entrusted to the extent.

What are the Five Sorts of Bailments?

Normally, the Bailment is quite the unique contract that does not include with property for sale so that these contracts mainly include with the seller-financing or with making payment of property to the extent. With higher intent of the contract is to transfer then bailment mainly does not have any kind of transfer of the property bit with the temporary control of the property.

For conveniently enabling the bailment to exist, bailee needs to have the intention for possessing the property as well as actual possession of the property. Bailor mainly intends that your property would be returned within the speculated time or during the end of the time. Bailments are mainly divided into 5 sorts that include

  • Depositum, or Deposit
  • Mandatum, or Commission
  • Commodatum, or Loan for use
  • Pignoli Accepted, or Pawn
  • Located, or Hiring

What are the Purposes of Bailment?

Bailment is mainly created without any kind of actual written contract in most of the cases but the low also recognizes that the bailment also exists. The main purpose for the creation of the Bailment is

Mutual benefit for Bailor and Bailee – Easier to exchange of services between the parties so that when bailor leaves the property then bailee is to be repaired. Later bailor needs to repay for any repairs

  • For gaining sole bailor benefit – Mainly created with a valuable item like TV, car, jewelry or leaving an item for the safekeeping
  • For Bailee benefit – Mainly created for the owner of the loan item that priority would mainly enable for another person
  • Unilateral and Mutual Benefit Bailments
Financial Reporting

What Are “Mutual Benefit Bailment” And “Unilateral Benefit Bailment”?

Normally, the bailment would be made by either the party or both the parties. unilateral benefit bailment and mutual benefit bailment are quite different from each other.

  • Unilateral Benefit Bailment is the unique aspects where bailor mainly helps the bailee to receive more benefits for the bailment that is either the party does not. In fact,  it could mainly arise as a gift or favor as one party to each other.
  • Mutual Benefit Bailment mainly offers the complete benefit for bailee as well as bailor. The mutual benefit bailment mainly has the complete pursuant for the enforceable contract and could exchange[1] the value that mainly has the impetus in the relationship.

What are the Main 3 Elements of A Bailment?

According to the civil lawsuits mainly arise on the failure in bailee for the property of bailor. Bailee mainly has the duty to protect the property of the bailor and it mainly proves that this bailment of property existed. Bailee would be under the obligation for taking the most responsible care of the property that is placed under the possession. In fact, Bailment contracts are quite a common occurrence in modern-day life. Below are some of the most important elements that existed for the bailment:

  • Delivery:

Property needs to be delivered based on the Bailment with the best care to the bailee so that they may control the property for a few periods of time based on the agreement. Normally, Control of property also does not require the possession of the actual property in most of the cases however, it also mainly gives the complete access for the property like providing the keys for the secure storage unit and many others. Bailor would mainly give the bailee with complete access on taking custody of property to the extent with actual delivery.

  • Acceptance:

Bailee mainly knows to accept the possession or control of the property so that when no one is mainly unwitting to become the bailee then it is important to include the type of contract, acceptance, and knowledge. With the creation of bailment mainly implied or expresses the possession or control on property enabled by Bailee.

  • Consideration:

Unlike any other typical contract, both parties also need to receive the value of the property as one party needs to receive something that is mainly enabled with the value in bailment. When one party loans use of his car for a good friend then bailment is created in the process even though bailor mainly receives with nothing of value and this would be the benefit for bailee. With the exchange of something of value that needs to be present when bailment exists. Consideration of the contracts also gives the complete value for the property so that every action on the property would be regarded as the consideration.

What are the Rights And Responsibilities to Be Considered By Bailee?

Written Bailment Contract is made then it also mainly enabled with certain rights and duties mainly suitable for the parties. For some circumstances, if there is no written contracts are made then law mainly recognizes that the Bailee needs to exercise the duty care for protecting property in a more efficient manner. Therefore, it is considered as important purposes for tiered liability system based on the specific duties that mainly vary with varied bailment type.

  • Mutual Benefit – when Bailee fails to take any responsibility for the property then it could results in the liability of bailee in case of any kind of damages.
  • Sole Benefit Of Bailor – when Bailee have lesser duty to care then he or she is responsible for damages resulting in the gross negligence

When the Bailee has the duty to take care of the property then it could result in the use of a property that is agreed for bailment created. Bailee would be responsible for any kind of damages of property arises from any failure to the property to take care.


Bailment will be ended when its purpose has been achieved so that both the parties have agreed to terminate the contract or if the property that is bailed is destroyed.

To Sum Up

When you like to know more about the Bailment then you could contact the experts at Award-Winning Legal Technology and CPA firm called Enterslice. Therefore, it is more sufficient enough to prove that bailor suffers the loss of control on Bailee if given up value with the immediate right for controlling the property.

Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

Business Plan Consultant

Trending Posted

Startup CFO

Our Awards Our Awards

Top 100 Companies in Asia - Red Herring
Top 100 Companies in Asia - Red Herring

Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.

Top 25 in India - Consultants Review

Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.

Top 25 in India - Consultants Review

In the news