The relationship of Bailor and Bailee is the creation of a contract. In other words, the bailment is based on contract between the Bailor and Bailee. There must be written document if delivery of goods is worth more than five thousands rupees in accordance with the Section 25 of Nepal Contract Act, 2056.
Delivery of Moveable Goods
Firstly, for the valid contract of bailment, the property must be moveable. Money is not movable goods but it signifies the goods, which is moveable like, car, timber, horse. Delivery of goods involves a change of possession of goods from one person to another, but not a change of ownership of the goods. Delivery of goods is needed to be a valid contract of bailment.
- Actual delivery: Handover of goods to Bailee is an actual delivery.
- Constructive Delivery: Secondary things handover to Bailee is the constructive delivery. e.g Receipt of purchasing or Key of Car
Delivery for Some Special Purpose
Delivery of goods must be made for some specific purpose. e.g repair, security, making something. When the goods are delivered by mistake without any purpose, there is no bailment.
Non-transfer of Ownership
Under the contract of bailment, the ownership of goods is not transferred, only the possession of goods is transferred from a Bailor to Bailee. The ownership of goods remains with Bailor.
Return or Dispose of Goods
The goods are to be return either in their original form or in an altered form or disposed in accordance with the directions of the Bailor.
Rights and duties of Bailor and Bailee
- Rights of Bailor
The duties of Bailee are the rights of the Bailor. The following are the rights of the Bailor and reciprocate duties of the Bailee.
- Enforcement of Bailee's duties:
The duties of Bailee are the rights of Bailor. The Bailor can enforce by suit all the duties of the Bailee as his right. And the Bailee has to fulfill the rights of Bailor as his duty. These are as follows;
- Right to claim damages for loss caused to the goods bailed by Bailee's negligence. (Section 28.2)
- Right to claim compensation for any damage arising from or during unauthorized use of goods. (Section 28.3)
- Right to claim compensation for any loss caused by unauthorized mixing of bailed goods with his own goods.(Section 28.6)
- Rights to demand return of goods in the prescribed time. (Section 29.1)
- Right to claim any natural increment to the bailed goods (Section 4)
- Right to termination a contract of bailment:
The Bailor has right to terminate the contract of bailment before the prescribed time in the following circumstances. (Section 34)
- If the objectives of the contract can not be fulfilled.
- If the contract has an illegal object.
- If the Bailee breaches the terms of the contract.
- If the contract has a fraudulent object.