A real bailment contract

Topic: Take A Real Bailment Contract Of A Transaction Of A Company And Relate It To All The Provisions Available In Indian Sales Of Goods Act Regarding This Contract.

Introduction

The Indian Contract Act, 1872 deals with the general rules relating to bailment but does not with all types of bailment for which separate acts have been enacted, for example, The Carrier Act 1865, The carriage of Goods by Sea Act, 1925.

Bailment Contract (Sec 148)

Bailment is the process of making delivery of an asset or other type of property. Generally, this type of transaction involves the owner of the assets choosing to temporarily place them in the control of another individual. The person who delivers the asset is usually known as the bailor, while the recipient of the assets is known as the bailee.

The process of bailment is not a casual situation where an individual is asked to function as a caretaker for a short period of time. Part of the procedure with bailment it that a legal relationship is established between the owner and recipient. While the owner retains full rights to the assets, the physical possession of the assets is granted to the recipient. Along with the physical possession of the property or assets, the bailee may also be granted certain powers of administration that are related to management of the assets.

Along with defining the rights of management during the time that the bailment is in effect, the legal documentation usually also contains specific instructions on how long the state of bailment will be in effect. Typically, most bailment agreements also include some sort of out clauses that are related to both the bailor and the bailee. For example, the bailor could revoke the bailment if there was evidence that the bailee was mismanaging the asset. At the same time, the bailee would be able to terminate the arrangement and return the property if there was a perception that the bailor is not living up to the terms of the agreement in some manner.

A legal state of bailment can be a great option when the owner will be unavailable to manage or oversee an asset for a short period of time. A bailee may be designated that can manage rental property in the absence of the owner, or perhaps oversee a stock portfolio for a given period of time. The idea behind the bailment is to ensure that the asset is in good hands, even if the owner is not in a position to manage the asset at the present time.

Delivery of assets into the possession of another person is nothing to be taken lightly. A great deal of trust must exist between the owner and the bailee in order for the business relationship to work. Great care should be taken before entering into a bailment agreement, whether as an owner granting temporary care of assets to another individual, or as the person who is being asked to serve as a bailee.

Examples of Bailment:

  • A lends a car to B for his driving only without charge.

  • A sells a horse to B who leaves the horse in the possession of A.

Bailment Is Concerned Only With Goods:

Goods, as defined in sec. 2(7) of the Sale Goods Act, 1930, mean every kind of movable property other than money and actionable claims.

  1. Agreement: There must be an agreement between the bailor and the bailee. This agreement may be either express or implied. However, a bailment may be implied by law also. For Example, bailment between a finder of goods and owner of goods.

  1. Delivery of goods: There must be delivery of goods. It means that the possession of goods must be transferred.

Delivery may be actual or constructive.

  1. Purpose: The delivery of goods must be for some intended purpose.

  1. Return of Specific Goods: The goods which form the subject matter of a bailment must be returned to the bailor or the bailor or otherwise dispose off according to the directions of the bailor, after the accomplishment of purpose or after the expiry of period of the bailment. It may be noted that the same goods must be returned in their original form or desired form. Thus, goods must be returned in specie though they may undergo a change of form.

Duties Of Bailee

  • To take reasonable care of goods bailede.g. M was admitted to a hospital where her jewellery was handed over to hospital authorities for safe custody. The jewellery was stolen. The hospital authorities are liable for the loss.

  • Not to make any unauthorized use of goods.

  • Not to set up an adverse title.

  • Not to mix the goods bailed with his own goods.

  • To return any accretion to the goods. E.g. A leaves a cow in custody of B to be taken care of. The cow has a calf. Both cow and calf to be returned back to A.

Rights of Bailor and Bailee

  • Enforcement of rights.

  • Avoidance of contract.

  • Return of goods lent gratuitously.

  • Compensation from a wrong-doer.

  • Delivery of goods to one of several joint bailors of goods.

  • Delivery of goods to bailor without title.

  • Right to apply to court to stop delivery.

  • Right of action against trespassers.

The Sale Of Goods Act, 1930

Sale of Goods Act is one of very old mercantile law. Sale of Goods is one of the special types of Contract. Initially, this was part of Indian Contract Act itself in chapter VII (sections 76 to 123). Later these sections in Contract Act were deleted, and separate Sale of Goods Act was passed in 1930.

The Sale of Goods Act is complimentary to Contract Act. Basic provisions of Contract Act apply to contract of Sale of Goods also. Basic requirements of contract i.e. offer and acceptance, legally enforceable agreement, mutual consent, parties competent to contract; free consent, lawful object, consideration etc. apply to contract of Sale of Goods also.

Contract of Sale - A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. [section 4(1)]. A contract of sale may be absolute or conditional. [section 4(2)].

Essential Elements Of Contract Of Sale

  • Seller and buyer

  • Goods

  • Transfer of general property

  • Price

  • Essential elements of valid contract

Sells or agrees to sell goods- [section 2(13)]. A part owner can sale his part to another part-owner. However, if joint owners distribute property among themselves as per mutual agreement, it is not ‘sale' as there are no two parties.

Transfer of property - “Property” means the general property in goods, and not merely a special property. [section 2(11)]. In layman's terms ‘property' means ‘ownership'. ‘General Property' means ‘full ownership'. Thus, transfer of ‘general property' is required to constitute a sale. If goods are given for hire, lease, hire purchase or pledge, ‘general property' is not transferred and hence it is not a ‘sale'.

Possession and property - Note that ‘property' and ‘possession' are not synonymous. Transfer of possession does not mean transfer of property. e.g. - if goods are handed over to transporter or godown keeper, possession is transferred but ‘property' remains with owner. Similarly, if goods remain in possession of seller after sale transaction is over, the ‘possession' is with seller, but ‘property' is with buyer.

Goods - “Goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. [section 2(7)].

Price - “Price” means the money consideration for a sale of goods. [section 2(10)]. Consideration is required for any contract. However, in case of contract of sale of goods, the consideration should be ‘price' i.e. money consideration.

Price - “Price” means the money consideration for a sale of goods. [section 2(10)]. Consideration is required for any contract. However, in case of contract of sale of goods, the consideration should be ‘price' i.e. money consideration.

Specific goods in a deliverable state - Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immate­rial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed. [Section 20].

All The Essential Elements Of The Valid Contract

Bailment Contract Of A Transaction Of A Fedex Company

Introduction:

FedEx Corporation was founded as FDX Corporation in January 1998 with the acquisition of Caliber System Inc. by Federal Express. With the purchase of Caliber, FedEx started offering other services besides express shipping. Caliber subsidiaries included RPS, a small-package ground service; Roberts Express, an expedited shipping provider; Viking Freight, a regional, less-than-truckload freight carrier serving the Western United States; Caribbean Transportation Services, a provider of airfreight forwarding between the United States and the Caribbean; and Caliber Logistics and Caliber Technology, providers of logistics and technology solutions. FDX Corporation was founded to oversee all of the operations of those companies and its original air division, Federal Express.

In January 2000, FDX Corporation changed its name to FedEx Corporation and rebranded all of its subsidiaries. Federal Express became FedEx Express, RPS became FedEx Ground, Roberts Express became FedEx Custom Critical, and Caliber Logistics and Caliber Technology were combined to make up FedEx Global Logistics. A new subsidiary called FedEx Corporate Services was formed to centralize the sales, marketing, customer service for all of the subsidiaries. In February 2000, FedEx acquired Tower Group International, an international logistics company. FedEx also acquired World Tariff, a customs duty and tax Information Company, Tower Group and World Tariff were rebranded to form FedEx Trade Networks.

Relating Fedex With The Provisions Available In Indian Sales Of Goods Act .

Bailment means only transfer of possession from the bailor to the bailee. This may be for any one of the objects, namely, safe custody, use, carriage from one place to another, etc. Similarly, FedEx Express is the bailor and the person for whom courier is made is bailee. The provision available in Indian Sale of Act is as follows:

  • How Contract of sale is made

  • Two parties to contract

  • Contract of Sale includes agreement to sale

  • Transfer of property

  • Possession and property

  • Goods

  • Price

  • Conditions and Warranties

  • Acceptance of goods by buyer

  • Auction sale

  • Measure for compensation and damages

How Contract Is Made By Fedex?

Contract between fedex and bailee is made by another party who has offered fedex to deliver courier for the bailee. In this that party who has got the possession of good, agreed to transfer its possession to another person through the help of fedex. Delivery of the goods might be immediate or after certain period of time. A contract by conduct of the parties is only valid in case of FedEx.

Two Parties To Contract:

There are always two parties in BAILMENT CONTRACT. First person who gives and second person who receives. Only in case of joint owners there might exceed the number of parties. In case of FedEx, FedEx will be one party and courier receiver will be a second party. They had a relation of bailor and bailee among them.

Transfer Of Property:

“Property” means the general property in goods, and not merely a special property. Property doesn't mean money. If goods are given for hire, lease, hire purchase or pledge, ‘general property' is not transferred and hence it is not a ‘sale'. FedEx will transfer the property from sender to the receiver. During the period of transfer of property Fedex is liable for the any act which may damage the good.

Possession And Property:

Possession and property is two different thing. When Fedex get the goods to be delivered possession of good will be changed to the Fedex but not the property or the ownership is changed.

Goods

Every kind of movable property comes under the contract of sale. Fedex also delivers all kind of movable properties, except some special properties like stock and shares, growing crops, grass, and things attached to or forming part of the land.

Price

Consideration for the delivery of the good is money. Fedex charges money according to the weight of the courier. Contract is not complete without the consideration so, sales of good act have decleared money as a consideration for the work that Fedex does.

Conditions And Warranties

Condition and warranties is the another provision provided by the sales of good act. According to this if Fedex made any mistake and caused courier to be damaged it is the responsibility of the FedEx to pay for that. If the courier is damaged than it may lead to breach of contract until the compensation is paid.

Acceptance Of Goods By Buyer

The duty of Fedex is only completed when the receiver of the courier accepts or receives the courier; the Sale of Good act also supports this view. Contract of Sale is completed not by mere delivery of goods but by acceptance of goods by buyer. ‘Acceptance' does not mean mere receipt of goods. It means checking the goods to ascertain whether they are as per contract. Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conform­ity with the contract.

Auction Sale

According to the sale of good act if the delivery was not successful because of without any fault of Fedex than Fedex have to try to return that good to it owner but owner is unknown or good is going to be damage than Fedex is legible to sale it through auction after making public announcement.

Measure For Compensation And Damages

According to the sale of good act there is no any special provision for measuring the compensation of the damages. Being a commercial company Fedex will provide compensation after examining the loss bared by the buyer/seller.

Conclusion

Indian sales of good act which mean a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another. [section 4(1)]. A contract of sale may be absolute or conditional. [section 4(2)]. are provision of contract which should be fallowed while dealing with bailment contract. Bailment is the process of making delivery of an asset or other type of property. Generally, this type of transaction involves the owner of the assets choosing to temporarily place them in the control of another individual. The person who delivers the asset is usually known as the bailor, while the recipient of the assets is known as the bailee. It helps to know basic requirement during the process of bailment contract. It helps both bailor and bailee to solve problems which may arise during the course of fulfilment contract.

FedEx is a courier company which deals with bailor and bailee. All the provisions including duties of bailor and bailee has been related with provisions provided by the Sale of Good Act, 1930. The conclusion is some of the provision provided by Sale of Good Act are not followed by the FedEx company and it has also made it few additional provisions to attract customers.

Bibliography

Books

Elements of Mercantile Law- N.D Kapoor

Business Law- P.C. Tulsian

Mercantile Law- Avtar. Singh

Websites

http://en.wikipedia.org/wiki/Bailment

www.dateyvs.com/gener12.htm

http://www.dateyvs.com/gener12.htm

http://fedex.com/gb/services/terms/

http://fedex.com/gb/services/terms/

http://en.wikipedia.org/wiki/FedEx



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