Specific Law: Bailment, Pledge and Agency Swathi J V Gupta Legal Article Fri, Sep 01, 2023, at ,01:57 PM INTRODUCTION:Definition of Contract:A contract is an agreement made between two or more parties which the law will enforce.Sec 2 (h) defines a contract is an agreement enforceable by law. According to Salmond, “Contract is an agreement creating and defining obligations between the parties”.BAILMENT & PLEDGEBAILMENT The word Bailment is derived from the French word “Ballier” which means “to deliver”, “handling over”. In legal sense, it involves change of possession of goods from one person to another for some specific purpose. Sec 148 of Indian Contract Act defines, “Bailment is the delivery of goods by one person to another for some purpose, upon a contract, that they shall when the purpose is accomplished”. Bailor : The person delivering the goods.Bailee : The person to whom they delivered the goods.Example : Mr.A delivers a piece of cloth to Mr.B, a tailor to be stitched into a suit. There is a contract of bailment between Mr.A & Mr.B.REQUISITES OF BAILMENT :ContractDelivery of PossessionPurposeReturn of Specific Goods Contract : Usually bailment creates based on the agreement between bailor & bailee. Agreement might be implied or express way. Hence, Contract must be their between the parties to create bailment.Delivery of Possession : A bailment necessarily involves delivery of possession of goods by bailer to bailee. The basic features of possession are control and an intention to exclude others.Purpose :The delivery of goods from bailor to bailee there must be purpose. If the goods are delivered by mistake, then there is no Bailment arises.Return of Specific Goods :It is agreed between the bailor and the bailee that as soon the purpose achieved, goods shall be returned or disposed of according to the directions of the bailor. Bailment is concerned only with Goods. Goods are defined in Sec 2(7) of the Sales & Goods Act, 1930.Case Laws comes under Bailment : State of Gujarath Vs. M M Haji Hassan. [A.I.R. (1967) S.C.885]. Instalment Supply Pvt Ltd., Vs. Union of India. [A.I.R.(1962)S.C.53] Shivnath Vs. Union of India [A.I.R. (1965) S.C.1666] Incometax Commissioner Vs. P.M.Rathod [A.I.R. (1959) S.C.1394] Rights & Duties of Bailor & Bailee :Rights of Bailor :As the owner of the goods, the bailor in a bailment arrangement has certain rights that are protected under the law. These rights include: Right to Compensation for Damages Right to Demand Return of Goods Right to Terminate Bailment Right to Sue for Breach of Bailment Contract Termination of bailment by Bailee’s act inconsistent with conditions Rights of Bailee :The Indian Contract Act, 1872 outlines certain rights of the bailee in bailment, which include: Right of Possession Right of Compensation for Expenses Right to Claim Compensation for Damages Right to Lien Right to Recover Compensation for Fault of Bailor Duties of Bailor : Duty to Disclose Known Defects Duty to Provide Clear Instructions Duty to Pay Necessary Expenses Duty to Indemnify the Bailee Duty to Allow Inspection Duty to Bear Extraordinary Expenses Duty to Take Back the Goods Duty to Compensate for Premature Termination Duties of Bailee : Duty to Take Reasonable Care Duty to Return the Goods Duty to Render Accounts Duty not to Mix Goods Duty not to Make Unauthorized Use Duty to Compensate for Loss Duty not to Deny Bailor’s Title PLEDGEA pledge contract is a pact between two or more parties outlining the specific steps that each will take to fulfil a predetermined objective. The parties to the contract typically agree on its terms, which may be changed or updated as needed. Contracts with pledges can be used for a number of things, like boosting productivity, enhancing communication, or just solidifying a personal commitment. They can be especially beneficial for teams or groups trying to accomplish a common objective. It’s crucial to include all relevant information when creating a pledge contract, such as deadlines and penalties for missing commitments.Essentials of Pledge :Valid ContractTransfer of possessionImpossible to transfer ownershipProtection from debtGoods returned after paymentDuties of the Pawnor : Pawnors obligations include paying expenses To Pay Back The Entire Amount Owed, Plus Interest To Make Clear Every Flaw In The Product Taking reasonable care of the goods is one of the pawnee’s obligations To Only Use The Products For Authorized Uses Returning the items To Return Any Earnings From The Sale Of The Goods Pawnor’s & Pawnee’s Rights : Redeeming the goods is one of the pawnor’s rights To Recover The Items Pawnee’s Legal Right To Keep The Items To Be Reimbursed For Extraordinary Costs Selling The Products Relevant Case Law :Rahmat Ali and OthersVs.Lallan Prasad1996 FACTSIn this case, the plaintiff gave the defendant an advance of INR 20,000 in exchange for a promissory note and a receipt. Both parties signed a contract committing the defendant to use his aeroscapes as collateral for his debt. According to their agreement, the defendant was required to give the appellant the aeroscapes, who would then keep them in his possession.According to the plaintiff’s lawsuit, this agreement cannot be regarded as a contract of pledge because the aforementioned goods were never delivered to be in his custody. He asserted that he had a right to the money he had lent.ISSUEWhether the plaintiff received the pledged goods after they were delivered?Was the plaintiff eligible for damages because, according to him, there was no contract of pledge because the goods hadn’t been delivered?Judgment of the CourtThe defendant was given a favourable ruling. The Supreme Court ruled that the plaintiff received delivery of the pledged goods. This indicated that this arrangement did indeed develop into a contract of pledge. The plaintiff’s claim that the goods were never pledged to him was denied, according to the court, and he was not entitled to any compensation.AGENCYAgency is defined as a relationship between two people in which one person has the authority to act on behalf of another, thereby entitling him or her to a legal relationship with the third party. In an agency contract, there are two parties: the principal and the agent. The agency contract is based on the fact that one person cannot perform all transactions; thus, he can appoint someone else to do or act on his behalf.Principal According to Section 182 of the Indian Contract Act, the "principal" is the person for whom such an act is done or who is so represented. As a result, the person to whom authority has been delegated will be the principal. The principal is any person who employs another person to perform an act and is represented by another person in dealings with a third party.AgentSection 182 of the Indian Contract Act of 1872 defines an "Agent" as "a person employed to do any act for another or to represent another in dealing with third people." An agent is a person engaged by the principal to act on his behalf, represent him in dealings with third parties, and bring him into a contractual relationship with the third party.Characteristics of Contract of Agency :Sections 183 to 185 of the Indian Contract Act explain the features or characteristics of an agency contract. A brief discussion of the characteristics of an agency contract is provided below.The Capacity of the Principal [Section 183] :The principal must be competent to create a contract in order to form an agency contract. That is, he must be of age of majority (18+) and of sound mind. Because the agent creates a contractual relationship between the principal and a third party in an agency contract, they must be contract competent.The Capacity of the Agent [Section 184] :The capacity of an agent in an agency contract is immaterial. Anybody can act as an agent between the principal and the third party. In other words, any person, whether a minor or otherwise unable to contract, is able to create a valid contract between his principal and a third party. However, if an agent is unable to enter into a contract, he is not liable to the principal.Consideration Is Not Required [Section 185] :The law makes no requirement or mandate for any regard to be given to the validity of an agency contract. An agent is often compensated by commission for services provided. Yet, no consideration is provided to him at the time of his appointment.Legal Binding :The principal is legally bound by the acts of the agent in the same way that he is legally bound by his own acts.Conclusion :Bailment, pledge and agency are part of Indian Contract Act 1872 each and every concept takes their different role under this. Every concept binded by law. If anyone breach the law that leads to invalid contract.