Bailment – Essential Elements of Bailment| Business Law


Essential Elements of Bailment | Business Law
Management Notes

Essential elements of bailment:

Bailment is a contract, where the owner of goods makes delivery of his goods to another for some limited period or purpose. It is change of possession of goods, not transfer of ownership of goods as in sale. If a person gives some property to another upon a contract that it shall be returned to him or otherwise disposed off or sold out according to the order of the person delivering it, the contract is said to be the contract of bailment.

A person who delivers his goods temporarily to another is called the bailor and a person to whom goods are temporarily delivered is called bailee. The transaction between those two parties is known as a contract of bailment.

Essential elements of bailment


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 thousand rupees in according to section 25 of Nepalese Contract Act, 2056.

ii.Delivery of movable goods:

Firstly, for the validity of contract of bailment, only the moveable property is needed. It signifies the goods which is movable like car, timber, horse etc. Secondly, the goods delivered by one person to another person. Delivery of goods may be either in actual or constructive form and it must be voluntary.
(a)Actual delivery: when the bailor hands over to the bailee physical possession of the goods is known as actual delivery.
(b)Constructive delivery: It doesn’t involve handing over the physical possession, but something is done which has the effort of putting the goods in the possession of the bailee, e.g. delivery of document of title, delivery of key of store or vehicles.


Delivery of goods must be some specific purpose (repair, security, making something) by which the bailee is bound to return the goods as the purpose is achieved. When the goods are delivered by mistake without any purpose, there is no bailment.

iv.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 the goods remains with the bailor.

v.Return or dispose of goods:

The goods are to be returned either in their original from or in an altered form or disposed in accordance with the directions of the bailor.

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