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CMA Intermediate · Business Laws and Ethics · Special Contracts - Indemnity and Guarantee; Bailment and Pledge; Laws of Agency

Rohit lends his car to Vikas for a trip to Pune only. Vikas, without Rohit's permission, uses it to carry goods for his business, and the car is damaged in an accident that would not have happened had it been used as agreed. Under the law of bailment, which statement is correct?

Vikas must compensate Rohit. When a bailee uses the goods in a way inconsistent with the terms of the bailment, he is liable to make good any damage to the goods arising from that use, even if he otherwise took reasonable care.

  1. ARohit must bear the loss, since Vikas took ordinary care while driving
  2. BVikas must compensate Rohit for the damage arising from the unauthorised useCorrect
  3. CRohit may only demand return of the car and has no right to damages
  4. DThe bailment continues unaffected, with no remedy for either party

Explanation

If a bailee makes use of the goods in a manner inconsistent with the bailment, he must compensate the bailor for any damage arising from such use. The care taken while driving does not cure the unauthorised use. Hence the claim for damages exists.

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