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

Sunita delivers a bale of cloth to Gopal, a carrier, for transport. Gopal has a bailee's lien for charges due. Sunita refuses to pay the agreed freight of ₹2,000 for this bale. What may Gopal do under the law of bailment?

Gopal may retain the bale of cloth until the ₹2,000 freight is paid, provided there is no contract to the contrary. A bailee's lien is only a right to retain the goods, not to sell them without following the law, destroy them or take ownership.

  1. ASell the cloth immediately without any notice and keep the sale proceeds
  2. BRetain the bale until the freight due is paid, where no contract to the contrary existsCorrect
  3. CDestroy the cloth as a penalty for non-payment
  4. DKeep the cloth permanently and treat it as his own property

Explanation

Where the bailee has rendered service involving labour or skill in respect of goods bailed, he has a right to retain them until paid, absent a contrary contract. This is a mere right to retain, not to sell or appropriate. So Gopal may hold the bale until the ₹2,000 is paid.

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