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

Under the Indian Contract Act, 1872, which of the following is an essential feature of a contract of bailment of goods?

Bailment is the delivery of goods by one person to another for a purpose, under a contract that the goods will be returned or disposed of as the bailor directs after the purpose is met. Only possession passes, not ownership, and payment is not essential.

  1. ADelivery of goods by one person to another for some purpose, on a contract that they shall be returned or disposed of as the bailor directs once the purpose is accomplishedCorrect
  2. BTransfer of ownership of the goods from the person delivering them to the person receiving them
  3. CDelivery of goods only as security for a debt owed by the person delivering them
  4. DDelivery of goods that must always be made in return for a payment of hire

Explanation

Bailment involves delivery of possession for a purpose, with the goods to be returned or disposed of as directed. Ownership does not pass, so the second option describes a sale. Security for a debt is pledge, a special kind of bailment, and hire is not essential because a gratuitous bailment is valid.

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