Chapter IX - Of Bailment
Section 148
Section 148: Bailment and its parties
Bailment concerns delivery of goods for a purpose, with their return or disposal as directed when that purpose ends.
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This article is for general information. Refer to the Indian Contract Act, 1872 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
A “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, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the “bailor”. The person to whom they are delivered is called, the “bailee”.
Explanation.—If a person already in possession of the goods of another contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.
Rule and business relevance
The delivering party is the bailor and the recipient is the bailee. Someone already possessing another’s goods may agree to hold them as bailee without a fresh physical handover.
Limits and related provisions
Possession for a purpose is different from a transfer of ownership. Identify the contract and agreed return or disposal before classifying a transaction.
Hypothetical business example
Hypothetical example: A workshop receives a customer’s machine for repair and return. Its custody can be bailment even though the workshop never owns the machine.
Practical decision flow
Identify the goods and the purpose of custody.
Record the agreed return or disposal directions.
Check whether an existing possessor agreed to become bailee.
Check the applicable legal framework
This guide explains the central provision. Applicable State amendments, the agreement, transaction date and other governing laws can affect its application. Check the current legal framework before relying on it for a commercial decision.
Practical checklist
Do
- Identify the goods and the purpose of custody.
- Record the agreed return or disposal directions.
- Check whether an existing possessor agreed to become bailee.
Avoid
- Possession for a purpose is different from a transfer of ownership. Identify the contract and agreed return or disposal before classifying a transaction.
Glossary
- Bailor
- The person delivering goods under the bailment.
- Bailee
- The person receiving or agreeing to hold the goods as bailee.
Frequently asked questions
Does bailment necessarily transfer ownership?
No. The definition concerns delivery and custody for a purpose.
Is a new physical handover always needed?
No. The explanation addresses an existing possessor agreeing to hold as bailee.
What happens when the purpose ends?
The goods are to be returned or disposed of according to the agreed directions.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026