Chapter IX - Of Bailment
Section 150
Section 150: Disclosure of faults in bailed goods
A bailor must disclose certain known faults; goods bailed for hire carry the broader responsibility stated in the second paragraph.
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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
The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults.
If the goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of the existence of such faults in the goods bailed.
Illustrations
(a)A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and injured. A is responsible to B for damage sustained.
(b)A hires a carriage of B. The carriage is unsafe, though B is not aware of it, and A is injured. B is responsible to A for the injury.
Rule and business relevance
Known faults materially interfering with use or exposing the bailee to extraordinary risk must be disclosed. Non-disclosure brings responsibility for directly resulting damage; for hire, lack of awareness of the fault does not avoid that responsibility.
Limits and related provisions
Separate an unpaid loan from hire and establish fault, the relevant damage and causal connection. Do not assume a safety check or contractual label removes applicable duties.
Hypothetical business example
Hypothetical example: A hired lifting device has a dangerous fault that injures the hirer. The hire rule requires review even if the owner says the fault was unknown.
Practical decision flow
Record whether the bailment is for hire.
Identify the fault, knowledge and disclosures.
Connect the claimed damage directly to the fault.
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
- Record whether the bailment is for hire.
- Identify the fault, knowledge and disclosures.
- Connect the claimed damage directly to the fault.
Avoid
- Separate an unpaid loan from hire and establish fault, the relevant damage and causal connection. Do not assume a safety check or contractual label removes applicable duties.
Glossary
- Material fault
- A fault materially interfering with use or creating extraordinary risk.
- Bailment for hire
- Bailment involving hire, for which the second paragraph applies.
Frequently asked questions
Does knowledge always determine liability?
No. The hire paragraph applies whether the bailor knew of the fault or not.
Must every minor imperfection be treated identically?
The first paragraph identifies faults materially affecting use or exposing extraordinary risks.
What damage does the section identify?
Damage arising directly from the relevant faults.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026