Comprehension
The Indian Contract Act is a classical model of contract law that covers various codes that govern general contracts as well as specific contracts. Contract of Bailment, one such type of contract under the Indian law of contract, talks about the delivery of goods from one person to another for a purpose. Under this contract, the bailee is given a right to lien. Right to lien is defined under Section 171 of the Indian Contract Act, 1872, which talks about the general right to lien of bankers, wharfingers, factors, attorneys of high courts and policy brokers.
Generally, two parties are involved. The banker who lends money to the borrower or the customer, who then provides a security in exchange for the loan. Both parties are entitled to some of the rights that are associated with the securities that were provided. It is a possessory right which allows the bank to have temporary possession of the goods until 17 * PG the customer’s outstanding debt is paid. The banker the right to act as the trustee of the property as long as they are acting within their powers as the custodian and do not sell the property without giving notice to the customer. The landmark judgment of Syndicate Bank v. Vijay Kumar and Others dealt with the issue of whether or not a banker’s right to lien and set off was a general and customary right guaranteed to them. In furtherance of Halsbury’s laws of England, this judgment recognised the banker’s right to general lien was a right guaranteed by the law and not the contract.
(Extracted with edits from “Critical Analysis of Bankers Right of General Lien” by Alisha Khalid Bhendwade, IJLRA, Vol. II, 2024)
Generally, two parties are involved. The banker who lends money to the borrower or the customer, who then provides a security in exchange for the loan. Both parties are entitled to some of the rights that are associated with the securities that were provided. It is a possessory right which allows the bank to have temporary possession of the goods until 17 * PG the customer’s outstanding debt is paid. The banker the right to act as the trustee of the property as long as they are acting within their powers as the custodian and do not sell the property without giving notice to the customer. The landmark judgment of Syndicate Bank v. Vijay Kumar and Others dealt with the issue of whether or not a banker’s right to lien and set off was a general and customary right guaranteed to them. In furtherance of Halsbury’s laws of England, this judgment recognised the banker’s right to general lien was a right guaranteed by the law and not the contract.
(Extracted with edits from “Critical Analysis of Bankers Right of General Lien” by Alisha Khalid Bhendwade, IJLRA, Vol. II, 2024)
Question: 1
Who among the following can exercise right to General Lien in the absence of any provision in the contract?
i. Factors
ii. Brokers
iii. Wharfingers
iv. Attorneys
Who among the following can exercise right to General Lien in the absence of any provision in the contract?
i. Factors
ii. Brokers
iii. Wharfingers
iv. Attorneys
i. Factors
ii. Brokers
iii. Wharfingers
iv. Attorneys
Updated On: Dec 3, 2024
- iv
- iv and ii
- i and iii
- All of them
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The Correct Option is C
Solution and Explanation
- In the absence of any contract provision, the general lien can be exercised by:
- Factors: Persons employed to sell goods on behalf of the owner.
- Brokers: Persons who arrange deals or transactions between parties.
- Wharfingers: Individuals who operate docks or wharves.
- Attorneys: Legal professionals can exercise a general lien over papers or documents related to a client’s case.
Thus, the correct answer is (D).
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Question: 2
The Bailee’s right to retain the goods until he receives due remuneration for the services, he has rendered in respect of them is known as:
The Bailee’s right to retain the goods until he receives due remuneration for the services, he has rendered in respect of them is known as:
Updated On: Dec 3, 2024
- Particular Lien
- General Lien
- Particular Retention
- General Retention
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The Correct Option is A
Solution and Explanation
- A general lien refers to the right of a bailee to retain possession of goods until they are paid for the services provided, even if the goods are unrelated to the particular service.
Thus, the correct answer is (B).
Thus, the correct answer is (B).
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Question: 3
With respect to bailment, a Banker:
With respect to bailment, a Banker:
Updated On: Dec 3, 2024
- Has a right to a particular lien on fixed deposits
- Has a right to a general lien on fixed deposits
- Has a right to a general lien on savings account
- Has no right to a lien on a savings account or fixed deposits
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The Correct Option is D
Solution and Explanation
- A banker can exercise a general lien over deposits like fixed deposits and securities held by them, to cover any dues owed by the depositor.
Thus, the correct answer is (B).
Thus, the correct answer is (B).
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Question: 4
Which one of the following is not an essential characteristic of Bailment?
Which one of the following is not an essential characteristic of Bailment?
Updated On: Dec 3, 2024
- Physical delivery of goods
- Delivery of goods for some purpose
- After the purpose is accomplished, the goods must be returned
- Goods may be returned to the owner or otherwise disposed of according to the directions of the person delivering them
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The Correct Option is A
Solution and Explanation
- Bailment involves:
- Physical delivery of goods to the bailee.
- Purposeful delivery of goods for a specific purpose.
- Return of goods after the purpose is achieved.
- The disposition of goods according to the deliverer’s directions is not an essential characteristic of bailment.
Thus, the correct answer is (D).
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Question: 5
Which one of the following are bailments?
i. Hiring a Locker facility in a Bank
ii. Taking a Gold loan from the Bank
iii. Hypothecation of the vehicle for loan to the Bank
iv. Giving car for valet parking
Which one of the following are bailments?
i. Hiring a Locker facility in a Bank
ii. Taking a Gold loan from the Bank
iii. Hypothecation of the vehicle for loan to the Bank
iv. Giving car for valet parking
i. Hiring a Locker facility in a Bank
ii. Taking a Gold loan from the Bank
iii. Hypothecation of the vehicle for loan to the Bank
iv. Giving car for valet parking
Updated On: Dec 3, 2024
- iv
- iv and ii
- i and iii
- All of them
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The Correct Option is B
Solution and Explanation
- Bailment occurs when goods are delivered for a specific purpose with an agreement to return them.
(i) Hiring a locker is not a bailment because the bank does not take possession of the goods.
(ii) Taking a gold loan is a contract of pledge, not bailment.
(iii) Hypothecation involves possession of goods by the lender as security for a loan, not a bailment.
(iv) Giving a car for valet parking is a classic example of bailment, as the car is delivered for a purpose (parking) with an agreement to return it.
Thus, the correct answer is (A).
(i) Hiring a locker is not a bailment because the bank does not take possession of the goods.
(ii) Taking a gold loan is a contract of pledge, not bailment.
(iii) Hypothecation involves possession of goods by the lender as security for a loan, not a bailment.
(iv) Giving a car for valet parking is a classic example of bailment, as the car is delivered for a purpose (parking) with an agreement to return it.
Thus, the correct answer is (A).
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