Bailor’s duty of disclosure when goods bailed are defective

Section 150 of the Indian Contract Act 1872 mentions the following duty of a bailor in respect of the goods bailed by him.

(1) 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 the damage arising to the bailee directly from such faults.

(2) 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 fault in the goods bailed.

Gratuitous bailment

First para (Section 150) imposes a duty on the bailor of defective goods which interfere with the use of them, or expose the bailee to extraordinary risks. He is bound to disclose those faults in the goods which create the risk and of which he is aware. If he fails to make such disclosure, he is responsible for damage arising to the bailee directly from such fault. This duty is of gratuitous bailor or the bailor without reward, because when the bailor bails the goods for reward, he is liable for the damage caused by the defective goods even though he is not aware of the defect in them.

For example, 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 the damage sustained.

Bailment for reward

Second para of Section 150 deals with bailment of goods for reward. According to this provision, when the goods are bailed for hire, the bailor is liable for the damage caused to the bailee by the defective goods, whether the bailor is aware of the existence of faults in the goods or not.

For example, 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.

In Hyman v. Nye & Sons (1881) 6 Q.B.D. 65 the plaintiff hired a carriage and horses from the defendant for a particular journey. The carriage being defective, it was upset and the plaintiff was injured thereby. The defendant was held liable for the injury to the plaintiff.