Tuesday, April 29, 2008
Bailment is a legal relationship created when a person gives property to someone else for safekeeping. To create a bailment the other party must knowingly have exclusive control over the property. The receiver must use reasonable care to protect the property.
This word is derived from the French, bailler, to deliver. It is a compendious expression, to signify a contract resulting from delivery. It has been defined to be a delivery of goods on a condition, express or implied, that they shall be restored by the bailee to the bailor, or according to his directions, as soon as the purposes for which they are bailed shall be answered. Or it is a delivery of goods in trust, on a contract either expressed or implied, that the trust shall be duly executed, and the goods redelivered, as soon as the time or use for which they were bailed shall have elapsed or be performed.
Mr. Justice Blackstone has defined a bailment to be a delivery of goods in trust, upon contract, either expressed or implied, that the trust shall be faithfully executed on the part of the bailee. And in another place, as the delivery of goods to another person for a particular use.
Mr. Justice Story says that a bailment is a delivery of a thing in trust for some special object or purpose, and upon a contract, express or implied, to conform to the object or purpose of the trust.
Bailment is also defined as the temporary placement of control over, or possession of Personal Property by one person, the bailor, into the hands of another, the bailee, for a designated purpose upon which the parties have agreed. Or it can be said as the act of placing property in the custody and control of another, usually by agreement in which the holder (bailee) is responsible for their safe keeping and return of the property. It is also understood as the delivery of an asset by its owner to another person or persons for temporary care.
Sir William Jones has divided bailment into five sorts, namely:
-Depositum, or deposit.
-Mandatum, or commission without recompense.
-Commodatum, or loan for use, without pay.
-Pignori acceptum, or pawn.
-Locatum, or hiring, which is always with reward.
This last is subdivided into,
-Locatio rei, or biring, by which the hirer gains a temporary use of the thing.
-Locatio operis faciendi, when something is to be done to the thing delivered.
-Locatio operis mercium vehendarum, when the thing is merely to be carried from one place to another.
Literary, the word wadee’ah is derived from word al-wad’u or wada’ means ‘to leave’. It is because each mudee (proprietor) and muda’ (trustee) leaves one another. It can also mean al-hifz (to preserve, to keep, and to secure). It is kind of Amanah.
As-Sun’anee defines al-wadee’ah as the thing or good (corpus) entrusted by the owner or his agent to another to be kept in the custody. The contract of wadee’ah can be mandoob if the trustee has a character trust confidence in his self. Allah said in soorah al-Maidah verse 2:
وتعاونوا على البرّ والتّقوى
Means: “Do help one another in the courtesy and God-fearing”.
But wadee’ah can be wajib (compulsory) when nobody else other than himself (trustee) who is capable to keep the goods, and it is worried to be perish when nobody takes it into custody.
Ibn Balban defines wadee’ah as the wealth which is delivered or is handed over the person keeping it without reward.
In fact, wadee’ah contract is a kind of Bailment. It is sort of deposit in which the trust is for the benefit of the bailor as mandates. Generally, wadee’ah is done gratuitously.
There are some comparisons between the contract of Bailment and Wadee’ah:
Bailment has a wider sense in definition, as it includes many kinds of trust contracts, e.g  Those contracts in which the trust is for the benefit of both parties, as pledges or pawns, and hiring and letting to hire,  Those in which the trust is for the benefit of the bailee, as gratuitous loans for use, and  those in which the trust is for the benefit of the bailor, as deposits and mandates. The result; wadee’ah is one of its kind, as it is sort of deposit and mandates.
b. Use of Term
The term of ‘Bailment’ is used for a kind of contract, while the term of ‘wadee’ah’ is used for two meanings: for the contract itself and for subject of the contract (the goods delivered to the muda’).
c. Elements of Contract
In Bailment three elements are generally necessary: delivery, acceptance, and consideration.
Actual possession of or control over property must be delivered to a bailee in order to create a bailment. Control over property is not necessarily the same as physical custody of it but, rather, is a type of constructive delivery. The delivery of the keys to a safe-deposit box is constructive delivery of its contents.
A requisite to the creation of a bailment is the express or implied acceptance of possession of or control over the property by the bailee. A person cannot unwittingly become a bailee. Because a bailment is a contract, knowledge and acceptance of its terms are essential to its enforcement.
Consideration is the exchange of something of value, must be present for a bailment to exist. Unlike the consideration required for most contracts, as long as one party gives up something of value, such action is regarded as good consideration. It is sufficient that the bailor suffer loss of use of the property by relinquishing its control to the bailee; the bailor has given up something of value, the immediate right to control the property.
Whereas the Wadee’ah contract involved 3 elements as well, they are: Sighah, mudee, and muda’.
-Sighah (offer and acceptance),
-mudee’ (the party who deliver the goods, he can be the owner, the possessor or his agent), and
-muda’ (the trustee, or the party who is to take the goods into his custody).
But, Imam Shafe’i did not consider the sighah (offer and acceptance) as the element required in the wadee’ah contract. Merely silence of both mudee’ and muda’ in certain circumstances may be enough to create wadee’ah contract.
d. Parties involved
In Bailment the parties involved are known as bailor and bailee. Bailor is the party delivering the goods, and Bailee is the person to whom the goods are delivered. While in Wadee’ah they are known as mudee’ and muda’ (proprietor and trustee).
e. Source of Provision
The rights and duties of each bailor and bailee are provisioned in Contract Act 1872, while the rights and duties of each mudee and muda’ are regulated in the sources of Islamic Law (Qur’an, Sunnah, Ijma or consensus of jurists, and Qiyas).
f. Voluntarily and Involuntarily
Bailment can be established voluntarily or involuntarily, e.g by operation of law, while wadee’ah contract is always created voluntarily.
g. Movable and Immovable
Bailment contract is created for movable property, while wadee’ah can be done for both movable and immovable property. For instance; Z (mudee’) entrusted his home to Y (muda’) during Z’s travel to other city, or during specific time period. That illustration is an example of wadee’ah contract for immovable property.
h. Transfer of Goods to 3rd Party
In Bailment when bailee, without the knowledge of or authority from bailor, transferred the goods bailed to other person to be kept in the custody of that other person, and that transfer caused the goods bailed to the damage or loss. In this case bailee will be held liable to compensate. In Wadee’ah, when C (owner of the goods) entrusted the goods to A to be kept in his home, but after few days the door of A’s home was broken, and it may cause to the loss of the goods. Knowing this condition, A transferred the goods to his friend (B/third party) by reason to believe that B has more capability to keep the goods in his save home. In this circumstance, A will not be held liable to compensate in case of damage or loss, because his act is done in his capacity as trustee who has right to do so in case of emergency or manifest urgency.
i. Legal & Possessory Right
Trust of wadee’ah may cover realty as well as personality; the beneficiary under a trust has an equitable interest only, whereas a bailee has a legal interest (viz. various possessory rights). A trustee has the legal title of ownership, and so has power to convey a good title to a bona fide purchaser for value, whereas the bailee has only possessory rights.
j. Several joint Owners
Bailment in accordance with section 165 of Contract Act states that if several joint owners of goods bail them, the bailee may deliver them back to, or according to the directions of one joint owner without the consent of all, in the absence of any agreement to the contrary. On the other hand, in case of deposit (wadee’ah) by two persons, the trustee cannot deliver to either his share, but in presence of the other. So, if two men deposit (entrusted) something jointly with another, and one of them afterward appears and demands his share of deposit, the trustee must not give it unless in the presence of the other depositor, according to Imam Abu Haneefah.
The argument of Abu Haneefah is that the person present, in claiming his on share, necessarily claim half of the absentee’s since he claim a separate and determinate portion, whereas his right is indefinite. Now, where a right is mixed indefinitely with another, it is to be rendered separate and determinate only by means of division, but the trustee has no power to make a division.
k. To Use the Goods
In bailment, the bailee may use the thing bailed, provided that his act is not out of authorized use. Bailee can be held liable in case of making unauthorized use of goods bailed. He can use the thing bailed as far as the permission given by the bailor is concerned. In Wadee’ah, the muda’ (trustee) is not allowed to use the thing deposited to him. When the mudee (depositor/proprietor) allowed him to use the goods, the wadee’ah contract turns into areeyah (loan).
Consideration is one of the elements of Bailment contract. That is why in many cases, the bailee will be given a reward after the accomplishment of the task. For instance; a tailor will have a right of money after finishing the task of sewing the ordered garment of customer. It is a kind of non-gratuitous bailment. In the other hand, Wadeeah is generally created gratuitously and without a reward. And the goods are to be returned when it is demanded or required.
The contract of Wadee’ah is terminated when the goods are returned to mudee (proprietor/depositor) on his demand. It can be also terminated by the agreement of both parties, e.g when the muda’ (trustee) feels of incapability to keep the goods, or when the time period was specified.
Bailment, according to section 148 of 1872 Contract Act, 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. Thus, a bailment is ended when its purpose has been achieved, when the parties agree that it is terminated, or when the bailed property is destroyed. A bailment created for an indefinite period is terminable at will by either party, as long as the other party receives due notice of the intended termination. Once a bailment ends, the bailee must return the property to the bailor or possibly be liable for conversion.
1. A Law Dictionary, Adapted to the Constitution and Laws of the United States, By John Bouvier. Published in 1856.
2. AL-IKHYAR LITA’LEEL AL-MUKHTAR, by Majdooddin Abdullah Ibn Mahmood Ibn
3. Maudood al-Mausly, vol. II, Darul Fikr, Amman, Jordan, 1999
4. MAWAHIBUL JALEEL; MIN ADILLAH KHOLEEL, by Sheikh Ahmad al-Mukhtar al-Jaknee as-Shanqeety, vol. IV, Publisher: Idaratu Ihya-e-Turats al-Islami, Qatar, 1987.
5. AKHSARUL MUKHTASARAT, by Ibn Balban, vol. I, publisher: Maktabah ar-Rushd
THE HIDAYAH; Mussulman Laws, by Charles Hamilton, vol. III, Premier Book House, Lahore, 1982
6. Contract Act 1872, Mansoor Book House, Lahore, 2007