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Section 150: Bailor's duty to disclose faults in goods bailed

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Act 1872
Section 149 All 266 Sections of Indian Contract Act Section 151

Legal Commentary & Landmark Judgments: Section 150

Section 150 of the Indian Contract Act, 1872 establishes the statutory duty of a bailor to disclose defects and latent faults in the bailed goods that materially interfere with their use or expose the bailee to extraordinary risks. It draws a fundamental distinction between gratuitous bailment (where the bailor is liable only for defects of which he was actually aware) and bailment for hire or reward (where the bailor is strictly liable for damages resulting from defects regardless of whether he was aware of them).

  • Gratuitous Bailment Standard: In a gratuitous bailment (e.g. lending a car to a friend without charge), the bailor is liable only if he had actual subjective knowledge of the dangerous defect and failed to disclose it to the bailee.
  • Strict Liability in Bailment for Hire: Where goods are bailed for hire or commercial consideration (e.g. car rental, equipment leasing, crane hire), the bailor's duty is absolute; he is liable for damage or injury caused by defects whether he was aware of them or not.
  • Extraordinary Risk and Material Interference: The undisclosed fault must be one that exposes the bailee to extraordinary danger, personal injury, or property damage, or materially impairs the contemplated commercial utility of the goods.
Key Landmark Precedents:
  • Hyman v. Nye (1881) 6 QBD 685: Foundational English authority on bailment for hire codified in Section 150, holding that a person who lets out a carriage and horses for hire impliedly warrants that they are reasonably fit for the purpose; the jobmaster is strictly liable for a broken axle even if he was not personally aware of the defect.
  • Reed v. Dean [1949] 1 KB 188: Held that where a motor launch was hired for a holiday on the River Thames and caught fire due to a defective firefighting appliance, the bailor was strictly liable under the implied warranty of fitness in bailment for hire, irrespective of negligence.
Courtroom Practice & Strategic Litigation Guidance:

In personal injury or property damage claims arising from hired machinery or rental vehicles, frame the action under the second paragraph of Section 150. Emphasize that in bailments for hire, the plaintiff is not required to prove negligence, knowledge, or scienter on the part of the rental agency; the statutory liability for hidden mechanical faults is strict.

Section 149 All 266 Sections of Indian Contract Act Section 151