Home  /  Indian Contract Act  /  Section 162

Section 162: Termination of gratuitous bailment by death

Indian Contract Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1872
Section 161 All 266 Sections of Indian Contract Act Section 163

Legal Commentary & Landmark Judgments: Section 162

Section 162 provides for the automatic legal termination of a gratuitous bailment upon the death of either the bailor or the bailee, reflecting the purely personal and non-heritable character of gratuitous custody and lending relationships.

  • Gratuitous Character Requirement: Applies exclusively to gratuitous bailments where no consideration, hire, or commercial remuneration passes between the bailor and bailee.
  • Automatic Dissolution by Death of Either Party: The death of either the bailor or the bailee instantly terminates the bailment by operation of law, without requiring any notice or formal act of revocation.
  • Transformation of Legal Status of Personal Representatives: Upon death, the legal representatives of the deceased bailee do not inherit any right of possession or user; they become involuntary custodians bound to return the chattel to the bailor or his estate.
Key Landmark Precedents:
  • Pritchard v. Merchant's & Tradesman's Mutual Life Assurance Society (1858) 3 CB NS 622: The Court observed that relationships founded purely upon personal gratuitous confidence dissolve immediately upon the death of either party.
  • Re Cosslett (Contractors) Ltd [1998] Ch 495: The English Court of Appeal emphasized that gratuitous bailments and personal licences are non-assignable and terminate upon death, distinguishing them from commercial proprietary charges.
Courtroom Practice & Strategic Litigation Guidance:

When representing legal heirs of a deceased bailor, immediately serve a notice of termination citing Section 162 on anyone holding the deceased's chattels gratuitously. If representing the heirs of a deceased bailee, advise them not to use or transfer the goods, but to immediately issue an interpleader or tender delivery to the true owner to prevent personal liability for conversion.

Section 161 All 266 Sections of Indian Contract Act Section 163