Rights and Duties of the founder of lost Goods

This Article is written by Akshita Sodhi of Lloyd law college, Greater Noida.

Who is called Finder of lost goods?

A person who finds the belongings that belong to another person and holds that good into his own custody is bound to take due care of the good and to find and return that good to its real owner. Now the question arises, why is it the Responsibility of the finder of goods to take care of it?

The answer to this question is given by Section 71 of Indian Contract Act which says that “A person who finds the belongings or goods that belongs to another person and takes that goods or belongings into his own custody is subject to the same responsibility as a bailee”

Who is called bailee?

An act of placing any property or good in the custody and control of another person, usually be agreement, the person under whose possession the property is being placed under custody is called bailee, in other words, we could say that a bailee is a person to whom goods are delivered[1]. The bailee is responsible for the due care of the property and return and this whole process is called bailment.

Quasi-Contractual Situation

The situation when a good is lost by one person and is found by another, a situation of Quasi-Contract arises in these types of cases.

A quasi contract is a contract between two parties when they don’t have any previous obligations towards one another. The quasi-contract is legally recognised by our Courts. A quasi contract is a contract created by the court to correct a situation in which one party acquires something at the expense of other parties.

Even if the person has not broken any contract or committed any tort, he/she has to follow up certain obligations under certain situations.

Section 68 to 72 tells us about necessities under quasi-contractual obligations:-

  1. Supply of necessities. (Section-68)
  2. Payment by interested persons. (Section-69)
  3. Liability to pay for non-gratuitous acts. (Section-70)
  4. Finder of Goods. (Section-71)
  5. Mistake of coercion. (Section-72)

Supply of necessities:-

When a person supplies with necessities to another person who is incompetent to get into an agreement for the contract or to someone who is legally bound to support, the supplier is entitled to recover the cost of the property from the person to whom he/she has supplied with necessities.

Payment by interested persons:-

If a person is interested in doing the payment which is bound by another person to pay, he/she is entitled to the same, provided that he will be entitled to the reimbursement by the other.

Liability to pay for nongratuius goods:-

If a person enjoys the benefit of the good or property supplied by another person not intending to do it gratuitously. The former is bound to pay compensation to latter in respect of, or restore, the good so done or delivered.

Finder of goods:-

A person who finds goods that belongs to another person and takes that good into his own custody is subject to the same responsibility as a bailee.

Mistake or coercion:-

If money is being paid or some good is being delivered by one person to another person by mistake, the later is bound to repay or return it to former.

Rights of a founder of lost goods

Section 168: The right to sue for the specific reward offered:-

The founder of goods has no right to sue the owner of the good for compensation for the problem caused to him in preserving the good or the difficulty faced by him/her in finding the owner of the good. But, if the owner has promised of any reward or compensation for return of the lost good, the finder has right to retain that good until he/she receives such compensation form the owner of the good.

Section 169: The right of the founder of goods to sell the good which is already for sale.

The founder of a lost good has the right to sell the good, if the good is already subjected to sale, if the owner of the good with due diligence is found, or if he/she by demand refuses to pay the lawful charges to the finder, the founder may sell such good:-

  • If the good is in danger of perishing or losing its value
  • When the lawful charges of the finder, in respect of the good found, amount to two-third of its value.

Responsibilities/Duties of Founder of Goods

A person, who find the lost good belonging to another person and takes that good into his own custody, shall be liable for the same responsibility as a bailee[2].

  1. Duty to proper and reasonable care

Section 151 provides that it is the duty of founder of lost goods or bailee under Indian contract act to take due care of the goods in the same way he/she has taken care of the good if that good would belong to him/her or a man of ordinary prudence have taken care of under similar circumstances.

Section 152 provides thatthe founder is not responsible for any kind of loss to the good, a founder of lost goods or bailee is not liable for any kind of loss, deterioration or destruction caused to the good if he/she has taken due care of the good as prescribed in Section 151 of Indian Contract Act.

  1. Duty not to make unauthorised use of Goods

According to section 153 of the Act which says that bailment can be terminated if the bailee’s act is inconsistent.

“A contract of bailment is voidable at the option of the bailer if the bailee does any act with regard to the goods bailed, inconsistent with the conditions of the bailment”

Section 154- This section talks about the liability of bailee making unauthorised use of the goods –

If the bailee/founder of goods makes any use of the goods found by him(owner’s goods) which is not according to the conditions of bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.

  1. Duty not to mix the goods:-

It is the duty of bailee not to mix the goods found with other goods.

Section 155-Effect of the mixture with bailor’s consent-

If the bailee/founder of goods, with the consent of bailor, mixes the bailor’s/owner’s goods with his own goods, the owner and founder of goods shall have an interest, in proportion to their respective sharesin the mixture thus produced.

Section 156-Effect of mixing without bailor’s content, when the goods are separable:-

If the bailee/founder of lost goods without the consent of bailor/owner of goods, mixes the bailor/owner’s goods with his own goods in such a way that goods can be separated or divided, the properties in the goods remains in the parties respectively,i.e. both will remain the possessor of their respective shares but bailee/founder of goods is bound to bear the cost of separation or division, and any damage or loss arising out of mixture

Section 157-Effect of mixing without the consent of the owner of goods when the goods are not separable:-

If the bailee or founder of goods mixes the goods of the bailor/owner with his own goods without owner’s consent, in such a way that goods cannot be separated and deliver into its previous form, the bailee is liable to pay compensation for the loss of the goods.

  1. Duty to return Goods

Section 160 –It is the duty of bailee(finder of goods) to return the goods to the bailor(owner of goods )as per the directions of the bailor within the specified period of time as directed by bailor.

Section 161-If the goods are not returned on time by the finder of goods(bailee), he/she shall be liable for any cause of damage, destruction, or deterioration caused to the goods for not being returned on time.

[1] Section 148 of the Indian Contract Act, 1872.

[2] Section 7 of the Indian contract Act, 1972

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