Contract Act_Practical Problems_10

A customer entrusts certain G.P. Notes for safe custody to his bank. The bank keeps the G.P. Notes in a wooden box. Later, it is found that the Notes are destroyed by white ants. What is the bank's liability to the customer?

Section 151 of the Indian Contract Act, 1872 charges a bailee (which the bank is in the present case) to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed.

Further, Section 152 provides that if the bailee has taken reasonable amount of care which a man of ordinary prudence would take, then in the absence of any special contract, he will not be responsible for the loss, destruction or deterioration of the goods bailed.

In the present case, if to the knowledge of the bank manager, the premises were infested with white ants, it would certainly be considered negligence on his part to have stored valuable documents like G.P. Notes in a wooden box. Otherwise, i.e., not being aware, keeping G.P. Notes in wooden box is not likely to be considered as improper and hence bank may not be subjected to any liability.