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Liability for Negligence in Hotel Car Parking Services: Contractual Limitations and Legal Implications

Section 148 of the Indian Contract Act, 1872 defines bailment. It is defined as:
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. The person delivering the goods is called the bailor. The person to whom they are delivered is called the bailee.

This bailment, a special contract, comes with several rights and liabilities upon both, the bailee and the bailor. Section 151 and Section 152 majorly talks about the degree of care and liabilities that both bailee and bailor are supposed to decipher. Now, the legal issue that arises is whether it is open to any hotel to contract out his liability for negligence beyond what is already provided under Section 152 of the Indian Contract Act, 1872.


  1. Valid Bailment Contract
    Essentials for a valid bailment contract are:
    1. Agreement:
      The charges paid at the restaurant and, in-return, the holder keeping the check on the car, for the time being, form a valid set of promises and considerations. This forms a valid agreement under According to Section 2(e) of ICA, 1872.
    2. Delivery of Goods: The delivery of 'keys' by the owner of the car to the hotel.
    3. Movable Property:According to Section 3 of the Transfer of Property Act, 1882 r/w Section 3(26) of the General Clauses Act, 1897, the car (with the intention of moving it, Marshall vs. Green (1875-76) L. R. 1 C. P. D. 35) is a movable property.
    4. Definite Purpose:A definite purpose of keeping the check on the car.
    5. Return or Disposal of the Specific Good:The hotel is supposed to return the keys to the car owner after he comes out from the hotel.
    6. Essential of Valid Contract:The said agreement is enforceable by law, since it is made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and is not expressly declared to be void. Therefore, the agreement between the car owner and the Hotel is a valid contract.
    7. Ownership Not Transferred:As the holder is supposed to return the keys to Mr. Ram, he had merely transferred the possession for the time being, and not the ownership as not Contract of Sale is signed or executed.

    As all the essential elements of the bailment are fulfilled, it is valid.

  2. Degree of Reasonable Care:
    The ICA, 1872 talks about the degree of care that the bailee is supposed to offer to the bailor under Section 151 and Section 152 of the Act. According to Section 151 of the ICA, 1872, the bailee is expected to take prudent care as he would otherwise take of his own goods. According to Section 152, if the bailee takes enough reasonable care as described in Section 151, he would not be liable for any still-occurring further loss, unless he agrees to be held liable for such loss under any special contract.
  3.  In the case of Taj Mahal Hotel v. United India Insurance Co. Ltd., (2020) 2 SCC 224, the court held that in any case, the hotel owner could not agree to absolve himself of responsibility for his own negligence or the negligence of its employees with regard to a guest's vehicle, and once the hotel staff or valet receives possession of the vehicle, they have an implied duty to return it to the owner in a safe condition. However, it would not be appropriate to hold hotel owners to a strict liability standard, meaning that hotels cannot always be held strictly liable for the safety of automobiles without evidence of negligence on their part.

    Therefore, the prima facie liability rule should be applied when such a bailment relationship is determined between the hotel and its guest regarding automobiles so bailed to the hotel. However, if one scrutinizes, there is a minute but substantial factual difference between both cases.

    In the case of Taj Mahal Hotel v. United India Insurance Co. Ltd., (2020) 2 SCC 224, the car was stolen, and the negligence of the valet was proven upon his breach of duty. Whereas in this case, the car was not stolen, but the car had internal technical defects, which led to this mishap. No extent of reasonable care could have avoided it, as the valet did not have the knowledge of even the possibility of this. If presumably, the owner of the car knows about the technical glitch, he owned the duty under Section 150 of the ICA, 1872 to inform the valet about the same.

(7) In the case of Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, (2020) 2 SCC 265, the court defined the degree of reasonable care and its extent. It was decided that when a guest knowingly gave the hotel custody or possession of his vehicle, the hotel (bailee) had the burden of proof to prove that it made reasonable efforts to take reasonable care of the vehicle that was bailed and that theft did not happen as a result of its negligence or misconduct (as in the case with valet parking).

Along with designating an attendant or security person to park the car and keep the keys in his possession until the owner enters the hotel grounds, the hotel is required to take further procedures to guard against situations that could result in the automobile being wrongly lost or destroyed. For instance, making sure that car keys are kept out of the reach of strangers, that the valet parks the car in a secure location, that parking spaces nearby the hotel are well-guarded, that parking spaces inside the hotel (if any) are reasonably well-maintained, and CCTV cameras are installed there to detect any suspicious activity, that the car is only given to those who have a parking receipt, and so on.

Even if Hotel applies this prudent standard of care, it was not possible for the bailee to prevent the mishap. Therefore, it can be inferred that Hotel has no further liability of negligence in this case as even after taking all reasonable care, the mishap could not have been avoided. Therefore, it is not open to Hotel to contract out his liability for negligence beyond what is already provided under Section 152 of the Indian Contract Act, 1872.

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