Section 181 of ICA : Section 181: Apportionment Of Relief Or Compensation Obtained By Such Suits

Explanation using Example

Imagine Rahul lends his camera to Priya, who is a friend and a professional photographer, to use on a photoshoot. This is a bailment agreement where Rahul is the bailor, and Priya is the bailee. During the shoot, the camera is damaged due to the negligence of a third party. Priya decides to sue the third party for damages and wins the case, receiving compensation.

According to Section 181 of The Indian Contract Act, 1872, the compensation Priya received must be distributed between her and Rahul based on their interests in the camera. Since Rahul is the owner, he may have a greater interest in the compensation for the damages to his camera, while Priya might be entitled to a portion that covers her lost income from the photoshoot. They need to agree on how to divide the compensation in a manner that reflects their individual losses and interests in the camera.