Rights of finder of lost goods
Sections 71, 168 and 169 of the Indian Contract Act, 1872
In one minute
You find a wallet on the road and take it home. You do not become its owner. The law treats you as a bailee, a person who looks after another's goods. You must take care of the goods and return them to the owner.
In return, you have a right to keep the goods until your expenses are paid. You may sue for a reward only if the owner offered one. In exams, the duties, section 168, section 169 and the loose-or-attached rule earn the marks. In real life, it settles who may keep a lost phone, a bracelet or a ring.
Exam focus
- Frequency: Rarely asked
- Usually asked as: Long answer (10 to 15 marks)
Legal provision
- Section 71: a person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.
- Section 168: the finder has no right to sue the owner for compensation for the trouble and expense he voluntarily took to preserve the goods and find the owner. He may keep the goods against the owner until he receives such compensation. Where the owner has offered a specific reward for the return of lost goods, the finder may sue for the reward and keep the goods until he receives it.
- Section 169: when a thing commonly sold is lost, the finder may sell it if the owner cannot be found with reasonable diligence, or refuses on demand to pay the finder's lawful charges. In addition, the thing must be in danger of perishing or of losing the greater part of its value, or the finder's lawful charges must amount to two-thirds of its value.
- Sections 151, 152, 154, 160, 161 and 163: the bailee must take the care that a man of ordinary prudence takes of his own goods, is not liable for loss if he took that care, must not use the goods beyond the bailment, must return them, and must hand over any increase or profit.
- Section 25(2): a promise to compensate a person who has already voluntarily done something for the promisor is enforceable even without fresh consideration.
Meaning and definition
A finder of goods is a person who finds goods belonging to another and takes them into his custody. Section 71 does not make him a bailee by contract. There is no contract between him and the owner. The Act treats him as a bailee so that the full set of bailee's duties applies to him.
The reason is fairness to both sides. The owner has lost his goods through no wish of his own, and he should get them back unharmed. The finder is a stranger who took on a burden, so the law gives him rights to protect him. This is one of the five quasi-contractual situations.
The timeline shows how the position of a finder moves from finding to the end.
- FindingA person finds lost goods and takes them into his custody. He is a bailee (section 71).
- CareHe takes ordinary care, does not use the goods for himself, and tries to trace the owner (sections 151 to 154).
- Owner foundThe owner asks for the goods. The finder may keep them until his expenses are paid, or until a reward he is owed is paid (section 168).
- Owner not foundIf the owner cannot be found, or refuses to pay the charges, the finder may sell a thing in the cases in section 169.
- ReturnThe owner takes back the goods and pays what the law requires. The finder hands over any increase or profit (section 163).
Detailed explanation
Step 1: the finder's duties as a bailee
The finder must take as much care of the goods as a person of ordinary prudence takes of his own goods of the same value (section 151). If he takes that care, he is not liable for loss or damage (section 152). He must not use the goods for his own benefit (section 154). He must return them when the owner is found, and he is responsible for any loss if he fails to return them (sections 160 and 161). He must also give the owner any increase or profit, such as a calf born to a lost cow (section 163).
English law adds that the finder must take reasonable steps to trace the owner. The Court of Appeal stated this in Parker v. British Airways Board (1982).
Example. Meena finds a smartphone on a bus seat and takes it home. She keeps it safe and does not use it. She puts up a notice at the bus depot. If it is stolen from her locked cupboard in spite of her care, she is not liable.
Step 2: the finder's title against everyone but the owner
The finder does not become the owner. He does have a right to the goods that is good against everyone except the true owner. In Armory v. Delamirie (1722), a chimney sweeper's boy found a jewel and took it to a goldsmith's shop. The goldsmith's apprentice removed the stones. The Court held that the finder has "such a property as will enable him to keep it against all but the rightful owner".
The same Court told the jury to presume the worst against the goldsmith, who did not produce the jewel. The value of the best jewel that would fit the socket was the measure of damages.
Step 3: the right to keep the goods (section 168)
The finder cannot sue the owner for his trouble and expense. He can refuse to hand over the goods until the owner pays what the finder properly spent on preserving them and finding the owner. This is a right of retention, which is often called a lien (a right to keep another's goods until a debt is paid).
If the owner publicly offered a specific reward for the return of the goods, the finder may sue for the reward and keep the goods until it is paid.
Step 4: the right to sell (section 169)
The finder may sell only a thing that is commonly sold, and only when two sets of conditions are both met. First, the owner cannot be found with reasonable diligence, or he refuses on demand to pay the finder's lawful charges. Second, the thing may perish or lose the greater part of its value, or the finder's lawful charges are two-thirds of its value or more.
Example. Imran finds a crate of ripe mangoes left on a roadside. He cannot trace the owner. The mangoes will rot within days, so they are in danger of perishing. He may sell them. If he found a gold chain instead, the two-thirds test would not be met by a small expense, and he could not sell it.
Step 5: the finder against the owner of the place
A finder may meet a rival claim from the owner of the shop, house or land where he found the goods. The English cases give the rules. The finder wins if the goods were loose in a place open to the public, as in Bridges v. Hawkesworth (1851) where banknotes lay on a shop floor. The finder also wins against an owner who never occupied the house, as in Hannah v. Peel (1945), where a soldier found a brooch on a window frame in a requisitioned house.
The owner of the place wins if the thing was attached to the land or buried in it. In South Staffordshire Water Co. v. Sharman (1896) two gold rings lay in the mud at the bottom of a pool that a workman was cleaning, and the landowner won. In Parker v. British Airways Board (1982) the Court of Appeal held that an occupier has a better right to a loose thing only if he has shown that he means to control the place and the things in it. An airline lounge open to a class of passengers did not meet that test.
Step 6: when the owner later promises a reward
If no reward was offered, the finder cannot sue for one. But if the owner promises money after he gets the goods back, the promise is enforceable. Section 25(2) makes a promise to compensate a person who has already voluntarily done something for the promisor a valid contract. The Act's illustration (c) to section 25 is on these facts: A finds B's purse and gives it to him, B promises A Rs 50, and this is a contract.
Rights and duties of the finder at a glance
| Point | The rule | Source |
|---|---|---|
| Status | The finder is treated as a bailee | Section 71 |
| Care | Ordinary prudence, as with his own goods | Sections 151, 152 |
| Use | None for his own benefit | Section 154 |
| Return | To the owner, with any increase or profit | Sections 160, 161, 163 |
| Expenses and trouble | No suit, but he may keep the goods until paid | Section 168 |
| Reward | He may sue only if a specific reward was offered | Section 168 |
| Sale | Only in the cases of section 169 | Section 169 |
| Title | Good against all but the true owner | Armory v. Delamirie |
Don't confuse: a finder, an ordinary bailee and a thief
Each holds goods that belong to another person. The law treats them very differently.
| Point | Finder | Ordinary bailee | Dishonest taker |
|---|---|---|---|
| How he gets the goods | By finding lost goods and taking them into custody | By delivery under a contract | By taking or keeping what he knows is not his |
| Contract with the owner | None, the Act treats him as a bailee | Yes | None |
| Right against the owner | To keep the goods until expenses are paid | As agreed, and a lien for skilled work (section 170) | None |
| Reward | Only if a specific reward was offered | Under the contract | None |
Inside the idea. Kavya finds a gold bracelet in a park. She hands it to the police and gives them her name and address. She has acted as a finder should, and the law protects her title against everyone but the owner.
Just outside it. Ajay borrows his friend's scooter for a week under an agreement. He is an ordinary bailee under a contract, not a finder, because the scooter was not lost.
Common mistakes
- Thinking the finder becomes the owner. He has a right good against all but the true owner.
- Saying the finder can sue the owner for his expenses. He can only keep the goods until he is paid (section 168).
- Allowing a sale after some time has passed. Section 169 allows it only when both sets of conditions are met.
- Mixing up the loose-goods cases and the attached-goods cases. Where the goods were found decides who wins.
Apply it
Problem
X finds B's purse on the road and gives it to him. B then promises to give X Rs 5,000. B refuses to pay. Will X succeed in recovering the amount? Would the answer change if X had sued B for his trouble in finding him?
Issue. Is B's promise to pay X enforceable after the purse is returned?
Rule. A finder cannot sue the owner for trouble and expense voluntarily incurred (section 168). A promise to compensate a person who has already voluntarily done something for the promisor is a valid contract even without fresh consideration (section 25(2) and illustration (c)).
Application. X had no right to payment when he returned the purse, and no reward had been offered. After B promised Rs 5,000, the promise fell within section 25(2), because X had already voluntarily done something for B. The Act's illustration involves the same facts and a promise of Rs 50.
Conclusion. X succeeds on B's promise and can recover Rs 5,000. His claim rests on the promise, not on section 168. Without the promise, X could not sue B for compensation.
Leading case laws
- Armory v. Delamirie (1722)
Facts. A chimney sweeper's boy found a jewel and took it to a goldsmith's shop to learn what it was. The goldsmith's apprentice took out the stones and returned only the socket. The boy sued in trover. (1722) 1 Strange 505.
Principle. The finder of a jewel does not get absolute ownership. He has a property that lets him keep it against all but the rightful owner, and he may sue in trover.
Why it matters. It is the basic authority on the finder's title.
- Bridges v. Hawkesworth (1851)
Facts. A customer found banknotes on the floor of a shop and gave them to a partner of the firm for the owner. After three years nobody had claimed them, and the shopkeeper refused to return them. (1851) 21 LJQB 75.
Principle. The finder had a better claim than the shopkeeper. The notes were never in the shopkeeper's custody before they were found.
Why it matters. It gives the rule for loose goods in a place open to the public.
- South Staffordshire Water Co. v. Sharman (1896)
Facts. A workman who was cleaning a pool on the company's land found two gold rings in the mud at the bottom. The company claimed them. [1896] 2 QB 44.
Principle. A landowner has a better right than the finder to things that lie in or attached to his land.
Why it matters. It marks the difference between loose goods and goods attached to the land.
- Hannah v. Peel (1945)
Facts. A soldier found a brooch on a window frame in a house that the military had requisitioned. He gave it to the police. The owner of the house, who had never lived there, had it returned and sold it for £66. [1945] KB 509.
Principle. The finder won, because the brooch was lost, was not attached to the land, and the owner had never occupied the house.
Why it matters. It shows when a landowner has no better right than the finder.
- Parker v. British Airways Board (1982)
Facts. A passenger found a gold bracelet on the floor of an airline's executive lounge at Heathrow. He handed it to an employee. The airline sold it for £850 when the owner did not come forward. [1982] QB 1004.
Principle. The finder's rights beat the occupier's unless the occupier had shown an intention to control the place and the things in it. The finder must act honestly and take reasonable steps to find the owner.
Why it matters. It is the modern statement of the finder's rights against an occupier.
How to write this answer in the exam
5-mark answer
- State section 71: the finder is treated as a bailee.
- List the duties: care, no use, return.
- List the rights: retain the goods, sue for a reward only if offered, sell in the cases of section 169.
- Name Armory v. Delamirie for the finder's title.
10-mark answer
- Meaning, and the place of section 71 among quasi-contractual claims.
- Duties under the bailee's sections 151 to 163.
- Rights under sections 168 and 169, with the two-part test for sale.
- The finder's title and the rival claim of the occupier: Armory, Bridges, Sharman, Hannah, Parker.
- For a problem on a later promise, apply section 25(2).
- Conclude on the facts.
Key points to remember
- A finder who takes goods into custody has the responsibility of a bailee (section 71).
- He must take ordinary care, not use the goods, and return them with any increase.
- He cannot sue for his trouble and expense, but may keep the goods until he is paid (section 168).
- He may sue for a reward only if a specific reward was offered.
- He may sell only a thing commonly sold, and only in the cases of section 169.
- His title is good against everyone but the true owner (Armory v. Delamirie).
Quick self-test
1. Does a finder become the owner of lost goods?
No. He is treated as a bailee, and his right to the goods is good against everyone except the true owner.
2. Can a finder sue the owner for his expenses?
No. He may keep the goods until the owner pays, but he can sue only for a specific reward that the owner offered (section 168).
3. When may a finder sell the goods?
Only if the thing is commonly sold, the owner cannot be found or refuses the lawful charges, and the thing is perishing or the charges reach two-thirds of its value (section 169).