What is a Bailment?
Subject is personal property
! Involves a temporary transfer of
possession
! Involves a temporary transfer of control
! Parties intend the goods to be returned
Transfer of Possession & Control
!
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Actual Bailment – Bailee accepts
and receives goods themselves.
!
Constructive Bailment – Bailee
accepts a symbol of the personal
property in lieu of property itself.
bailor
bailee
Which of these transfer both
Possession and Control?
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Your car parked in a parking garage, the keys
are in your pocket.
Your car left with a valet.
House sitting for a friend.
A car you rented on Spring Break.
A pen you borrow from a friend.
A security guard on night duty at an art gallery.
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Custody – temporary control under owner’s direction
A necklace your friend loans you to wear at
prom.
Parties Must Intend Goods be Returned
!
In same condition (with reasonable aging, usage, etc.)
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Example: Rental car is expected to have additional mileage.
!
In improved or modified condition
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Exceptions:
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Example: repairs or cleaning
Goods may be returned to another party designated by bailor.
Fungible goods (one unit of goods is the same as the next):
only need to return same quantity not exact same goods.
Example: Rental truck returned to another city, with a full tank of
gas.
Termination of Bailment
!
!
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Agreed upon time is up
Purpose has been achieved
Parties mutually agree to end
Also
! Death, insanity or bankruptcy of one party
! Except in case of contracted time period,
duties are transferred to estate.
4 Characteristics of Bailments
Personal Property
Temporary Transfer of Possession
Temporary Transfer of Control
Intend goods be returned
Common Examples of Bailments
Bailments for Transport
1.
2.
3.
4.
(shipping)
Enforce reasonable rules for conduct of business
Charge a reasonable rate
Charge demurrage (fee for vehicle when not in use)
Enforce a carrier’s lien (keep goods until paid)
Bailments for Hire (rentals)
Bailments for Services (repairs)
Who’s responsible for damaged good?
Bailments for Sale
(consignment)
Why do we care?
Many legal disputes arise when
something happens to property
before it is returned.
Levels of Expected Care
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Extraordinary Care
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Bailee must not waste, ignore or destroy
property
When bailor is sole beneficiary
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Only exceptions are acts of God, war or police
Examples: hotels, truck lines, UPS, air freight,
and gratuitous bailments (bailee is sole
beneficiary)
Borrowing a friends calculator for no charge
Minimal Care
Example: Care for neighbors house
plants for free
Involuntary Bailments
Example: row boat washes ashore
! However, if valuable, must make effort
to identify owner
Ordinary Care
!
Expected of common carriers
Levels of Expected Care
!
!
Bailee is strictly liable for any damage or loss
!
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Levels of Expected Care
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Liable only if neglect or carelessness
Mutual benefit to bailor and bailee: both
receive consideration
Example: Leave tennis racquet to be
restrung for $20.
What Care Would Be Expected?
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Library Book
Find a wallet with $2
Find a wallet with
$200
Leave bike at repair
shop
Furniture on a
moving van
Rental car
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Borrow your neighbor’s
car
Leave your coat at a
friend’s house
Rent a video
Dog sit for a friend
Blood left at a blood
bank for future personal
use
Levels of Expected Care
Extraordinary care:
Common Carriers (if no waivers/disclaimers)
Gratuitous Bailments: When Bailee benefits
for example: Borrowing something
Ordinary care:
Mutual Benefit Bailments
Both parties Benefit, example: Rentals
Modifications to Level of Care
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By Legislation
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By Contract
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Duty to Return Goods
Bailee must return goods according to
the agreement
! If bailee is entitled to payment and not
paid – may exercise a bailee’s lien
(keep goods until payment)
! If payment is unreasonably delayed,
bailee may sell property to recover fee.
Parties can determine what kind of care is required
By Disclaimer
Minimal care:
Involuntary Bailments; Bailor Benefits
Found items, taking care of something for free
!
Limited liability laws for airlines responsibility for
luggage.
Sign, label or warning reducing the duty of care.
Bailor must be aware of disclaimer prior to
bailment.
Liability Issues
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Mutual Benefit Bailments
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Bailments for sole benefit of bailor
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Bailor must provide goods fit for intended purpose
Bailor must inform bailee of any defects
Bailee cannot collect damages if they were aware of the defect
Bailor must inform bailee of any defects or dangers
Bailee may not use bailed items unless necessary to preserve
them
Bailments for sole benefit of bailee
!
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Bailor must inform bailee of any defects
Bailee may use goods only as agreed.