CHAPTER
16
Bailments
16-1 Bailments
16-2 Bailor and Bailee Duties
Law for Business and Personal Use
© Thomson South-Western

16-1 Bailments
GOALS
 Discuss the ways in which bailments are created and ended
 Identify common real-life bailments
Chapter 16
Slide 2
Law for Business and Personal Use
© Thomson South-Western

FOCUS
 What is a bailment and have you been involved in one?
Chapter 16
Slide 3
Law for Business and Personal Use
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HOW ARE BAILMENTS
CREATED AND ENDED?
 Bailment
 Transfer of possession and control of personal property subject to an agreement to return the property or deliver it to a 3 rd party
 Delivery
 Acceptance
 Consideration
 Bailor
Chapter 16
 Bailee
Slide 4
Law for Business and Personal Use
© Thomson South-Western

Examples
 Business
 Hold something as security
 You give someone something of yours to sell
 Dispose of as you direct
 Personal
 Have someone look after for safekeeping
 Lending something to someone to keep
Chapter 16
Slide 5
Law for Business and Personal Use
© Thomson South-Western

HOW ARE BAILMENTS
CREATED AND ENDED?
 Possession
1.
Actual bailments
 Actual or constructive delivery
2.
Constructive bailments
 Person in possession of property holds it while law decides who to deliver it to
 Control
 Custody
Chapter 16
Slide 6
Law for Business and Personal Use
© Thomson South-Western

Disposition of Goods
 Typically agreed that goods get returned to bailor
 Sometimes goes to another party

Goods must be returned identical to previous state
 Wear and tear
 Modifications
 Fungible
 No difference
Chapter 16
Slide 7
Law for Business and Personal Use
© Thomson South-Western

Termination of the Bailment
 Previously agreed upon time, purpose, or mutual decision to end bailment
 Death, insanity, or bankruptcy
 Rights can be transferred to deceased’s estate
Chapter 16
Slide 8
Law for Business and Personal Use
© Thomson South-Western

What are the three ways in which bailments are ended?
Chapter 16
Slide 9
Law for Business and Personal Use
© Thomson South-Western

COMMON EXAMPLES OF
BAILMENTS
 Bailments for transport
 Common carrier
 Bailments for hire
 Rental of property
 Bailments for services
 Repairs
 Bailments for sale
 Consignment
Chapter 16
Slide 10
Law for Business and Personal Use
© Thomson South-Western

Name four common examples of bailments.
Chapter 16
Slide 11
Law for Business and Personal Use
© Thomson South-Western

16-2 Bailor and Bailee Duties
GOALS
 Describe the duties owed by the bailee in a bailment
 State the bailor’s duties in a bailment
Chapter 16
Slide 12
Law for Business and Personal Use
© Thomson South-Western

FOCUS
Characteristics of bailment
 The subject is tangible personal property
 The bailor transfers temporary possession to the bailee
 The bailor transfers temporary control to the bailee
 The goods must be returned to the bailor or to someone the bailor specifies
Chapter 16
Slide 13
Law for Business and Personal Use
© Thomson South-Western

Levels of Care
 Extraordinary bailment
 Goods are bailed with common carriers and hotels
 Extraordinary care
 Generally means the bailee will be strictly liable for any damage, loss, or injury to the goods
Chapter 16
Slide 14
 Only exception is act of war, unforeseeable acts of nature, or acts of police
Law for Business and Personal Use
© Thomson South-Western

Levels of Care
 When only one party benefits from the bailment
 Gratuitous bailment
 Ordinary care
 The bailee will be liable only if negligence occurs
 Mutual benefit bailment
Chapter 16
Slide 15
Law for Business and Personal Use
© Thomson South-Western

Levels of Care
 Involuntary bailments
 Typically arise accidentally and without consent of the bailee
 Minimal care
 Only liable for harm to the bailed property if they ignore, waste, or destroy it
Chapter 16
Slide 16
Law for Business and Personal Use
© Thomson South-Western

DUTIES OWED BY THE BAILEE
IN A BAILMENT
 Duty to care for the property (previously mentioned)
 Modification of the level of care
 Modification by legislation
 Modification by contract
 Modification by disclaimer
 Duty to return the goods
Chapter 16
Slide 17
Law for Business and Personal Use
© Thomson South-Western

Modification of the Level of Care
 By legislation
 Airline industry limiting liability for luggage
 By contract
 By disclaimer
 A sign, label, or warning reducing the bailee’s duty of care
Chapter 16
Slide 18
Law for Business and Personal Use
© Thomson South-Western

Duty to Return the Goods
 According to terms
 Bailee’s lien
 Right of a bailee to retain possession of the bailed property until payment is made
 Bailee gives property back to bailor without payment, the bailor loses the right to force the sale of the bailed property to pay the amount due
Chapter 16
Slide 19
Law for Business and Personal Use
© Thomson South-Western

Name the three levels of care owed bailed goods.
Chapter 16
Slide 20
Law for Business and Personal Use
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WHAT DUTIES ARE OWED BY
THE BAILOR IN A BAILMENT?
 Mutual-benefit bailments
 Bailments for the sole benefit of bailor
 Bailments for the sole benefit of bailee
Chapter 16
Slide 21
Law for Business and Personal Use
© Thomson South-Western

Name the types of bailments in which a bailor has duties.
Chapter 16
Slide 22
Law for Business and Personal Use
© Thomson South-Western