Bailments (Only read pages1061
to 1066. DO NOT Read
Documents of Title)
Chapter 49
Bailments
• A bailment is the legal relationship that results
whenever one person (the bailor) transfers
possession (but not title) of his/her personal
property to another person (bailee) to return it or
otherwise dispose of it, according to his/her
instructions.
– only exists with personal property
• To form a bailment, there must be an agreeement.
Owner must make DELIVERY of property. Bailee
must have clear intent to CONTROL the property,
and bailee must ACCEPT it.
– Delivery can be constructive, symbolic rather
than actual (i.e., keys to car)
Bailments vs. Sales & Gifts
• Bailments are distinguished from a sale or
gift in that the bailee does not receive title,
& at the end of the bailment term, the bailee
must return or account for the property.
– Bailee has absolute duty to restore possession
of the property to the bailor - can’t misdeliver
or bailee will be liable for conversion. Bailee is
presumed negligent if property is damaged.
– Generally, the bailee is required to return the
specific property unless property is fungible
(i.e.,grain), the bailee need only return goods of
the same quality and quantity.
Constructive Bailments
• Involuntary bailments. Bailee comes into
possession without the affirmative consent
of its true owner.
• Taking or having possession of lost or
mislaid property.
• Involuntary bailee owes the owner a slight
duty of care and is only liable for gross
negligence
Classification of Ordinary
Bailments; Bailee’s Duty of Care
• Gratuitous Bailments - for sole benefit of
bailor. Bailee has a duty of slight care; only
liable for gross negligence.
• Bailment for the Sole Benefit of Bailee Bailee owes a duty of great care, the utmost
care. Liable for slight negligence.
• Mutual Benefit Bailments - Bailee owes a
duty of ordinary care. Liable for ordinary
negligence (Includes commercial
bailments)
Extraordinary (Special)
Bailments
• Common carriers
• Innkeepers
• Public warehousers
Limitation of Liability
• Limitation of liability for negligence or
breach of contract.
• Limitation must be contained in a separate
agreement, or within the bailment contract.
• Liability for wrongful misconduct may not
be limited.
• The ability to modify may be restricted by
statute.
• Limitation must be brought to the attention
of bailor, and he must agree, or it’s
unenforceable...against public policy.
Termination
• Expiration of specified term
• Purpose of bailment is accomplished
• Mutual agreement between bailor and
bailee.
• Serious misuse of bailed property by bailee.
• Decision by either party if bailment is at
will