Bailment

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Bailment describes a legal relationship in common law where physical possession of personal property, or chattel, is transferred from one person (the 'bailor') to another person (the 'bailee') who subsequently has possession of the property. It arises when a person gives property to someone else for safekeeping.

Contents

General

Bailment is distinguished from a contract of sale or a gift of property, as it only involves the transfer of possession and not its ownership. To create a bailment, the bailee must both intend to possess, and actually physically possess, the bailable chattel. Bailment is a typical common law concept although similar concepts exists in civil law (Spain- Depósito).

In addition, unlike a lease or rental, where ownership remains with the lessor but the lessee is allowed to use the property, the bailee is generally not entitled to the use of the property while it is in his possession.

A common example of bailment is leaving your car with a valet. Leaving your car in a parking garage is typically a license, as the car park's intent to possess your car cannot be shown. However, it arises in many other situations, including terminated leases of property, warehousing (including store-it-yourself) or in carriage of goods.

Purposes

There are three types of bailments:

  1. for the benefit of the bailor and bailee
  2. for the sole benefit of the bailor; and
  3. for the sole benefit of the bailee.
Examples

A bailment for the mutual benefit of the parties is created when there is an exchange of performances between the parties (e.g. a bailment for the repair of an item).

A bailor receives the sole benefit from a bailment when a bailee acts gratuitously (e.g. a restaurant, a bailee, provides an attended coatroom free of charge to its customer, the bailor).

A bailment is created for the sole benefit of the bailee when a bailor acts gratuitously (e.g., the loan of a book to a patron, the bailee, from a library, the bailor).

Types

Modifying the earlier opinion of Lord Holt (Coggs v. Bernard, 92 Eng. Rep. 107 (K.B. 1704)), Sir William Jones in his 1781 An Essay on The Law of Bailments divided bailments into five sorts, namely:

Liability

No matter how a bailment arises, the bailee will incur some liability in the taking of a bailment. Different jurisdictions maintain different standards of care.

Strict liability

The old common law held a bailee strictly liable for the bailment. The exception to this rule was the case of involuntary bailments (see below), when the bailee is only held to a standard of due care.

Tiered system

In many jurisdictions the system of strict liability has been replaced by a tiered system of liability that depends on the relationship of the bailee to the bailor. The bailee is generally expected to take reasonable precautions to safeguard the property, although this standard sometimes varies depending upon who benefits from the bailment.

Normal care

Some jurisdictions have held bailees to a standard of normal care regardless of who benefits in the bailor/bailee relationship.

Involuntary bailees

An exception to all the above is the case of an involuntary bailee, one who by not intentional acts is made a bailee. For example, if one is given a stock certificate but it turns out to be the wrong certificate (intended for someone else), he is an unintentional bailee, he has made no intentional act to become a bailee. He is therefore entitled to divest himself of the certificate regardless of a duty of care, so long as he does no malicious or intentional harm to another.

Damages

Plaintiffs will be able to sue for damages based on the duty of care. Often this will be normal tort damages. Plaintiff may elect also to sue for conversion, either in the replevin or trover, although these are generally considered older, common law damages.

Terms

Bailment can arise in a number of situations, and is often described by the type of relationship that gave rise to the bailment. Several common distinctions are:

Cases

See also

External references