Chapter 27

“Bailments”

What is a Bailment?

• Transfer of possession of personal property without transfer of ownership.

• Bailor- party who gives up possession of property.

• Bailee- The party who receives possession and control.

Three Characteristics of Bailment

• The Subject of Bailment Must Be Personal Property

• A Bailor Gives Temporary Possession and Control of Goods To Another

• The Parties Must Intend That the Goods Be Returned to the Bailor

• Fungible- There’s no difference between one unit of the goods and another.

What Are The Types of Bailments?

• Extraordinary Bailments- Bailment requiring an unusually high standard of care

• Ordinary Bailment- Voluntary bailments with parties other than commercial carriers and hotels.

• Involuntary Bailment- arises without the consent of the bailee.

Common carrier- one who agrees, for a fee, to transport good for another who applies, provided the goods are lawful and fit for shipment.

Gratuitous Bailment- Bailment which benefits only one party.

Bailment for the sole benefit of the bailee- a type of gratuitous bailment in which the bailor transfers an item to the bailee without charge and the bailee gains the service.

Bailment for the sole benefit of the bailor- a type of gratuitous bailment in which the bailor transfers the item to the bailee and the bailor gains a service without charge.

Mutual-benefit bailment- when consideration is given and received by both bailor and bailee.

Actual bailment- the bailee receives and accepts the goods themselves.

Constructive bailment- when the bailee agrees and accepts a symbol of the actual personal property.

Bailees duty of care- care of goods while they are in the possession of the bailee.

Three levels of care:

1-Duty of Extraordinary Care-If there is damage, loss, or injury the bailee is liable.

2-Duty of Ordinary Care-The bailee will be liable only if he or she has been negligent in some fashion.

3-Duty of Minimal Care-The bailee must not waste or destroy the property.

How Can the Bailee’s Duty of Care Be Modified?

• Modification of Legislation

• Modification of Negotiated Contract

• Modification by Disclaimer• disclaimer- a sign, label, or warning reducing the bailee’s

duty of care.

What is the Nature of the Bailee’s Duty to Return the

Goods?• Bailee’s duty to return the property-

compels the bailee to return the bailed property according to the terms of the bailment agreement.

• Bailee’s lien- retains possession until paid.

What are the Bailee’s Duties?

• Bailor’s duty to provide goods fit for the intended purpose- the bailor’s obligation in a mutual-benefit bailment to check for damages and inform the bailee of discoverable defects, or be liable for any resulting injuries.

What are the Most Common Bailments?

• Bailments for Transport• Demurrage- Fees for use of the transportation vehicle when the bailor

fails to load or unload at the agreed time.• Carrier’s Lien- The right to obtain possession of the goods until the

charges for transportation and incidental services are paid.

• Bailments for Hire• Bailments for Services• Bailments for Sale• Consignment- where ownership remains in the manufacturer or

wholesaler until the goods are sold.• Sale on Approval- the prospective buyer is permitted to use the goods

to determine whether he or she wants to buy them.

How is a Bailment Ended?

• When the time agreed upon by the parties has elapsed.

• When the agreed purpose has been accomplished.

• When the parties mutually agree to end it.