Bailment

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Bailment is a legal relationship in common law, where the owner of personal property ("chattel") transfers physical possession of that property to another, who holds the property for a certain purpose, but retains ownership. [1] The owner who surrenders custody of a property is called the "bailor" and the individual who accepts the property is called a "bailee". [2] The bailee is the person who possesses the personal property in trust for the owner [a] for a set time [b] and for a precise reason and who delivers the property back to the owner when they have accomplished the purpose that was initially intended. [7]

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 for example a car mechanic business when a car has been dropped off for repair. Although a bailment relationship is ordinarily created by contract, there are circumstances where lawful possession by the bailee creates a bailment relationship without an ordinary contract, [7] such as an involuntary bailment. A bailment relationship between the bailor and bailee is generally less formal than a fiduciary relationship. [7]

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. However, a lease of personal property is the same as a bailment for hire, where the bailee gains the right to use the property. [8]

A common example of bailment is leaving one's car with a valet. [9] Leaving a car in an unattended parking garage, however, is typically a lease or license of a parking space rather than a bailment, as the garage does not take possession of (i.e. exercise dominion or control over) the car. However, bailments arise in many other situations, including terminated leases of property, warehousing (including store-it-yourself), or in carriage of goods.

Governing law

In the United States, bailments are frequently governed by statute. [7] For example, the UCC regulates personal property leases. [10] State bailment for hire statutes may also regulate the rights and duties of parties in the bailment relationship. [7] [11] The Malay States' ordinance of 1950 on contracts stated that:

104. In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality, and value as the goods bailed.
105. The bailee, in the absence of any special contract, is not responsible for the loss, destruction, or deterioration of the thing bailed, if he has taken the amount of care of it described in s 104 of this Ordinance. [12]

Bailment is a typical common law concept, [13] although similar concepts exist in civil law. [14]

"Sir William Jones has defined bailment to be 'a delivery of goods on a condition, express or implied, that they shall be restored by the bailee to the bailor, or according to his directions, as soon as the purpose for which they are bailed shall be answered.' He has again, in the closing summary of his essay, defined it in language somewhat different, as, 'A delivery of goods in trust, on a contract expressed or implied, that the trust shall be duly exercised and the goods re-delivered, as soon as the time or use for which they were bailed shall have elapsed or be performed.'"

Wharton, J. (1867) [15]

Purposes

There are three types of bailments, based on the purpose of the relationship: [7]

  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 when the owner is paying to have the repair accomplished).

A bailor receives the sole benefit from a bailment when a bailee acts gratuitously (e.g. the owner leaves the precious item such as a car or a piece of jewelry in the safekeeping of a trusted friend while the owner is traveling abroad without any agreement to compensate the friend).

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).

Damages

Plaintiffs will be able to sue for damages based on the duty of care. [16] 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. In US jurisdictions, the measure of care required by the bailee in a mutual benefit bailment is "ordinary care" or "due care". [17]

Terms

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

Cases

Notes

  1. ↑ In English common law, the bailee need not be a trustee for the bailor. [3] The bailee has no legal title to the property, whereas a trustee would have a legal title. [4]
  2. ↑ Under English common law, a bailment need not be for a precise term, it can be "at will". [5] [6]

References

  1. ↑ Garner, Bryan A, ed. (2009). Black's law dictionary (9th ed.). St. Paul, MN: West. p. 162. ISBN   978-0314199492.
  2. ↑ Merrill, Thomas W. (2010). Property. Smith, Henry E. New York: Oxford University Press. ISBN   978-0-19-971808-5. OCLC   656424368.
  3. ↑ Scott, Austin Wakeman (1967). The Law of Trusts. Little, Brown. p. 49. LCCN   67019987. Trust and bailment. The term "trust" is sometimes used in a sense broad enough to include bailment. A bailment, however, is not a trust in the strict sense; for a bailee is entrusted merely with the possession of a chattel, whereas a trustee holds the title to the trust property. A trust is a more intensive relationship than that which is involved in a bailment.
  4. ↑ Virgo, Graham (2020). The Principles of Equity & Trusts. Oxford University Press. p. 62. ISBN   978-0-19-885415-9. The essence of the distinction between trust and bailment is therefore that the bailee does not have legal title to the property and is obliged to manage the property on behalf of the legal owner, whereas the trustee has legal title to the property and is obliged to manage the property on behalf of the beneficiary, who has an equitable interest in the property.
  5. ↑ Faber, Wolfgang; Lurger, Brigitta (27 April 2009). England and Wales, Ireland, Scotland, Cyprus. Walter de Gruyter. p. 23. ISBN   978-3-86653-703-3. It is recognised that such a relationship can be of two main types: 'at will', meaning that the bailor can call for possession to be returned at any time; or 'for a term', meaning that the bailor only has a right to the return of the asset upon expiration of the certain period (save where the bailment has been repudiated...). Unless the bailor has made a binding promise to allow the bailee to retain possession for a fixed term, the bailment is at will.
  6. ↑ Faber, Wolfgang; Lurger, Brigitta (30 March 2011). Acquisition and Loss of Ownership of Goods. Walter de Gruyter. p. 388. ISBN   978-3-86653-901-3. Unless the bailor has given a binding promise to confer possession to the bailee for a fixed term, the bailment is considered to be at will. Bailment can derive from a contract, but this is not always the case and gratuitous bailments (e.g. deposit of luggage with a coach driver during travel) also exist (Houghland v. R. R. Low (Luxury Coaches) Ltd. [1962] 1 QB 694).
  7. 1 2 3 4 5 6 Gordon, Noah J.; Surette, Eric C. "Bailments". American Jurisprudence. Vol. 8A (2d ed.).
  8. ↑ Gordon, Noah J.; Surette, Eric C. "Bailments § 5. Transactions constituting bailments". American Jurisprudence. Vol. 8A (2d ed.).
  9. ↑ Cheeseman, Henry R. (2001). Business Law: Ethical, International & E-commerce Environment. Prentice Hall. p. 928. ISBN   978-0-13-087913-4. It is clear that parking lots and garages are bailees of automobiles once they assume control and possession of the automobile. Thus, if a valet parking attendant parks the car and keeps the keys, it is relatively certain that a court will recognize the existence of a bailment and hold the garage liable if the vehicle is stolen.
  10. ↑ U.C.C. §§ 2A-101 to 2A-604. As to the regulation of personal property leases under U.C.C. §§ 2A-101 et seq., see §§ 269 to 343.
  11. ↑ See Mark Singleton Buick, Inc. v. Taylor, 194 Ga. App. 630, 391 S.E.2d 435, 12 U.C.C. Rep. Serv. 2d 84 (1990).
  12. ↑ Contracts (Malay States) Ordinance of 1950, sections 104-105, quoted in Privy Council, Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd, reported 19 June 1978, accessed 21 September 2023
  13. ↑ Story, Joseph (1839). Commentaries on the Law of Bailments: With Illustrations from the Civil and the Foreign Law. J. Richards. p. 227. And in the common law, it would be treated as a case of bailment, only when the stock or materials belong to the employer. And, where the principal materials belong to the employer, the case would still be treated as a bailment, although the workman might furnish some accessorial materials or ornaments.
  14. ↑ "Bailment". uk.practicallaw.thomsonreuters.com. Retrieved 2017-09-18.[ failed verification ]
  15. ↑ Wharton, John (1867). The Law Lexicon Or Dictionary of Jurisprudence: Explaining the Technical Words and Phrases Employed in the Several Departments of English Law... Stevens and sons. p. 110.
  16. ↑ James, Nickolas; Chapple, Ellie (Larelle); Baumfield, Richard; Copp, Richard; Cunningham, Robert; Kamalnath, Akshaya; Floyd, Louise (2024-04-08). Business and Company Law, 3rd Edition. John Wiley & Sons. p. 119. ISBN   978-1-394-23528-5. The person in possession of the goods (the bailee) owes a duty of care to the owner of the goods (the bailor) to take reasonable care of the goods. If the bailee fails to take reasonable care of the goods, they will be liable for loss or damage to the goods.
  17. ↑ American Jurisprudence: A Modern Comprehensive Text Statement of American Law, State and Federal. Lawyers Co-operative Publishing Company. 1962. pp. 167, 637. Observation: The common-law duty of ordinary care in a mutual benefit bailment has been codified by statute in some jurisdictions, and has been modified by other bailment-for-hire statutes. The degree of care required of a bailee for mutual benefit is defined as ordinary care, or due care, or the degree of care which would be exercised by a person of ordinary care in the protection of his or her own property,...
  18. ↑ Privy Council, Port Swettenham Authority v TW Wu & Co (M) Sdn Bhd, reported 19 June 1978, accessed 21 September 2023
  19. ↑ Burrows, Andrew (29 April 2016). Principles of English Commercial Law. Oxford University Press. p. 278. ISBN   978-0-19-106328-2. Where a bailee is left in possession of goods for a period longer than that contemplated, various doctrines may enable him to lessen his responsibility. At one extreme, the court may find that he has become an involuntary bailee and no longer owes any duty to take care to safeguard the goods from theft or other physical hazard. This conclusion will be easier to reach where the bailment was for a fixed period, though even in that event the court may imply a period of grace before the duties of the bailee determine.

See also

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