bailment


Also found in: Dictionary, Thesaurus, Medical, Financial, Encyclopedia, Wikipedia.

Bailment

The temporary placement of control over, or possession of Personal Property by one person, the bailor, into the hands of another, the bailee, for a designated purpose upon which the parties have agreed.The term bailment is derived from the French bailor, "to deliver." It is generally considered to be a contractual relationship since the bailor and bailee, either expressly or impliedly, bind themselves to act according to particular terms. The bailee receives only control or possession of the property while the bailor retains the ownership interests in it. During the specific period a bailment exists, the bailee's interest in the property is superior to that of all others, including the bailor, unless the bailee violates some term of the agreement. Once the purpose for which the property has been delivered has been accomplished, the property will be returned to the bailor or otherwise disposed of pursuant to the bailor's directions.

A bailment is not the same as a sale, which is an intentional transfer of ownership of personal property in exchange for something of value. A bailment involves only a transfer of possession or custody, not of ownership. A rental or lease of personal property might be a bailment, depending upon the agreement of the parties. A bailment is created when a parking garage attendant, the bailee, is given the keys to a motor vehicle by its owner, the bailor. The owner, in addition to renting the space, has transferred possession and control of the vehicle by relinquishing its keys to the attendant. If the keys were not made available and the vehicle was locked, the arrangement would be strictly a rental or lease, since there was no transfer of possession.

A gratuitous loan and the delivery of property for repair or safekeeping are also typical situations in which a bailment is created.

Categories

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.

A bailment for the mutual benefit of the parties is created when there is an exchange of performances between the parties. A bailment for the repair of an item is a bailment for mutual benefit when the bailee receives a fee in exchange for his or her work.

A bailor receives the sole benefit from a bailment when a bailee acts gratuitously—for example, if a restaurant, a bailee, provides an attended coatroom free of charge to its customers, the bailors. By virtue of the terms of the bailment, the bailee agrees to act without any expectation of compensation. A bailment is created for the sole benefit of the bailee when both parties agree the property temporarily in the bailee's custody is to be used to his or her own advantage without giving anything to the bailor in return. The loan of a book from a library is a bailment for the sole benefit of the bailee.

Elements

Three elements are generally necessary for the existence of a bailment: delivery, acceptance, and consideration.

Actual possession of or control over property must be delivered to a bailee in order to create a bailment. The delivery of actual possession of an item allows the bailee to accomplish his or her duties toward the property without the interference of others. Control over property is not necessarily the same as physical custody of it but, rather, is a type of constructive delivery. The bailor gives the bailee the means of access to taking custody of it, without its actual delivery. The law construes such action as the equivalent of the physical transfer of the item. The delivery of the keys to a safe-deposit box is constructive delivery of its contents.

A requisite to the creation of a bailment is the express or implied acceptance of possession of or control over the property by the bailee. A person cannot unwittingly become a bailee. Because a bailment is a contract, knowledge and acceptance of its terms are essential to its enforcement.

Consideration, the exchange of something of value, must be present for a bailment to exist. Unlike the consideration required for most contracts, as long as one party gives up something of value, such action is regarded as good consideration. It is sufficient that the bailor suffer loss of use of the property by relinquishing its control to the bailee; the bailor has given up something of value—the immediate right to control the property.

Rights and Liabilities

The bailment contract embodying general principles of the law of bailments governs the rights and duties of the bailor and bailee. The duty of care that must be exercised by a bailee varies, depending on the type of bailment.

In a bailment for mutual benefit, the bailee must take reasonable care of the bailed property. A bailee who fails to do so may be held liable for any damages incurred from his or her Negligence. When a bailor receives the sole benefit from the bailment, the bailee has a lesser duty to care for the property and is financially responsible only if he or she has been grossly negligent or has acted in bad faith in taking care of the property. In contrast, a bailee for whose sole benefit property has been bailed must exercise extraordinary care for the property. The bailee can use the property only in the manner authorized by the terms of the bailment. The bailee is liable for all injuries to the property from failure to properly care for or use it.

Once the purpose of the bailment has been completed, the bailee usually must return the property to the bailor, or account for it, depending upon the terms of the contract. If, through no fault of his or her own, the return of the property is delayed or becomes impossible—for example, when it is lost during the course of the bailment or when a hurricane blows the property into the ocean—the bailee will not be held liable for nondelivery on demand. In all other situations, however, the bailee will be responsible for the tort of conversion for unjustifiable failure to redeliver the property as well as its unauthorized use.

The provisions of the bailment contract may restrict the liability of a bailee for negligent care or unauthorized use of the property. Such terms may not, however, absolve the bailee from all liability for the consequences of his or her own Fraud or negligence. The bailor must have notice of all such limitations on liability. The restrictions will be enforced in any action brought for damages as long as the contract does not violate the law or public policy. Similarly, a bailee may extend his or her liability to the bailor by contract provision.

Termination

A bailment is ended when its purpose has been achieved, when the parties agree that it is terminated, or when the bailed property is destroyed. A bailment created for an indefinite period is terminable at will by either party, as long as the other party receives due notice of the intended termination. Once a bailment ends, the bailee must return the property to the bailor or possibly be liable for conversion.

Further readings

Cross, Frank B., and Roger Leroy Miller. 1998. West's Legal Environment of Business: Test Cases, Ethical Regulatory, and International Issues. St. Paul, Minn.: West.

Hall, Kermit L. 1991. A History of American Legal Culture: Cases and Materials. New York: Oxford Univ. Press.

Cross-references

Bad Faith; Conversion; Damages; Negligence.

bailment

n. 1) the act of placing property in the custody and control of another, usually by agreement in which the holder (bailee) is responsible for their safe keeping and return of the property. Examples: bonds left with the bank, autos parked in a garage, animals lodged with a kennel, or a storage facility (as long as the goods can be moved and are under the control of the custodian). While most are "bailments for hire" in which the custodian (bailee) is paid, there is also "constructive bailment" when the circumstances create an obligation upon the custodian to protect the goods, and "gratuitous bailment" in which there is no payment, but the bailee is still responsible, such as when a finder of a lost diamond ring places it with a custodian pending finding the owner. 2) the goods themselves which are held by a bailee. Thus, the "bailor" (owner) leaves the "bailment" (goods) with the "bailee" (custodian), and the entire transaction is a "bailment." (See: bailee, bailor)

bailment

noun giving up, held in pledge, in escrow, transferred, under control

bailment

a delivery of goods by one person (the bailor) to another person (the bailee) for a certain purpose, upon an express or implied promise by the bailee to return them to the bailor or to deliver them to someone designated by him, after the purpose has been fulfilled. While not a trustee, the bailee is bound to exercise a reasonable level of care in respect of the thing bailed during the period of the bailment. Bailments are of six kinds:
  1. (1) depositum, where goods are delivered by one person to another to keep for the use of the bailor;
  2. (2) commodatum, where goods are ‘lent’ gratis to be used by the bailee and returned to the bailor after such use;
  3. (3) locatio et conductio, where goods are hired by the bailee for use by him;
  4. (4) vadium (pawn or pledge), where goods or chattels are delivered to another as security for money borrowed by the bailor;
  5. (5) locatio operis faciendi, where goods are delivered to another for transportation or for the bailee to carry out some work on them;
  6. (6) mandatum, as in (5) but where the transportation or work is to be undertaken gratis and without any reward.

BAILMENT, contracts. This word is derived from the French, bailler, to deliver. 2 Bl. Com. 451; Jones' Bailm. 90 Story on Bailm. c. 1, Sec. 2. It is a compendious expression, to signify a contract resulting from delivery. It has been defined 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 purposes for which they are bailed shall be answered. 1 Jones' Bailm. 1. Or it is a delivery of goods in trust, on a contract either expressed or implied, that the trust shall be duly executed, and the goods redelivered, as soon as the time or use for which they were bailed shall have elapsed or be performed. Jones' Bailm. 117.
     2. Each of these definitions, says Judge Story, seems redundant and inaccurate if it be the proper office of a definition to include those things only which belong to the genus or class. Both these definitions suppose that the goods are to be restored or redelivered; but in a bailment for sale, as upon a consignment to a factor, no redelivery is contemplated between the parties. In some cases, no use is contemplated by the bailee, in others, it is of the essence of the contract: in some cases time is material to terminAte the contract; in others, time is necessary to give a new accessorial right. Story,on Bailm. c. 1, Sec. 2.
     3. Mr. Justice Blackstone has defined a bailment to be a delivery of goods in trust, upon contract, either expressed or implied, that the trust shall be faithfully executed on the part of the bailee. 2 Bl. Com. 451. And in another place, as the delivery of goods to another person for a particular use. 2 Bl. Com. 395. Vide Kent's Comm. Lect. 40, 437.
     4. Mr. Justice Story says, that a bailment is a delivery of a thing in trust for some special object or purpose, and upon a contract, express or implied, to conform to the object or purpose of the trust. Story on Bailm. c. 1, Sec. 2. This corresponds very nearly with the definition of Merlin. Vide Repertoire, mot Bail.
     5. Bailments are divisible into three kinds: 1. Those in which the trust is for the benefit of the bailor, as deposits and mandates. 2. Those in which the trust is for the benefit of the bailee, as gratuitous loans for use. 3. Those in which the trust is for the benefit of both parties, as pledges or pawns, and hiring and letting to hire. See Deposit; Hire; Loans; mandates and Pledges.
     6. Sir William Jones has divided bailments into five sorts, namely: 1. Depositum, or deposit. 2. Mandatum, or commission without recompense. 3. Commodatum, or loan for use, without pay. 4. Pignori acceptum, or pawn. 5. Locatum, or hiring, which is always with reward. This last is subdivided into, 1. Locatio rei, or hiring, by which the hirer gains a temporary use of the thing. 2. Locatio operis faciendi, when something is to be done to the thing delivered. 3. Locatio operis mercium vehendarum, when the thing is merely to be carried from one place to another. See these several words. As to the obligations and duties of bailees in general, see Diligence, and Story on Bailm. c. 1; Chit. on Cont. 141; 3 John. R. 170; 17 Mass. R. 479; 5 Day, 15; 1 Conn. Rep. 487; 10 Johns. R. 1, 471; 12 Johns. R. 144, 232; 11 Johns. R. 107; 15 Johns. R. 39; 2 John. C. R. 100; 2 Caines' Cas. 189; 19 Johns. R. 44; 14 John. R. 175; 2 Halst. 108; 2 South. 738; 2 Harr. & M'Hen. 453; 1 Rand. 3; 2 Hawks, 145; 1 Murphy, 417; 1 Hayw. 14; 1 Rep. Con. Ct. 121, 186; 2 Rep. Con. Ct. 239; 1 Bay, 101; 2 Nott & M'Cord, 88, 489; 1 Browne, 43, 176; 2 Binn. 72; 4 Binn. 127; 5 Binn. 457; 6 Binn. 129; 6 Serg. & Rawle, 439; 8 Serg. & Rawle, 500, 533; 14 Serg. & R. 275; Bac. Ab. h. t.; 1 Bouv. Inst. n. 978-1099.

References in periodicals archive ?
308) The bailment is perpetuated against the will of the
the interest payment outweighs the storage and administration costs), but they also bear additional risk, owing to the fact that they have a partial-deposit-partial-loan arrangement with the bank rather than a pure bailment of goods.
Similarly, if the real property exists in a bailment situation, the intent is to look to direct property coverage, whether that be in the commercial property forms or inland marine.
197) The only other possibilities are those of bailment and license.
Under a bailment theory, personal ownership exists in such tissues as blood (e.
Breyer filed suit on Anzalone's behalf against the veterinarian and the animal hospital for breach of bailment, negligence, breach of fiduciary duty, and intentional infliction of emotional distress, seeking damages in the amount of $100,000 plus costs and attorney's fees.
That's the decision rendered recently by the Texas Supreme Court, which issued the ruling in a bailment case.
Legal Basis for Contract/Bailment-- Trust/Fiduciary--A Relationship Bailment refers to the fiduciary relationship transfer of possession has three features: (1) of UBC by the "bailor" the fiduciary has scope to another person (the for the exercise of some "bailee") for some discretion or power; (2) temporary purpose (e.
The state doesn't actually purchase the product until it has been ordered by a retailer and leaves the bailment warehouse.
The bill would amend the Internal Revenue Code to give wholesalers and suppliers in bailment states a tax credit toward the cost of financing the excise tax for domestically produced spirits.
3) the creation of standardized form request letters for claims attorneys to use in gathering facility information in connection with standard lawsuits, such as slip-and-fall cases, medical malpractice cases, bailment cases and assaults/failure to protect cases;