what does bailment mean in legal terms

by Libby Feest V Published 2 years ago Updated 2 years ago

What is a Bailment Arrangement?

Definition of Bailment. In a bailment agreement, the bailee voluntarily assumes possession of goods from the bailor for a period with an obligation to return the personal property.
Types of Bailment Arrangements. ...
Difference Between a Bailment and a Lease. ...
Difference Between a Bailment and a Licence. ...
Key Takeaways. ...

A 'bailment' is defined as a non-ownership transfer of possession. Under English , the right to possess a thing is separate and distinct from owning the thing. Interestingly, as a result of this distinction, in some jurisdictions, an owner of an object can steal their own property.

Full Answer

What is bailment and what are the duties of bailee?

The duties of a bailee include the following:

Duty to exercise reasonable care of the goods bailed
Duty not to mix bailor’s goods with his own goods
Duty not to make unauthorized use of goods
Duty not to create an adverse title
Duty to return the bailed goods
Duty to return accretions to the goods

What are essentials of bailment?

Essential Elements of a contract of Bailment: 4 essentials of Contract of Bailment. According to Section 148 of the contract act,1872; Following are the essential of the bailment in law. 1). Contract: There must be a valid contract between the bailor and the bailee. The delivery of goods should be made under a contract.

What are the characteristics of bailment?

Characteristics of Bailment. The essential characteristics of bailment are given as under: Contract: There must be a contract between the party who delivers the goods i.e. bailor and the party which receives the goods, i.e. bailee, no matter if it is express or implied. Delivery of Goods: Goods must be delivered by one party to another.

What are the types of bailment?

Types of bailment

Bailments Benefiting Both the Bailor and the Bailee: This type of bailment is mentioned to aid in comprehending bailment. ...
Bailments that are only beneficial to the Bailor: This is referred to as an unjustified (free) bailment. ...
Bailments that are only beneficial to the bailee: These are known as productive bailments. ...

What is meaning of bailment in law?

—A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the 'bailor'.

What are the 3 types of bailments?

There are three types of bailments—those that benefit both parties, those that benefit only the bailor, and those that only benefit the bailee.

What is bailment with example?

Bailments may be created by contracts, either express or implied, which require agreement, and the agreement may also be express or implied. Contracts for the lease of a car, for sale of goods on consignment, and for the transport of goods are examples of bailments.

What is the purpose of a bailment agreement?

A bailment agreement is an agreement where one person agrees to take physical possession of another person's property for safekeeping or other purpose, but does not take ownership of it, with the understanding it will be returned at a later date.

What are the requirements for a bailment?

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.

Is a bailment a contract?

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.

What is a bailment of personal property?

A Bailment is 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.

Is mortgage a bailment?

The distinction between a pledge and a mortgage is that while under pledge there is only a bailment, under mortgage there is some sort of transfer of right of property by way of security. Where money is advanced by way of loan upon the security of goods the transaction may take the form of a mortgage or of a pledge.

Can a bailee be held liable when negligent?

The bailee has to perform according to the obligations laid down in the contract of bailment and as per the law of the land. He is being inconsistent or negligent while performing his obligation or duty would make him liable under various provisions of law.

What is breach of contract of bailment?

It is the right of the bailor to be compensated for the damages of the goods which are bailed if the bailee has failed to take all the necessary due care to abstain that damage or losss according to the direction. Right of termination of the contract in case of unauthorized use of goods [sec 153]:

Is a bailee responsible for damages?

The bailee is liable for any damages arising from their own negligence or the negligence of others who gain access to the item, for example, the item is stolen by an unknown third party while in the borrower's possession, or someone else uses the borrowed car while in the borrower's possession.

What are mutual benefit bailments and their categories?

The most common bailment is a mutual benefit bailment, in which both parties benefit. There are five types of mutual benefit bailments: renting, work and services, pledging, consigning, and storage and parking. In a mutual benefit bailment, the standard of care is that of reasonable care.

What is gratuitous and non gratuitous bailment?

When a bailment is made without any consideration of benefit to the bailor or to the bailee, it is referred to as gratuitous bailment. In simple terms, it is a bailment without any consideration. For example, when one lends a book to a friend free of cost.

What are the characteristics of bailment?

Essential features of bailmentDelivery of possession. There should be the delivery of possession from one person to another. ... Delivery should be done upon a contract. ... Delivery should have a purpose. ... Duty of reasonable care. ... Duty not to make unauthorised use. ... Duty to not to mix. ... Duty to return. ... Duty to return increase.

What is a tortious Bailee?

Tortious Bailee. What is a tortious bailee? A party who wrongfully retains lost property or stolen property. A party who wrongfully uses a bailed article for a purpose other than that agreed upon by the parties.

What happens if a bailee can't produce the asset?

If this isn't possible, bailees must account for any actions that led to damage or loss. 8. Bailors have the right to end the agreement and to legal recourse, including compensatory damages, if the bailee can't produce the asset when the agreement ends.

What happens after a bailee ends?

After the relationship ends, bailors can expect to get their property back in its original state.

What is gratuitous bail?

3 Free valet service would be an example of this because the valet service (in this case, the bailee) doesn't receive compensation for parking your car. A bailee can face liability for damaging the bailed items if they are grossly negligent or act in bad faith while safeguarding the asset.

What happens when a bailee takes possession of a property?

By taking possession of the property, the bailee agrees to guard it using reasonable care. Legal disputes can arise if anything happens to the asset while in the bailee's possession. 3. As mentioned above, bailments also take place in finance.

What is a bailment?

The term bailment refers to a legal relationship between two parties in common law, where assets or property are transferred from a bailor to a bailee. In this relationship, the bailor transfers physical possession of a piece of personal property to the bailee for a certain period of time but retains ownership.

How does bail work?

How Bailment Works. A bailment is an agreement in common law that comes into effect when someone entrusts an asset to someone else for safekeeping. 1 As previously noted, the bailor is the owner of the asset and temporarily relinquishes it to the bailee. Although the bailor gives possession to the bailee, the bailor retains legal ownership ...

What are constructive bailments?

Bailments That Only Benefits the Bailee. These bailments are called constructive bailments. 3 Checking a book out of the library is a common example. When you check the book out, you become the bailee while the library is the bailor, who gets no benefit from the relationship.

What is the mutual benefit of both the bailor and the bailee?

For the mutual benefit of both the bailor and bailee – created when there is to be an exchange of services or performances between the parties, such as when the bailor leaves his property with the bailee to be repaired, after which the bailor will be paying for the repairs.

What is the meaning of acceptance of bailee?

Acceptance. A bailee must knowingly accept possession and/or control of the property. This means that no one can unwittingly become a bailee, as, because a bailment is a type of contract, knowledge and acceptance of the bailment terms are essential elements. Consideration.

What is the intent of a bailment?

This is because the intent of a contract of sale is to transfer ownership of the property to the buyer. In a bailment, ownership of the property does not transfer, and transfer is never an intended consequence. In order for a bailment to exist, the bailee must have both the intent to possess the property, and actual possession the property.

What is bail for sole benefit?

Bailment for Sole Benefit of Bailee – a bailee has a duty of taking extraordinary care for the property, and may only use the property for the purpose agreed upon when the bailment is created. The bailee is responsible for all damages to the property that arise from his failure to properly take care of it.

How to prove a bailment exists?

In order to prove that a bailment existed, and therefore that the bailee had a duty to reasonably protect the property, three elements must be proven. These include: Delivery. The property must be delivered to the actual care and/or control of the bailee. Control of the property does not necessarily require actual physical possession in some cases, ...

What happens if Sam and George take the case to small claims court?

If the two men take the case to small claims court, Sam will not be able to prove that a bailment was created, and therefore that George had a responsibility to protect the car, as the three elements of a bailment did not occur. It is unlikely that the court would hold George liable for repairs to the car.

What is the term for the transfer of personal property to another person?

Bailment . The term bailment refers to the transfer of personal property to another person for safekeeping, or for the other person to control or use temporarily. A bailment is a form of contractual relationship, even if no contract has been signed. The person receiving the property (the “bailee”) has possession and control over ...

What is gratuitous bailee?

A gratuitous bailee must use only slight care and is liable only for gross negligence. To create a bailment, the alleged bailee must have actual physical control with the intent to possess. Physical control and intent to possess will be interpreted according to the expectations of the parties. If a court thinks that liability would be unexpected ...

What does it mean when a court finds that a defendant did not have physical control?

If a court thinks that liability would be unexpected or unfair, it can usually find that the defendant did not have “physical control” or “intent to possess.”. For example, courts are more likely to find a bailment of a car exists in a garage with an attendant than in a park and lock garage.

What is the duty of ordinary care in bailment?

When a bailment is for the exclusive benefit of the bailee, the bailee owes a duty of extraordinary care. If the bailment is for the mutual benefit of the bailee and bailor, the bailee owes a duty of ordinary care. A gratuitous bailee must use only slight care and is liable only for gross negligence. To create a bailment, the alleged bailee must ...

What is a bailment for hire?

There are different types of bailments- "bailments for hire" in which the custodian (bailee) is paid, "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. There is a lower standard of care imposed upon ...

What is the legal definition of bailment?

A bailment is the act of placing property in the custody and control of another, usually by agreement in which the holder (bailee) is responsible for the safekeeping and return of the property.

What are some examples of bailments?

Examples include securities 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). There are different types of bailments- "bailments for hire" in which the custodian (bailee) is paid, "constructive bailment" when ...

Is there a lower standard of care for a bailee?

There is a lower standard of care imposed upon the bailee in a gratuitous bailment, and the parties may contract to hold the bailee free from liability in any bailment. As the law of bailments establishes a lower standard of care for the bailee in a gratuitous bailment agreement, such an agreement or receipt should indicate explicitly ...

What is a bailment contract?

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.

What is a 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.

What are the different types of bailments?

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.

When is a bailment terminated?

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.

What are the elements of bailment?

Note: The typical elements of a bailment are delivery of the personal property, acceptance of the delivery, and possession or control of the property. Any of these elements may be actual or constructive. Bailments may be created by contracts, either express or implied, which require agreement, and the agreement may also be express or implied.

What is a bailment?

What is bailment in banking?

: the transfer of possession but not ownership of personal property (as goods) for a limited time or specified purpose (as transportation) such that the individual or business entity taking possession is liable to some extent for loss or damage to the property — compare deposit, loan for consumption ...

What is a Bailment Agreement?

What is a bailment agreement? The definition of bailment is when one party gives an item or items to another party to be held temporarily. A bailment does not include a sale and it is not intended for the receiving party to permanently keep the items.

Types of Bailment

There are three types of bailment: deposit, loan for use, and gratuitous.

What happens to property when a bailee leaves a car?

For example, if a bailor leaves a car in a parking garage, the bailee (the parking garage company), could experience a loss if the car is stolen from the garage, or if an accident occurs in the parking garage.